Solange Knowles in Calvin Klein's new ad campaign.

Add PVH Corp. to the small list of third-quarter success stories that could be signaling a slow comeback for North American retail.

Chief executive officer Emanuel Chirico told Wall Street analysts during a call discussing third-quarter financials that PVH, led by its marquee brands Calvin Klein and Tommy Hilfiger, is seeing a general “improvement” in store traffic and sales in North America.

“I am happy with the inflection we’ve seen in the [North American] business,” Chirico said. “We started to see a turn in our retail business in the second quarter and we saw even stronger momentum during the third quarter as revenue increased, driven largely by the improvement in our retail business.”

Such improvements, along with a border tax on imports falling out of the Trump administration’s tax reform proposal, which is now focused on one of the biggest corporate tax cuts in history as well as further reductions for wealthy individuals, has PVH eager for another acquisition.

“We’re in a place where we’d love to do an acquisition,” Chirico said. “We would not be looking to do a turnaround of a brand, but if we could find a great brand that’s got operating issues, that would be fantastic.”

He went on to note that PVH would be looking for a “third brand” that is “established” but wouldn’t cannibalize Calvin Klein or Tommy Hilfiger and have potential to grow in international markets.

Chirico said wholesale sales in North America have been strong for both men’s and women’s at Calvin Klein and Tommy Hilfiger, particularly at Macy’s, a business the ceo characterized as “outstanding with strong sell-throughs and higher overall margins.” Chirico has been an outspoken supporter of department stores and earlier this year admitted it’s the single most important channel for PVH brands.

Despite a 5 percent revenue decrease in Calvin Klein’s North American business to $476 million, PVH said this was primarily a result of the deconsolidation of its Mexico business, and highlighted comp store sales that only decreased 1 percent. During the second quarter, comps were down 2 percent.

The domestic picture for Tommy Hilfiger was rosier as the brand tallied a 2 percent comp increase in North America after months of negative to flat comps, along with a 2 percent increase in revenue to $410 million.

Ike Boruchow of Wells Fargo said in a note that trends for PVH in North America “improved meaningfully” during the third quarter, and the domestic picture overall is “very encouraging.” He noted that Chirico said in a recent TV appearance that the company is on track to have its best holiday season in four years.

John Kernan of Cowen & Co. echoed that sentiment, adding that current positive trajectory in North America is expected to accelerate and be a “key driver” in 2018.  

While international trends for both brands are booming in comparison, making up the bulk of the 6 percent revenue increase at Calvin Klein and that 10 percent increase at Tommy Hilfiger, Chirco said North America is the “big improvement” at PVH and the momentum is poised to continue.

“We’ve got a month ahead of us of for holiday selling, but it feels like we’re going into December with a lot of momentum, tighter inventories,” Chirico told analysts. “I think it’ll be promotional, but probably not as promotional as last year. There will be less goods to clear come January. So we are very positive in all that we’re seeing throughout North America across all of our businesses.”

Only a week into the traditional holiday selling season, Chirico said comps and traffic are trending up, aided by an apparently successful tie up with Amazon Fashion and Calvin Klein, focused on the brand’s core underwear business, which includes a presence online and in pop-up stores in New York and Los Angeles.

“It’s really created a lot of momentum around the brand and more excitement,” Chirico said of the Amazon partnership. “It’s really lifted all boats…and no, we haven’t seen any kind of pushback from our accounts. We have a strong relationship with all of our key customers and we try to drive everybody’s business.”

Chirico isn’t the only one feeling optimistic about the holiday season, and the future of retail in general.

Sales since the Thanksgiving holiday have been strong, with research from Adobe finding that a record $6.59 billion was spent online on Cyber Monday alone, an increase of 16.8 percent, or nearly $1 billion, over last year.

The National Retail Federation also estimated that from Thanksgiving Day through Cyber Monday, more than 174 million Americans shopped in stores and online, beating the 164 million estimated earlier in the year.

While there’s known to be something of a shopping lull after Cyber Monday, industry experts are widely expecting holiday sales to increase around 4 percent this year, which would be the best performance since 2014.

All of the positive buzz around holiday and some positive third-quarter results from a string of U.S. retailers and brands boosted more than a dozen retail stocks this week.

But the days of retail bankruptcies, store closures and other “efficiencies,” as layoffs and corporate consolidations have come to be termed, while on the wane, are not quite over, at least according to Chirico.

“I’m not ready to say that everything is great in North American retail overall,” the ceo said. “I think we’re going to continue to see a downsizing and store closings, but our retail partners have done a terrific job managing into the fourth quarter. That doesn’t mean the ills impacting retail in North America, like over-storing, are over. Those issues still linger and we’re going to have to deal and manage through that…but I think that’s just the nature of the North American retail business.”

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