Emanuel Chirico said PVH Corp. plans to keep investing in Calvin Klein and Tommy Hilfiger, which are growing steadily abroad, while layering in some more online savvy, potentially through digital acquisitions.
Chirico, who leads the company as chief executive officer, said the recent deal to acquire intimates e-commerce player True & Co. is bringing in a “relatively small” business that can help PVH a build a larger digital platform and pick up expertise in consumer data mining.
“It could be a very exciting acquisition for us as we go forward,” Chirico added.
Looking to the next year or two, Chirico said the “strength” of Calvin and Tommy means PVH will continue to focus on those brands in terms of investments and marketing, but that certain license buybacks, as well as further acquisitions, could come to pass sooner than later.
“If there are opportunities from a digital point of view or we can make an investment, gain expertise — because it’s very expensive and challenging to go out and get the talent — that’s necessary,” Chirico said. “Sometimes it’s easier and more efficient to buy that talent like we did with the True acquisition.”
Chirico added that the current uncertainty around the “tax situation” in the U.S. makes it difficult for PVH management to “plan for any major acquisition.
“That does give us a little bit of pause, but I’m hoping over the next three to six months, that situation will become more clear…and hopefully we’ll have more clarity on our decisions going forward,” he said.
(President Trump has promised to remake the tax code lowering corporate taxes, but there are still more questions than answers on exactly how that will play out for different types of businesses or individual companies.)
PVH also intends to make further investments in digital for Calvin and Tommy specifically, but Chirico declined to specify what level of e-commerce business either brand does currently.
Both brands saw growth internationally, mainly in Europe and China, helping PVH to grow revenue by 2.3 percent to $8.2 billion during 2016, but struggles in North America weighed on the company’s results, leaving net income for the year to fall 4.1 percent to $548.7 million.
Nevertheless, Chirico told analysts that PVH is looking to capitalize on momentum abroad, and without giving specific numbers, said both the Calvin and Tommy businesses in China could double over the next five years. Chirico did say that the Calvin brand is three times the size of the Tommy brand in the region right now.
As for changes in consumer habits related to the continued ascent of online shopping, Chirico said that’s a question still in need of an answer, but as a wholesaler and retailer, something that concerns him is the absence of impulse buying when a shopper has been properly romanced in a store.
“I’m not sure the impulse nature of online is as significant as it is in brick and mortar, where you are able to romance the consumer more. I think that is a challenge,” Chirico said.
He went on to note that PVH’s brands, as well as their strategic partners, need to create a fuller online shopping experience.
“We need to be better…about making the online shopping experience not only efficient and effective, but also, we are in the fashion industry, and we need to romance that consumer much more than we do today,” Chirico said. “I think some players do it well and some players don’t do it well — [an online sale today is] like buying a bar of soap — so we really need to make that experience much better.”
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