PVH Corp. Q3 FY2025 earnings call

• Brand Building: Built relevance through product innovation, marketing campaigns (e.g., Bad Bunny, Rosalia) and store expansions. - PVH+ Plan Execution: Focused on core categories, innovation, and simplifying operating model for cost savings, with over 200 basis points of SG&A efficiencies in 18 months. - Supply Chain and Inventory: Healthy inventory levels up 3% including tariffs, with investments in demand-driven supply chain. - Leadership Changes: Welcomed Patricia Gabriel as Chief Supply Chain Officer, Zac Coughlin's departure, and interim CFO Melissa Stone.

Calvin Klein: Continued to build relevance by connecting core DNA to consumer. Drove momentum in underwear and denim with product innovation and campaigns like Bad Bunny for men's Icon Cotton Stretch and Rosalia for women's Icon Cotton Modal, driving double-digit growth. Tommy Hilfiger: Launched Hilfiger Racing Club campaign, opened new shop-in-shop, and has a spring 2026 campaign with global talent. Regional Performance: - Europe: Reported revenue up 4% but down low single digits in constant currency; factors included muted consumer activity, lower cold weather outerwear, and Calvin product challenges. - Americas: Overall revenue up 2%, D2C down low single digits but digital outperformed; wholesale grew due to Calvin Klein women's sportswear/jeans transition. - Asia Pacific: Flat in constant currency, D2C turned to positive growth with improvements in China, Japan, Australia; Double-11 drove strong results. Revenue contribution: Calvin Klein and Tommy Hilfiger are key segments, with regional performances varying based on factors like consumer activity and operational challenges.

• Fourth Quarter: Projected revenue up slightly to low single digits reported, down slightly constant currency; reaffirmed full-year constant currency revenue and operating margin guidance, narrowing reported revenue and EPS to high end of ranges. - 2025 Outlook: Reaffirmed constant currency revenue and operating margin, narrowed reported revenue and EPS, addressed tariff impact (approx $65M unmitigated EBIT impact) and inventory management, with inventory up 3% including tariffs.

• Consumer Backdrop: Uneven global consumer conditions affecting sales. - Tariffs: Impact on earnings, though mitigation actions are in place. - Operational Challenges: Transitory issues with Calvin Klein global product capability setup causing delays and margin strain in the short term.

Q: Bob Drbul asked about geographic performance dynamics across Americas, Europe, and APAC and into 2026.

A: Stefan Larsson responded that Europe started on plan but had muted consumer activity in September and Calvin transitory challenges; Americas had 2% revenue growth with e-com as driver; APAC exceeded plan with D2C growth and strong Double-11. Zachary Coughlin added third quarter operating margin ex tariffs was almost 10% and 4Q guidance includes 10% ex tariffs.

Q: Jay Sole asked about marketing impact and operating cash flow.

A: Stefan Larsson discussed marketing discipline and stepped-up spending driving brand awareness and consideration; Zachary Coughlin said inventory is up 3% including tariffs, expecting strong free cash flow and optionality for 2026.

Q: Michael Binetti asked about Calvin Klein product design consolidation, margin recapture, and Europe weather impact.

A: Stefan Larsson said product capability build-out is on track for spring 2026 with on-time delivery and margin recapture; weather improvement in Europe may help outerwear sales but consumer is shifting to transitional products.

Q: Dana Telsey asked about Black Friday holiday insights and planning for 2026.

A: Stefan Larsson said Black Friday was on plan in Europe and North America, with Gen-Z consumer engagement, and insights inform spring/fall 2026 planning.

Q: Matthew Boss asked about Calvin brand improvement and 2026 operating margins.

A: Stefan Larsson talked about Calvin's brand desirability through consumer recruiting in e-commerce and key categories; Zachary Coughlin mentioned PVH+ Value Driver 5 initiative achieved over 200 basis points of SG&A improvements, with more to come in 2026.