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PVH+ Plan Sets Course for Digital, DTC-Led Growth

PVH Corp. has introduced its PVH+ Plan, a multiyear strategic initiative to accelerate growth by building on the core strengths of PVH and connecting Calvin Klein and Tommy Hilfiger closer to the consumer through five key drivers.

The execution of the PVH+ Plan is expected to achieve high single-digit compounded annual growth (CAGR) from $9.1 billion in 2020 to approximately $12.5 billion in revenue in 2025.

Rolled out as part of the company’s 2022 Investor Day, the key drivers for the Calvin Klein and Tommy Hilfiger brands start with “Win with Product,” in which PVH will develop the best products across key growth categories, with a focus on expanding in large and growing global demand spaces where the company’s iconic brands resonate most.

The next link is “Win with Consumer Engagement.” By driving digital-first, 360-degree consumer engagement built around brand, hero products and key consumer moments, partnering with the best creators in the industry and building out each brand’s ambassador program, Calvin Klein and Tommy Hilfiger will aim to meet consumers on their terms in new and engaging ways. In “Win in the Digitally-led Marketplace,” PVH is accelerating digital growth by building a holistic distribution strategy for Calvin Klein and Tommy Hilfiger led by its direct-to-consumer (DTC) channels and supported by key wholesale partnerships.

The next tenet, “Develop a Demand- and Data-driven Operating Model” starts with a systematic and repeatable product creation model that puts the consumer first and leverages data to bring new and fresh products to market with speed and agility, while “Drive Efficiencies and Invest in Growth” involves a “relentless focus on driving efficiencies to become more cost-competitive and reinvest in key strategic growth drivers,” said PVH, by simplifying how its teams work and identifying efficiencies to fuel initiatives with the greatest positive impact and strongest return.

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These five foundational drivers apply to each of PVH’s businesses and are activated in the regions to reflect consumer differences and their unique expectations. Leveraging the full power of Calvin Klein and Tommy Hilfiger, PVH is hoping to build on its market-leading power in Europe, its strength in Asia Pacific, and unlocking the full potential of its brands in the Americas.

“Our new, multiyear strategic growth plan leverages the global strength of our brands and reflects the compelling opportunities we see across our channels and geographies,” Zac Coughlin, chief financial officer, said. “While investing to fully capitalize on the global, digital and DTC-focused potential of our plan, we will also drive efficiencies that together will accelerate earnings growth and deliver strong and sustainable shareholder returns.”

In addition to the revenue outlook, the company said the execution of the PVH+ Plan is expected to achieve expansion of operating margin to approximately 15 percent in 2025 and free cash flow in excess of $1 billion in the same period. For fiscal 2021, PVH revenue rose 28 percent compared to 2020 to $9.16 billion. This included a 29 percent increase in the Tommy Hilfiger business and a 39 percent gain in the Calvin Klein business. For the year, net income was $952.3 million compared to a net loss of $1.14 billion in 2020.

The company also reaffirmed its first quarter and full year 2022 outlook announced when it released its 2021 results on March 29. Its 2022 outlook including a projected revenue increase of 2 percent to 3 percent compared to 2021 and an operating margin of approximately 10 percent and earnings per share of about $9 compared to $13.25 in 2021.