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PVH Buys Tommy Hilfiger China Stake from Apax Partners

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Tommy Hilfiger Spring '16

British private-equity firm Apax Partners has sold its stake in Tommy Hilfiger’s Chinese operations to the preppy brand’s owner, PVH Corp.

PVH, which already owned 45 percent of TH Asia Ltd., its joint-venture with Apax for the label’s business in China, on Tuesday announced it had acquired the remaining 55 percent share for around $172 million, including $100 million in cash. The deal is expected to close in the second quarter of 2016.

Tommy Hilfiger currently has more than 350 stores in China, 65 of which are directly operated, and sales have reportedly doubled since 2012 to a projected $140 million in revenue for 2015. Last May, the brand restaged its Fall ’15 runway show in Beijing to commemorate its 30th anniversary, as well as the opening of its largest store on mainland China, and CEO Daniel Grieder said in a statement that new store openings—both company-operated and franchised locations—are on the way.

“This transaction enables the Tommy Hilfiger business to directly operate its fastest growing market, while leveraging our well-established infrastructure in Asia, our regional leadership expertise and strong brand momentum across both our Tommy Hilfiger and Calvin Klein businesses in the region,” stated Emanuel Chirico, chairman and chief executive officer of PVH, which also owns Calvin Klein.

In fact, China was Calvin Klein’s fastest-growing market in 2010, with sales projected to increase as much as 30 percent year-over-year. Most recently, Calvin Klein International’s third-quarter revenue increased 7 percent on a constant currency basis—with a 2 percent increase in same-store sales—that PVH said was partially driven by strong momentum in the brand’s Chinese business.

The company is eager for a repeat performance with Tommy Hilfiger.

Grieder said, “We are looking forward to executing a more fully integrated strategy for China that takes advantage of our current momentum in the region. This will allow us to further realize the growth opportunities that exist for the brand by offering consumers a greater breadth of Tommy Hilfiger product lines and a more elevated brand presentation.”

“As a leading global investor in the fashion and consumer space, Apax has been privileged to partner with PVH to build the Tommy Hilfiger China joint venture and management team, leading to a significant expansion of the business. As a result of these efforts and the work of the management team, Tommy Hilfiger has become one of the fastest growing and most profitable fashion brands in China,” Richard Zhang, equity partner and head of Greater China at Apax Partners, said.

Earlier this week, PVH updated its fiscal 2015 earnings per share (EPS) guidance to be at or above $7.00, the high end of what was previously announced on Dec. 2, citing “continued strength” in Calvin Klein globally as well as its Tommy Hilfiger International business.

Chirico said that while the strong dollar caused macroeconomic issues, “We were able to post stronger results despite a difficult U.S. retail environment, which was negatively impacted by unseasonably warm weather and decreased international tourist traffic and spending, particularly for our Tommy Hilfiger brand.”

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