PVH raises profit outlook, unveils restructuring plan for Calvin Klein
By Prachi Singh
11 Jan 2019
Steve Shiffman, Chief Executive Officer of Calvin Klein, Inc., a wholly owned subsidiary of PVH Corp. has unveiled a series of strategic changes to the company in response to, what the company has called, rapidly evolving fashion and retail landscape. As a part of the strategy, Calvin Klein’s the 654 Madison Avenue store will be closing in spring 2019. Meanwhile PVH expects to incur pre-tax costs of approximately 120 million dollars over the next 12 months in connection with the Calvin Klein restructuring, including as a result of the closure of its flagship store on Madison Avenue in New York.
“Our industry is witnessing a historic transformation in consumer behaviour which presents a significant growth opportunity as we look to grow the brand to 12 billion dollars in global retail sales over the next few years. Now more than ever, we must double down on meeting consumer demands by creating culturally relevant products and experiences that engage communities by pushing fashion and culture forward,” said Shiffman in a statement.
The brand’s strategy includes three key initiatives
The business will be streamlining its North America division, including consolidation of operations for the men’s Calvin Klein Sportswear and Calvin Klein Jeans business as a means of further strengthening the brand’s positioning. The Calvin Klein retail and ecommerce teams will be integrated to create an omnichannel approach mirroring how consumers browse, shop and purchase today.
The brand is re-launching the Calvin Klein 205W39NYC business under a new name, design approach and creative direction. The company added that new business will “focus on connecting directly to all of the other Calvin Klein brands and amplifying each category with unique products and aspirational experiences.
The company further said that Calvin Klein leadership team has adopted a digital-first approach and introduced a newly formed “Consumer Marketing Organization (CMO).” The CMO is evolving to accommodate the rapidly changing demands of today’s consumers, with highly specialized teams focused on new areas including consumer engagement and shopper experience.
PVH updates Q4 and full year earnings outlook
PVH currently expects revenue in the fourth quarter and full year 2018 to be at least 2.40 billion dollars and 9.57 billion dollars, respectively, which is above its plan. The company also revised its projected fourth quarter and full year earnings per share outlook.
The company currently expects its earnings per share on a non-GAAP basis for the fourth quarter to be at least 1.75 dollars, which is 15 cents per share above the high end of its guidance range previously announced on November 29, 2018 and includes a 5 cents per share benefit due to lower than expected income tax expense. The company currently expects its full year earnings per share on a non-GAAP basis to be at least 9.50 dollars.
Commenting on the updated earnings outlook, Emanuel Chirico, Chairman and Chief Executive Officer of PVH added: “Our improved 2018 outlook reflects the power of our diversified global business model. Specifically, we are experiencing outperformance across all of our businesses relative to our previous guidance, despite the increasingly volatile macroeconomic and geopolitical environment.”
Picture:PVH Corp website