Pvh Corp. · NYSE:PVH
Pvh — Investor Presentation (December 2020)
53 slides from Pvh's investor presentation, Dec 2, 2020
Slide 1: Investor Update Winter 2020
Investor Update Winter 2020 1
Slide 2: Safe Harbor
Safe Harbor We (PVH Corp.) obtained the market and competitive position data used throughout this presentation from research, surveys or studies conducted by third parties, information provided by customers and industry or general publications. Industry publications and surveys generally state that
Slide 3: Our Brand Framework
Our Brand Framework Vision To be the most Purpose Priorities admired fashion and We power Drive consumer engagement through innovative lifestyle company in brands that drive designs and personalized brand and shopping the world. fashion forward – experiences that captures the heart of the consumer f
Slide 4: PVH by the Numbers
PVH by the Numbers PVH Established in PVH Foundation (the company’s philanthropic division) >40,000 has been in existence for 1881 Global Associates 30+ Years 15% CAGR >50% for Non-GAAP Earnings per Share* Revenues Generated Outside of the U.S. from 2003-2019 $9.9 Billion 2019 Reported Revenues We O
Slide 5: Three Distinct Businesses, All Positioned for Global Growth
Three Distinct Businesses, All Positioned for Global Growth 2019 Business Recap PVH CORP. Tommy Hilfiger Calvin Klein Heritage Brands Global Retail Sales: ~$22B Global Retail Sales: $9.2B Global Retail Sales: $9.4B Global Retail Sales: $3.3B Revenues: $9.9B Revenues: $4.7B Revenues: $3.7B Revenues:
Slide 6: PVH is One of the Largest Global Apparel Companies
PVH is One of the Largest Global Apparel Companies with $9.9 Billion in 2019 Revenues 2019 Revenue ($ in Billions) $10.5 $9.9 $7.0 $6.2 $6.0 $5.8 $5.6 $3.3 $3.2 $3.2 $2.7 $2.6 Source: Factset. 6
Slide 7: A Rich History of Sales & Earnings Growth
A Rich History of Sales & Earnings Growth Revenue & EPS Growth (2003 – 2019) 12% revenue CAGR & 15% EPS* CAGR Heightened global volatility Acquired Calvin Klein Great Recession Acquired Tommy Hilfiger Acquired Warnaco $9.60 $9.54 $10 $11,000 $9 $7.94 $9,909 $9,657 $7.30 $8 $7.03 $7.05 $8,915 $6.80 $
Slide 8: Calvin Klein and Tommy Hilfiger Account for 85% of Revenues
Calvin Klein and Tommy Hilfiger Currently Account for 85% of PVH’s Revenues and nearly 95% of PVH’s EBIT(1) Revenue by Business (2019) EBIT(1) by Business (2019) 15% 6% 48% 37% 57% 37% Tommy Hilfiger Calvin Klein Heritage Brands (1) Figures exclude certain amounts that were deemed non-recurring or n
Slide 9: Revenues and EBIT Generated Outside the U.S.
Nearly 60% of PVH’s Revenues and Approximately 70% of PVH’s EBIT(1) are Generated Outside the U.S. Revenue by Region (2019) EBIT(1) by Region (2019) 6% 9% 14% 28% 18% 43% 37% 45% U.S. Europe Asia Pacific Americas (excluding U.S.) Note: Americas (excluding U.S.) includes Canada, Mexico, South America
Slide 10: Significant Focus on Digital Expansion & Enhancements
Significant Focus on Digital Expansion & Enhancements § Over $1 billion in digital sales through our digital sites and digital sites operated by our wholesale partners in 2019 (~20% growth) § Digital represented 12% of our sales in 2019 (through our own digital sites and digital sites operated throu
Slide 11: Focus on Innovation, Speed, Consumer Data & Flexibility
Focus on Innovation, Speed, Consumer Data & Flexibility Supply Chain Design Consumer § Faster & more responsive supply chain § 3-D design capabilities help reduce § Increased use of data, analytics & § Leveraging 3-D Design and Showrooms need for samples and expedites early- Consumer Insights stage
Slide 12: Driving Fashion Forward – for Good
The picture can't be displayed. Driving Fashion Forward – for Good Our Ambitions Our 01. Eliminate carbon emissions 05. Source ethically 11. Empower women Priorities 02. End waste 06. Amplify worker voice 12. Foster inclusion & diversity 03. Eliminate hazardous chemicals 07. Promote safe workplaces
Slide 13: Tommy Hilfiger
Tommy Hilfiger § One of the world’s leading designer lifestyle brands § Celebrates the essence of classic American cool style § Strong global brand awareness 13
Slide 14: Tommy Hilfiger – Brand Overview
Tommy Hilfiger – Brand Overview Distribution § Select Global Retail § Select Global Retail § Global Retail § Select Global Retail § Select Global Retail § Global tommy.com § Global tommy.com § Global tommy.com § Global tommy.com § Global tommy.com § Global Wholesale § Global Wholesale § Global Whole
Slide 15: Tommy Hilfiger – Brand Overview
Tommy Hilfiger – Brand Overview 2019 Regional Breakout Global Retail Sales: $9.2 BN Reported Revenues: $4.7 BN 11% 13% 3% 35% 42% 44% 52% North America(1) Latin America(2) Asia Pacific(3) Europe(4) (1) North America includes Canada and Mexico. (2) Latin America includes South America, the Caribbean
Slide 16: Tommy Hilfiger Strategies
1. Product Focus Delivering compelling products that reflect 2. Category TOMMY HILFIGER’s Category expansion 3. Regional accessible premium within womenswear, Regional expansion, positioning and classic accessories, denim particularly across Tommy Hilfiger American cool aesthetic, with a focus on su
Slide 17: Tommy Hilfiger – Global Marketing & Communications
Tommy Hilfiger – Global Marketing & Communications OBJECTIVE: Build on consumer-centric go-to- market strategies to maintain global brand relevance & momentum INVESTMENT: OVER $200 MILLION in 2019 global marketing spend FOCUS: Attracting a new generation of consumers globally; Blend of global and re
Slide 18: Tommy Hilfiger – Business Overview & Financials
Tommy Hilfiger – Business Overview & Financials Tommy Hilfiger Business Summary $4.7B 2019 Reported Revenues ~$3.1B ~$1.6B International Revenues North America revenues 13.5% 2019 EBIT Margin(1) (1) EBIT margin excludes certain amounts that were deemed non-recurring or non-operational. Refer to Appe
Slide 19: Tommy Hilfiger Europe – Overview
Tommy Hilfiger Europe – Overview § Healthy brand with premium positioning Expected Long-Term Growth § Opportunity for further market share gains + Mid single-digits Largest Category Opportunities Largest Distribution Opportunities 2019 Europe Revenues by Distribution Model(1) § Outsized growth expec
Slide 20: Tommy Hilfiger Asia – Overview
Tommy Hilfiger Asia – Overview § Healthy brand with premium positioning Expected Long-Term Growth § China is the largest long-term regional opportunity for Tommy Hilfiger, + Mid to High single-digits with the ability to double the size of the business over time Largest Category Opportunities Largest
Slide 21: Tommy Hilfiger North America – Overview
Tommy Hilfiger North America – Overview § Healthy brand with premium positioning Expected Long-Term Growth § Opportunity for further market share gains + Low single-digits Largest Category Opportunities Largest Distribution Opportunities 2019 North America § Significant digital opportunity: Revenues
Slide 22: Tommy Hilfiger Licensed Businesses
Tommy Hilfiger Licensed Businesses Notable Licenses Regional Product Categories Joint Venture India Mexico Brazil Women’s Apparel Footwear Watches & Jewelry (North America) (North America) Movado Distributor G-III Marc Fisher Indonesia Vietnam Philippines License Men’s Tailored Clothing Eyewear Frag
Slide 23: Calvin Klein
Calvin Klein § One of the world’s most recognized brands § Bold, progressive ideals 23
Slide 24: Calvin Klein – Brand Overview
Calvin Klein – Brand Overview Distribution § Select Asia Retail § Global Retail § Global Retail § Global Retail § Global Retail § Asia calvinklein.com § Global calvinklein.com § Global calvinklein.com § Global calvinklein.com § Global calvinklein.com § Select Asia Wholesale § Global Wholesale § Glob
Slide 25: Calvin Klein – Brand Overview
Calvin Klein – Brand Overview 2019 Regional Breakout Global Retail Sales: $9.4 Billion Reported Revenues: $3.7 Billion 2% 2% 15% 20% 46% 56% 27% 32% North America(1) Latin America(2) Asia Pacific(3) Europe(4) (1) North America includes Canada and Mexico. (2) Latin America includes South America, the
Slide 26: Calvin Klein – Global Marketing & Communications
Calvin Klein – Global Marketing & Communications OBJECTIVE: A marketing approach that brings together all facets of the consumer marketing experience – from consumer engagement to data capabilities to the shopping experience INVESTMENT: With over $365 million in global annual marketing spend in 2019
Slide 27: Calvin Klein – Business Overview & Financials
Calvin Klein – Business Overview & Financials Calvin Klein Business Summary Over 50% of the brand’s global retail sales continues to be from licensing. $3.7B Past Today 2019 Reported Revenues ~$1.7B ~$2.0B 53% North America Revenues International revenues 89% 11.3% 47% 2019 EBIT Margin(1) 11% 2012 2
Slide 28: Calvin Klein Strategies
1. Product Focus 2. Categories Delivering compelling Product improvement and products that reflect Calvin expansion, particularly 3. Regional Klein’s accessible premium within men’s and women’s Regional expansion, positioning and seductive sportswear, jeanswear, particularly across Calvin Klein aest
Slide 29: Calvin Klein North America – Overview
Calvin Klein North America – Overview § Premium positioning Expected Long-Term Growth § Focus on driving productivity and operational efficiencies + Low Single-Digits Largest Category Opportunities Largest Distribution Opportunities 2019 North America Revenues by Distribution Model(1) § Outsized gro
Slide 30: Calvin Klein Europe – Overview
Calvin Klein Europe – Overview § Europe is the largest near-term regional opportunity for Calvin Klein, with the ability to double the size of the business over time Expected Long-Term Growth + High Single-Digits § Focus on driving productivity and operational efficiencies Largest Category Opportuni
Slide 31: Calvin Klein Asia – Overview
Calvin Klein Asia– Overview § Healthy brand with premium positioning overseas Expected Long-Term Growth § Ability to double the size of the business over time + Mid Single-Digits § Focus on driving productivity and operational efficiencies Largest Category Opportunities Largest Distribution Opportun
Slide 32: Calvin Klein Latin America – Overview
Calvin Klein Latin America – Overview § Owned business in Brazil § Joint Venture for Mexico (Grupo Axo), which also includes our Tommy Hilfiger, Warner’s, Olga and Speedo businesses in Mexico § Licensed business in Latin America, run by American Designer Fashion S.A. (ADF) Largest Category Opportuni
Slide 33: Calvin Klein Licensed Businesses
Calvin Klein Licensed Businesses 7 significant partnerships represented over 80% of licensing and advertising revenue in 2019. Over time, we look to assume more direct control over various licensed businesses where we have core competencies. Global Retail Sales Potential Buyback Opportunities Women’
Slide 34: Heritage Brands
Heritage Brands § Portfolio of iconic American brands § Generate healthy cash flows § Market share opportunities 34
Slide 35: Heritage Brands – Overview & Financials
Heritage Brands – Overview & Financials Summary Financials 2019 reported revenues – $1.5 BN 2019 EBIT Margin(1) – 4.0% Heritage Brands § Underwear § Sportswear § Dress furnishings Licensed Brands Include: § Chaps § Kenneth Cole Reaction § MICHAEL Michael Kors § Michael Kors Collection (1) EBIT margi
Slide 36: Heritage Brands Strategies
1. Product Focus 2. Share Gains Delivering trend-right Leveraging and enhancing products at an attractive each brand’s position in the value proposition, with a market to drive market focus on new technologies, share gains, with a focus on Heritage Brands features and sustainability. the most profit
Slide 37: Market Share Gains are Critical for our Heritage Brands Business
Market Share Gains are Critical for our Heritage Brands Business Category Unit share Neckwear >50% Woven Shirts 13%(1) Bras & Panties 10%(1) Knit Shirts 8%(1) Casual Pants 5%(1) (1) Based on percentage of 2019 unit volume in US Department and Chain Stores combined. Source: NPD. 37
Slide 38: Financial Overview
Financial Overview 38
Slide 39: PVH Financial History
PVH Financial History $ in Millions, Except per Share Data FX Headwinds Warnaco Acquisition 2014 2015 2016 2017 2018 2019 Revenues $8,241 $8,020 $8,203 $8,915 $9,657 $9,909 Gross margin 52.6%* 51.6%* 53.4%* 54.9% 55.0% 54.7%* EBIT* $921 $842 $794 $864 $971 $931 EBIT margin* 11.2% 10.5% 9.7% 9.7% 10.
Slide 40: PVH Financial History
PVH Financial History Free Cash Flow ($ in Millions) Gross Leverage Ratio(2) $800 140% $700 $644 $664 120% 3.4 $600 117% 3.2 3.1x 100% $500 $461 3.0 93% 80% $400 $274 60% 2.8 2.7x $300 62% 40% 2.6 $200 44% 2.4 $100 20% 2.2x 2.2x $0 0% 2.2 2016 2017 2018 2019 2.0 Free Cash Flow Free Cash Flow / Non-G
Slide 41: Managing COVID-19
Managing COVID-19 PVH Confidential – For authorized use only. 41
Slide 42: Taking Decisive Actions to Navigate COVID-19
Taking Decisive Actions to Navigate COVID-19 Financial Measures Liquidity Measures Reduced its North American office workforce by Ended 3Q with ~$1.5 billion in cash and over $1.2 billion of approximately 450 positions (12%). Reductions were across all available borrowings under revolving credit fac
Slide 43: Prioritizing Safety in our Stores and Workplaces
Prioritizing Safety in our Stores and Workplaces In-Store Protocols Workplace Protocols In the U.S. and Canada, we continue to take precautionary Company associates in the U.S. and Canada have added measures, including: enhanced health and safety practices to daily operations including: • Social dis
Slide 44: Appendix
Appendix PVH Confidential – For authorized use only. 44
Slide 45: GAAP to Non-GAAP Net Income per Common Share Reconciliations (2003-2006)
GAAP to Non-GAAP Net Income per Common Share Reconciliations (2003-2006) GAAP to Non-GAAP Reconciliations Net Income (Loss) Per Common Share (Dollars and Shares in Millions, Except Per Share Data) 2006 2005 2004 2003 GAAP Adjustments(1) Non-GAAP GAAP Adjustments(2) Non-GAAP GAAP Adjustments(3) Non-G
Slide 46: GAAP to Non-GAAP Net Income per Common Share Reconciliations (2008-2010)
GAAP to Non-GAAP Net Income per Common Share Reconciliations (2008-2010) GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) 2010 2009 2008 (1) (2) GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP GAAP Adjustments(3) Non-GAAP Net In
Slide 47: GAAP to Non-GAAP Net Income per Common Share Reconciliations (2011-2013)
GAAP to Non-GAAP Net Income per Common Share Reconciliations (2011-2013) GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) 2013 2012 2011 (1) (2) GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP GAAP Adjustments(3) Non-GAAP Total
Slide 48: GAAP to Non-GAAP Reconciliations (2014-2016)
GAAP to Non-GAAP Reconciliations (2014-2016) GAAP to Non-GAAP Reconciliations (Dollars and Shares in Millions, Except Per Share Data) 2016 2015 2014 GAAP Adjustments(1) Non-GAAP GAAP Adjustments(2) Non-GAAP GAAP Adjustments(3) Non-GAAP Total Revenue $ 8,203.1 $ - $ 8,203.1 $ 8,020.3 $ - $ 8,020.3 $
Slide 49: GAAP to Non-GAAP Revenue & Gross Margin Reconciliations
GAAP to Non-GAAP Revenue & Gross Margin Reconciliations (Dollars in Millions) 2013(1) 2008(2) 2003(3) GAAP Revenue $ 8,186.4 $ 2,492.0 $ 1,569.0 Adjustments 30.0 (95.0) (21.0) Non-GAAP Revenue 8,216.4 2,397.0 1,548.0 (1) Adjustments for 2013 represent the revenue reduction due to sales returns for c
Slide 50: GAAP to Non-GAAP Reconciliations (2017-2019)
GAAP to Non-GAAP Reconciliations (2017-2019) GAAP to Non-GAAP Reconciliations (Dollars and Shares in Millions, Except Per Share Data) 2017 2018 2019 (1) (2) (3) GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Revenue Total Revenue $ 8,914.8 $ - $ 8,914.8 $ 9,656.8 $ - $
Slide 51: GAAP to Non-GAAP Gross Debt/EBITDA Reconciliations
GAAP to Non-GAAP Gross Debt/Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) Reconciliations (1) Amounts that were deemed non-recurring or non-operational for 2016 were (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the c
Slide 52: GAAP to Non-GAAP Cash Flow Reconciliations
GAAP to Non-GAAP Cash Flow Reconciliations GAAP to Non-GAAP Reconciliations Cash Flow (Dollars in Millions) 2016 2017 2018 2019 (1) Cash Flow from Operations $ 903 $ 644 $ 853 $ 1,020 Less: Capital Expenditures 247 358 380 345 Dividends 12 12 12 11 Free Cash Flow $ 644 $ 274 $ 461 $ 664 (1) Updated
Slide 53: #WEAREPVH
#WEAREPVH