PVH 4Q16 Earnings Call Notes

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Manny Chirico – Chairman and CEO

US is still challenged

“Sure, I guess I’d just take a step back more from a more micro and maybe more focusing on the short-term is as you would expect as we’re looking out at the U.S. retail landscape the U.S. market is continues to be almost challenged market. And because of that we are planning that business conservatively and based on current trends that we’re seeing in the market today.”

Growth for us is happening internationally

“The growth for us, I mean I’ve tried to cover in my opening comments is really happening internationally”

Retailers have kept inventory leaner

“Sure, I think there is always pockets, but right now I would say is I think the retailers have done a very good job in department store sector in particular about keeping inventories clear. We came out of the fourth quarter, I think they reacted strongly to some of the softer sales trends both from a tightening open to buy dollars and moving inventory out in the fourth quarter.”

Really keeping inventory lean

“The other pressure that’s coming from that sector is significant pressure is being put on inventory turn. So inventory open to buy dollars have been constructed. Whatever they’re planning be it flat sales or slightly negative comps sales, the buy plan is even lower than that. So I think that bodes well for gross margin as we go through the first quarter and into the second quarter of this year. And I think even the way they projected to buy third and fourth quarter has been very tight as well given the trends that are in the business.”

Retail space is much lower in Europe. Department stores in Europe are much more fragmented

“I think you know brick and mortar in general is under pressure, but I think one of the benefits that exist in Europe and in Asia even to a greater extent is the level of retail square footage on a per capita basis is just significantly lower, 50% lower than it is in the United States. So I think some of the challenges with — the challenges that we’re facing in brick and mortar in the United States has to do with there is too many stores. I don’t believe that issue to the level that it exist in the United States exist in Europe and in Asia.”

“So that’s point one, point two is the retail landscape particularly on the department store side and specialty multi-brand stores, it’s just much more fragmented than in the United States, the United States has gone through a tremendous consolidation in the department store sector where Europe have had minimal consolidation. There is no Pan European department store, it’s really regional department stores most times country specific, but sometimes regionally specific.”

Currency situation favorable in the UK

“So I think that’s the dynamic that changes, I think traffic trends are healthier obviously there. I think the currency situation particularly in the UK is very favorable and they are benefiting from a significant amount of European tourism into the UK as well as Asia and U.S. tourism into the UK. And I can say the same thing about Continental Europe where we are seeing from the credit card data that we look at every month that particularly Chinese stores given the euro’s lack of strength is also a place that there is a lot of tourism going on and a lot of shopping going on, so really benefiting from that.