PVH Corp. Price & Performance (PVH)

It may not be recorded, rebroadcast, or otherwise transmitted without PVH's written permission. Your participation constitutes your consent to having anything you say appear in any transcript or replay of this call. The information to be discussed includes forward looking statements that reflect PVH's view as of 03/31/2025, of future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's SEC filings and the Safe Harbor statement included in the press release that is the subject of this call. These include PVH's right to change its strategies, objectives, expectations, intentions, and the company's ability to realize anticipated benefits and savings from divestitures restructurings, similar plans, such as the headcount cost reduction initiative announced in August 2022, the 2021 sale of assets of and exits from its heritage brands menswear and retail businesses, the November 2023 sale of the Heritage Brands women's intimate apparel business to focus on its Calvin Klein and Tommy Hilfiger businesses, and its current multiyear initiative to simplify its operating model. PVH does not undertake any obligation to update publicly any forward looking statement including, without limitation, any estimates regarding revenue or earnings. Generally, the financial information and projections to be discussed will be on a non GAAP basis as defined under SEC rules.

Reconciliations to GAAP amounts are included in PVH's fourth quarter twenty twenty four earnings release which can be found on www.pvh.com and in the company's current report on Form eight ks furnished to the SEC in with with the release. At this time, I am pleased to turn the conference over to Stephan Larson.

Thank you, Cheryl. Good morning, everyone, and thank you for joining our call today. I want to start by thanking our teams around the world for delivering a strong fourth quarter and finish to the year. Through the strength of our two iconic global brands, Calvin Klein and Tommy Hilfiger, and the disciplined execution of our multi year brand building growth plan, the PVH plus plan, we over delivered on both the top and bottom line versus our fiscal twenty twenty four guidance. With stronger than expected revenue on a constant currency basis and higher than expected non GAAP EPS.

In addition, we increased our gross margin by 120 points to a new record. And even with the fixed cost deleveraging from our Europe business, we maintained our double digit EBIT margins at 10%. As we focused on driving cost efficiencies across the company. For the fourth quarter, we delivered a strong holiday performance that beat our expectations, On a constant currency basis, we drove low single digit revenue growth with growth in both our D2C and wholesale channels excluding the sale of our heritage business and the fifty third week in twenty twenty three. Which supports our planned return to growth during 2025. 2024 marks the major step towards our vision to build Calvin and Tommy into the most desirable lifestyle brands in the world and make PVH one of the highest performing brand groups in our sector. We connected both Calvin and Tommy to the site guide through our marketing driving record consumer engagement. We improved the relevance of sell through of our fall twenty four product assortment across both brands. We're turning Europe back to growth.

With improved performance in both D2C and wholesale. Where we drove two consecutive quarters of growth in our stores as well as moving our European wholesale order books back to growth. Despite the tough macro, we kept Asia growing on a constant currency basis. On top of two consecutive years of double digit constant currency growth. And we significantly increased our profitability in North America. Including a double digit EBIT margin rate for our combined Calvin and Tommy business in the region. We are working more closely than ever with our wholesale partners. And in January, we brought together more than 300 key partners for one of our largest ever global partner days, to kick off fall twenty twenty five market launch. Their feedback was very positive around the improved product marketing and marketplace execution. And we'll build on this momentum together in 2025. We stood up our global product kitchen for Calvin, and created the strongest product assortment so far for Tommy. Which launches this fall. And it was a big part of helping to return our European order books back to growth for 2025. We drove significant cost efficiencies while simplifying our organization and shifting our culture to become brand builders with a strong consumer focus.

We put in place our technology roadmap, taking important steps to becoming a data and demand driven company. We have a strong management team in place with experience and capabilities to bring our vision to life. For all this progress, there is no question that 2024 was a challenging environment. And I'm especially proud of our team for executing so well despite the macro issues at hand. Now, let me share a bit more of what drove our performance in the fourth quarter. Full year both from a global brand and regional perspective. And then I'll move into how we will drive growth during 2025. Starting with Calvin Klein, We started 2024 with Calvin's explosive spring campaign featuring Jeremy Ellen White. Driving record visibility and engagement which we continue to build on through the year. In the fourth quarter, we continue to tap into Calvin's iconic DNA to drive global brand heat. Chutting through with mega talent Kendall Jenner, Idris Elba, [indiscernible] and for fall, Greta Lee and Jeremy Ellen White, headlined global campaigns for our iconic underwear and denim. And we elevated the brand in the marketplace, including an opening of a flagship store on the iconic Champs Elysees in Paris.

These impactful moments resonated with consumers driving strong engagement and growth in key product categories such as underwear, denim, outerwear, and knits.

Turning to Tommy Hilfiger. Tommy had a very strong brand building year. And continued to tap into the cultural conversation by leaning into its classic American cool DNA. Amplified by global talent including Stray Kids, Sofia Richie Grange, Dan San Idris, Patrick Schwarzenegger, Lewis Hamilton, and George Russell, to name a few. Tommy cut through major cultural moments, from the Met Gala to Formula One, driving new levels of consumer engagement with a continued focus on fame, art, music, entertainment and sports. We started the year with a return to New York Fashion Week. Built on that momentum with our Staten Island Ferry runway show in the fall, And we ended the year with a capsule collection starring global brand ambassador Jisoo, followed by the launch of our denim focused Spring twenty five campaign with damson and supermodel Abi Champion. Turning to our regional performance. Starting with North America. The team continued to lean into the next level execution of the PVH plus plan. Driving a double digit EBIT margin each quarter. A significant step change in trajectory. Our Calvin and Tommy businesses together delivered EBIT dollars up 40% to an 11.9% EBIT margin for the year, up more than three fifty basis points year over year.

On flat revenues. Demonstrating the progress we are making in building the foundation for long term brand accretive growth in the region. In the fourth quarter, Tommy and Calvin together achieved low single digit revenue growth on a reported basis and mid single digit growth excluding the fifty third week. And again delivered significant improvement in profitability to 12.1%. For both Calvin and Tommy, we drove double digit growth in our full product collection in B2C. We also had strong growth in e commerce, with higher traffic higher average order value and higher conversion supported by the investments we made to elevate the online shopping experience. And for both brands, we continue to partner closely with our key wholesale partners in developing joint growth targets based on elevated product assortments better floor space, and improved in stock rates to drive out performance. Turning to our international business, Europe was a strong proof point of our improved next level PVH plus plan execution. For both the fourth quarter and the full year. For 2024, in the face of a tougher macro, we made the proactive decision to drive higher quality of sales to build our brands for the long term and position us for sustainable brand accretive growth in the region.

Now, one year later, I feel very good about how we delivered. Having solidified the very strong brand position we have in Europe. Built for high quality growth, with our key partners. From our quality of sales actions, which had a planned 5% negative impact 2024 sales in the region declined mid single digits, which was better than what we had initially projected. And importantly, we delivered it with higher gross margins. In the fourth quarter, excluding the fifty third week comparison, overall revenue was flat in euros which included a 3% impact from our quality of sales actions. For the second consecutive quarter, we drove growth in our retail stores reflecting our enhanced in store experience. Building on the significant product improvements over the past year, we continue to drive higher sell through trends from our success successful fall season product supported by stronger core product inventory. This combined with quality of sales directly translated into stronger business with our key partners leading to the sequentially improved wholesale order books. Moving to Asia Pacific. Our team's disciplined PVH plus plan execution across both Calvin and Tommy drove growth for the quarter and the full year in constant currency. For the year, the region delivered low single digit revenue growth in constant currency, including 3% growth in the fourth quarter, excluding the fifty third week last year.

Growth was led by China, which increased 3% in constant currency excluding the fifty third week.

Benefiting from an earlier Lunar New Year from both a calendar and an overall shopping behavior perspective. And we grew in Japan and Korea. The region's ability to ignite and amplify global talent continue to be a key growth driver. Through powerful brand ambassadors including Min Yu for Calvin and Jisoo for Tommy. We captured key local consumer moments through activations that continuously fuel the brand heat in the region. Now, let's switch gears and turn to our overall outlook for 2025. For all the progress of 2024, we're starting 2025 with some obvious headwinds. Our industry is facing uncertainty around The U. S. Consumer demand, and with macro pressures in mind, we have already taken proactive cost and efficiency actions to reflect the current environment. In addition, as you know, PVH has been added to MOFCON's unreliable entity list. Which is unprecedented for a global consumer company. We remain fully committed to serving our Chinese consumers as we have for the last twenty years and we are investing in our growth in China for the long term. We continue to engage with MOFCOMM and we work towards a positive resolution. Our team is of course fully focused on responding to the moment.

While at the same time not losing sight of our longer term commitments. We have two of the most globally iconic and beloved brands, and from the eye of the consumer, have the right to play as part of the most desirable brands in the market, and through the PVH plus plan that's where we are taking them. As we look at the 2025 outlook for Calvin Klein, we kicked off the year with a historic return to runway at New York Fashion Week, which dominated the conversation. Calvin Klein himself for the first time in twenty years sat front row. Alongside with his original muses Kate Moss and Christy Turlington, who wore a custom Calvin Klein collection. And global talent who joined us wore shoppable fall and spring stars. We're excited for Creative Director Veronica Leone's fall twenty five collection, to come to life this year in our flagship stores, and a select premium wholesale partners such as Harvey Nichols, Mytheresa, Pronto, Browns, and Netta Porter.

We have leaned into Calvin's products strength as the number one men's premium underwear brand globally, and took one of our biggest and best selling product franchises, the Cotton Stretch underwear, and brought unprecedented innovation in it.

Building it into the new Icon Cotton Stretch. With an industry leading infinity waistband and improved fit and fabric. We launched this product innovation in our biggest category globally, in D2C and in close collaboration with our key wholesale partners. Together with multi platinum recording artist Bad Bunny. One of the most popular artists of our time. And in the first forty eight hours, we reached over 29,000,000 users on Calvin's Instagram page alone. And added nearly 100,000 followers within the first week of launch. Bringing our brand and our iconic underwear to the consumer. With unprecedented excitement and newness and with direct commercial impact. In 2025, you'll also see Calvin relaunch its women's sportswear business at US wholesale. Following the take back of this license from G3. We kicked this off tapping into the site guides with a campaign featuring actress Lily Collins, that will span the full marketing funnel. We continue to make important progress to align Calvin Klein to one global brand vision to win in all markets. Spring twenty five was the first season where we centralized Calmene's global product capabilities bringing product creation across Europe, Asia and North America to our team in New York.

This was a significant undertaking given the highly fragmented and decentralized legacy model we had before.

As we brought this first season to life, the team had to work through a number of complexities including centralizing disparate systems and processes that existed around the world. This initial transition took longer than we expected. And led to extended product development timelines constrained sourcing and shipping options, and pressured production costs for the season. Which we decided not to pass on to partners or the consumer. As soon as we experienced these challenges, we took action. And go forward we now have a simplified and improved go to market process in place, with a standard global buy approach and we are upgrading our technology capabilities to support it. While the compounding effect of these factors factors created a temporary margin headwind that will be most pronounced in the first half of this year Importantly, we see the improvements already for the fall 25Cs. And we'll be fully through this transition for the [indiscernible] that we are working on right now. Even though the work to set up Calvin engine for global product creation initially was tougher than expected, it was absolutely the right thing to do. And we can already see the strength and benefits coming out of it.

And finally, we will continue to elevate the Calvin brand in the marketplace. And we are excited for this year's launch of our SoHo flagship store here in New York. As well as other store enhancements and key openings as we expand our own and operated footprint of Calvin around the world. For Tommy in 2025, the brand continues to generate strong consumer relevance launching its spring twenty twenty five campaigns featuring Sofia Richie Grange, global K pop sensation Stray Kids, and brand ambassador Patrick Schwarzenegger, who wore Tommy to the highly anticipated global premiere of The White Lotus in Bangkok.

Together with Sofia, we also launched Sofia for Tommy, a women's capsule collection that introduces a new elevated brand expression designed to create the halo for our women's main line. This campaign drove strong engagement among our core demographic and new consumers, through a full funnel storytelling approach. It's also been very well received by our key partners globally. Tommy is also preparing a very special appearance at the gala. And this summer will play an exciting role in the highly anticipated F1 movie. Starring Tommy Hilfiger brand ambassador, Dampson Idris, alongside Brad Pitt. The film where Tommy is a key partner brings the adrenaline fueled world of Formula One to the big screen. Finally, to amplify our summer lifestyle shop in both D2C and with our wholesale partners, Tommy gathered key talent from around the world at a Hilfiger resort themed event in The Caribbean. This event will be captured as a campaign launching in May across our talent's own channels our brand channels on tomy.com and with our partners. The organic social media impact from this event has already pre launched generated 160,000,000 impressions with high engagement rates. Turning to our regions, In Europe, as I mentioned earlier, following our successful quality of sales initiative, we have driven two consecutive quarters of growth in our stores And I'm so pleased to share that our full 2025 order book have returned to growth.

Our spring twenty twenty five order book finalized down low single digits as we expected, an important sequential improvement from fall twenty four and our fall 'twenty five order book took another big step forward and is now up low single digits. With growth across both Tommy and Calvin.

This returned to growth for fall twenty five is a testament to the strong execution from our global and regional teams to improve the overall assortment and drive higher quality of sales across the marketplace. In 2025, we build on this momentum through continued execution of our PVH plus plan. In product, you will see us further strengthen in key product categories, infusing more innovation and elevation of our hero products and together with even stronger product segmentation between channels. Our strong seasonal campaigns would cut through the full marketing [indiscernible] led by aspirational talent, amplified by mid funnel product storytelling, and cut through all the way into our wholesale doors and our elevated D2C execution in stores and online. In North America this year, we expect to continue to drive a double digit EBIT margin through our PVH plus execution. Further unlocking our business across channels. Just like in Europe, our key business drivers in the region will come from continued improvements in product, marketing, and the marketplace execution. And Asia will continue to be a growth engine for us long term. We have a diversified business across the region, where we will continue to build strength this year.

As we look at the year ahead, like others in our industry, are navigating global macro volatility, particularly in North America. Following a strong holiday in January, in February retail traffic trends took a step down. A dynamic affecting the entire sector.

And despite this lower traffic, we're driving higher conversion, a reflection of our execution improvements in the region. Also, starting in February, we began to face incrementally tougher headwinds in China, including a post New Year holiday slowdown, that led to a step down in revenue. The trend has since stabilized at these new lower levels. Importantly, we remain fully committed to serving our Chinese consumers and partners for the long term. Turning to our licensing business. Across both Calvin and Tommy, we have a large and diversified global licensing business. Which is a key competitive advantage. Our licensing partners help bring our vision to life across multiple lifestyle categories. From watches and fragrances to eyewear, and are important to how we drive sustainable profitable growth. Before I give you an update on the multi year transition away from G3, I would like to share some important context on our licensing business overall. 80% of PVH licensing revenues this year are from strong long term brand building partnerships. Where we have full alignment on where we are taking the brands. And where our partners bring unique expertise. A concrete example of this includes how we work with CODI. Where CODI's CEO, Sue Navi, and I have engaged both our teams on something big that's in the works for Calvin Klein fragrance in 2026.

There are many more examples like this, and these go forward licensing partnerships will drive high quality growth for 2025, and for many years to come. When it comes to the G3 transition, the overall contribution to our total global licensing business is relatively small. At only 20% of our expected licensing revenues for 2025. This is following the take back of the North America women's sportswear categories for the wholesale channel. Which represented approximately 20% of the G3 business previously. While still early, our new product is driving significant increase in AURs with consumers describing it as fresh, modern, and elevated. And we are looking forward to building long term sustainable growth of our women's business in North America wholesale. Just as we already do in the rest of the world. Shifting to our guidance. Building on the momentum of 2024 and the benefits arising arising from our ongoing disciplined execution of our PVH plus plan, we are positive on our prospects for 2025. While recognizing the challenges of the moment. We expect revenue to be flat to up slightly on both the reported and constant currency basis. We expect EBIT margins to also be flat to up slightly.

With a stronger second half of the year having the benefit of both the strength in the European order books as well as more of our structural cost efficiencies having full impact. We will also make meaningful increases in our capital return to shareholders. With accelerated stock buybacks in 2025. These actions will help us take advantage of the current valuations while accelerating our EPS growth even in a weaker macro backdrop. And in 2025, we will be well positioned to deliver another year of record non GAAP EPS. In conclusion, our vision and our long term commitment are to build Calvin Klein and Tommy Hilfiger into the most desirable life brands in the world. And make PVH one of the highest performing brand groups in our sector. This is the heart of the PVH plus plan. 2024 was a year of significant progress in both brands across all regions. In 2025, it's all about executing at pace, building on this momentum, and I'm so proud of our teams and partners and we are full steam ahead. And with that, I'll turn the call over to Saq. Thanks, Stephane, and good morning.

My comments are based on non GAAP results and are reconciled in our press release. As Stephane discussed, we are pleased with our fourth quarter and full year financial results driven by the strength of our two iconic global brands and disciplined execution of the PVH plus plan.

For the fourth quarter, revenue and EPS came in slightly ahead of guidance, with operating margin in line with expectations. Importantly, for the full year 2024, we deliver on the commitments we made at the start of the year for both revenue and profit. We achieved a record high 59.4% gross margin this year, and delivered record high non GAAP earnings per share of $11.74 up 10% versus 2023 and exceeding our initial start of year guidance range $10.75 to $11 and we delivered this in spite of an increasingly challenging consumer backdrop in China and North America that began around mid year. In North America, for Calvin Klein and Tommy Hilfiger combined, we delivered an increase in EBIT of over 40% and drove over three fifty basis points of operating margin expansion. In Europe, we ended the year with two consecutive quarters of DTC store revenue growth and confirmed positive fall twenty five order books. In Asia Pacific, we delivered yet another year of revenue growth in constant currency in our most profitable region, on top of two consecutive years of double digit constant currency growth. And across the world, we made significant progress in the next phase of growth driver five of the PVH plus plan, to simplify our operating model and drive SG and A efficiencies.

Additionally, we delivered strong cash flow again this year with free cash flow of nearly $600,000,000 enabling us to return $500,000,000 to shareholders during the year through the repurchase of 4,700,000.0 shares of common stock. I would now discuss our 2024 results in more detail, then move on to our outlook for 2025. Revenue for the fourth quarter was down 2% on a constant currency basis, including a 3% decline due to the fifty third week in twenty twenty three, and a 1% decline due to the sale of the Heritage intimates business. Excluding these impacts, revenue on a constant currency basis was up 2%, with growth in both DTC and wholesale, an important milestone in our plan to return to growth during 2025. On a reported basis, revenue through the quarter was down 5%. From a regional perspective, fourth quarter revenue for our international businesses was down 3% on a constant currency basis, including a 3% decline from the fifty third week in twenty twenty three. Excluding the impact of the fifty third week, our Asia Pacific business was up 3% on a constant currency basis, benefiting from the earlier Lunar New Year as well as growth in Japan and Korea.

Sales for Asia Pacific business were down 4% on a reported basis and down 1% in constant currency.

In our European business, sales in Euros were flat compared to last year excluding the impact of the fifty third week. Low single digit growth in our retail stores, offset a planned decrease in wholesale. Sales for our European business were down 7% on a reported basis, and down 4% in euros. In North America, excluding the impact of the fifty third week, revenue for our Tommy Hilfiger and Calvin Klein businesses combined increased 4% versus last year. Reflecting the wholesale timing shift from the third quarter into the fourth quarter that I discussed last quarter. DTC was flat compared to last year, excluding the fifty third week. On a reported basis, revenue was up 1%. From an overall PVH channel perspective, I'll first talk about our DTC revenue excluding the 4% negative impact from the fifty third week in 2023.

Overall, direct to consumer revenue was up 2% on a constant currency basis, and better than we communicated at the start of the quarter primarily driven by the strong holiday season. Sales in our retail stores were up 3% on a constant currency basis. And in our owned and operated e commerce business, sales were down 4% on a constant currency basis as strong growth in North America was more than offset by our planned strategic reduction of sales in Europe to drive overall higher quality of sales in the region. Including the impact of the fifty third week, DTC sales overall were down 5% on a reported basis and down 2% in constant currency. Within wholesale, we remain focused on strong quality of sales and winning with our key wholesale partners. Total wholesale revenue was down 2% on a constant currency basis, including a 2% decline from the sale of the Heritage intimates business. The benefit from the shift in timing of wholesale shipments in North America was largely offset by the planned reduction in Europe. On a reported basis, wholesale revenue was down 5% versus last year. Turning to our global brands, Calvin Klein revenues were up 1% on a constant currency basis and down 2% on a reported basis including a benefit from the shift in timing of North America wholesale shipments.

Tommy Hilfiger revenues were down 3% on a constant currency basis and down 5% on a reported basis, with Tommy more impacted by our quality of sales initiative in Europe in 2024. In the fourth quarter, we delivered gross margin of 58.2%, down two ten basis points compared to a record high in 4Q last year. The decrease was driven by three main factors. A moderately more promotional environment than last year, particularly in North America an increase in freight costs primarily due to Red Sea disruptions and increased premium freights, and the mix of wholesale shipments in North America, which negatively impacted our gross margin in the quarter but did not impact our overall profitability. Inventory at quarter end was up 6% compared to 2023, due to an investment in best selling core product categories and overly lean inventory levels last year. As discussed last quarter, we chose to strategically increase inventory in our most essential products to support our goal of having these timeless items in stock at a target of 95% of the time. Importantly, the vast majority of inventory is current season in core. SG and A expense as a percent of revenue was 47.9 was percent, a 30 basis point improvement versus last year.

Our Growth Driver five cost savings actions and other expense efficiencies drove a nearly 100 basis point improvement which more than offset the impact from the deleverage of expenses due to the fifty third week in twenty twenty three. EBIT for the quarter was $244,000,000 and operating margin was 10.3%. Earnings per share was $3.27 and our tax rate for the quarter was 21.4%. For the full year, revenue was down 6% on a reported and down 5% in constant currency, including a 2% decline due to the sale of the Heritage intimates business. And a 1% decline due to the fifty third week in twenty twenty three. EBIT margin was 10% and in line with last year with record high gross margin offsetting the impact from the deleveraging of expenses on lower sales. And we delivered record high non GAAP earnings per share of $11.74 And now moving on to our outlook. In 2025, we will build on the progress we made in 2024 with a continued focus on driving double digit operating margins in North America, returning to growth and growing profitability in Europe, and building on the strong growth over the last three years in Asia Pacific.

At the same time, we remain cautious as we face new external headwinds that have emerged beginning in early February. First, softness in the consumer backdrop in North America, were following a strong holiday season retail traffic across the industry took a significant step backwards. And second, a noticeable decline in revenue in China.

Both of these factors partially stabilized in March, but at levels below 2024, a trend we are forecasting will continue through the rest of 2025. Additionally, as Stephane discussed, Calvin Klein product delays are expected to result in temporary margin headwinds, particularly in the first half of the year. As we lean into those specific headwinds, we remain laser focused on driving disciplined execution of the PVH plus plan. We expect to build on our financial performance as the year progresses, driving sequential improvements in our European order books, and increasing SG and A efficiencies quarter by quarter through our growth driver five actions. While improving margins in our Calvin Klein business as we work through that transition. In the first quarter, we are projecting revenue to be flat to down 2% on a reported basis and flat to down 1% on a constant currency basis compared to 2024. In Europe, our investment in quality of sales last year continues to pay off, as we expect revenue to be higher than last year by mid single digits in euros with growth in DTC and wholesale. In North America, we're planning revenue to be approximately flat to last year, with growth in wholesale offset by lower DTC sales.

And in Asia Pacific, we expect revenue to be lower by low double digits due to a combination of an early Lunar New Year this year and headwinds in China. We are projecting first quarter gross margin to decline approximately two fifty basis points driven by an increase in freight costs and incremental discounts due to the Calvin Klein product delays and the gross margin differential as we transition the first significant categories in North America wholesale from a licensed to an in house wholesale business model. Additionally, our mix of wholesale revenue is higher in the first quarter than last year, which has a negative impact on gross margin, but not on our overall profitability. We expect gross margin compared to last year to improve sequentially each [indiscernible] as we are making steady progress to stabilize Calvin Klein product delays we expect our channel mix to normalize throughout the year. We are actively working to mitigate these impacts through disciplined cost management and expect SG and A expenses as a percentage of revenue in the first quarter to approximately 100 basis points. In total, we are projecting our first quarter operating margin to be approximately 8% to 8.5% down 150 to 200 basis points compared to last year.

First quarter earnings per share is projected to be $2.1 to $2.25 compared to $2.45 in the prior year. Our tax rate for the first quarter is estimated at approximately 18% and interest expense is projected to be approximately $20,000,000 And now moving to the full year. Overall, revenue is projected to be flat to up slightly on both a reported and constant currency basis compared to 2024. We expect our full year operating margin will be flat to up slightly compared to 10% in 2024 and are projecting another record high non GAAP earnings per share in the range of $12.4 to $12.75 up. 9% at the top end. Our improved EPS outlook reflects a significant benefit from our share repurchases in 2024, and $500,000,000 in planned share repurchases in 2025. We are excited to announce we will deliver these repurchases repurchases by entering in an accelerated share repurchase program in April. From a regional perspective, Europe is planned to return to growth with revenue of low single digits in euros and a across both DTC and wholesale, with sequential improvement in order books including confirmed growth in fall twenty twenty five. In The Americas, we are planning revenue up mid single digits versus 2024, with low teens growth in wholesale powered by the first significant women's wholesale transition to in house.

Partially offset by a low single digit decline in DTC due to the softness in the consumer backdrop we discussed earlier. In Asia Pacific, due to the headwinds in China that I mentioned earlier, we are cautiously planning Asia Pacific revenue down mid single digits in constant currency. China is planned down low double digits but we are still planning low single digit growth in the rest of the region. And in our important licensing business, as Stephan mentioned earlier, we expect to deliver high quality growth in the 80% of our business outside of our relationship with G III. Gross margin for the year is expected to be down approximately 100 basis points compared to 2024, of which approximately half is due to the impact of the G3 transition in North America from license to wholesale, and the rest largely explained by the temporary impacts from centralizing the Calvin Klein Global Product Kitchen. We expect that Calvin Klein product delays to primarily impact first half gross margins leading to lower gross margins in the first half and improving gross margins in the second half. We expect SG and A expense to be lower in 2025 compared to 2024, resulting in a decrease of approximately 100 basis points as a percentage of revenue.

Last year, we announced that we are embarking on the next phase of growth driver five of the PVH plus plan, to drive efficiencies and improve our ways of working. We have laid the groundwork for these initiatives and we expect to drive significant cost savings in 2025, on top of the reductions we already realized in 2024 with savings showing up more powerfully as we progress through the year. To highlight a couple of these actions, In North America, we continue to make good progress streamlining our logistics operations to drive efficiencies and cost savings. Including consolidating into two warehouses and in housing our e commerce distribution. This work will increase our U. Warehouse capacity utilization from a little above 50% to approximately 85% to 90% and significantly decreased North America distribution expenses. And in IT, in the last sixty days, have signed with some of the world's largest and most innovative technology companies, that will enable consolidation of our historically decentralized and fragmented technology stack into a single platform of global systems, and deliver tens of millions of dollars of annual savings once implemented. These are important examples of the actions in growth driver five of the PVH plus plan.

As we shared previously, we expect the total of our Growth Driver five actions to deliver 200 to 300 basis points of operating margin expansion over time. As a result of this work, we expect our full year operating margin will be flat to up slightly compared to 10% in 2024. While operating margins will be lower than last year early in the year, we'll see sequential improvement each quarter throughout 2025 based on the actions that are well underway. And we expect to exit 2025 and enter 2026 with significantly higher operating margins than 2024. Interest expense is projected to increase to approximately $85,000,000 compared to $67,000,000 in 2024, to fund the accelerated share repurchase agreements. And our tax rate for 2025 is estimated at approximately 22% in line with our long term commitment of low 20s percent. We have one other important change to announce. With the appointment of Fredrik Olson as CEO EMEA, and the promotion of Donald Kohler to CEO for all of The Americas, we now have our leadership team and operating model firmly in place to drive the PVH plus plan forward. As a result of that, beginning in 2025, we will be evolving our reported segments to be one, Americas, two, Europe, The Middle East, Africa three, Asia Pacific and four, a new standalone licensing segment.

Additionally, we'll be providing revenue data for each the Calvin Klein and Tommy Hilfiger brands. Beyond aligning to our internal operating model, we also believe this will provide increased transparency to the dimensions of the business most relevant to understanding our financial performance. We plan to share recast quarterly and annual segment data for 2023 and 2024 on a Form eight ks with our first quarter earnings release. Before we open up for questions, I want to echo Stephane's sentiments earlier thanking our associates all around the world for leaning into the PVH plus plan and delivering our annual financial commitments in 2024, in spite of a choppy environment. Looking forward, we continue to work relentlessly to drive results in all aspects of our global business. While we remain agile to new developments, we have a clear plan in place to deliver continuous, sequential improvement throughout the year. Our goals are set, the team is focused, and through the PVH plus plan, we are making progress to deliver on all of our commitments to our customers, associates and shareholders.

And with that operator, we would like to open it up to questions.

Thank you very much. We'll take our first question from Jay Sole with UBS. Please go ahead.

Great. Thank you so much. My question is about Europe. Stephane, can you talk about what you've learned from the quality of sales initiative? And how does the PVH plus plan elevated level of execution that you've shown? You know, how is that really impacting the business? Can you give us a little bit more color on that too? Thank you. Absolutely. Good morning, Jay, and thank you for your question. Europe is such a great story of progress and how we connect PVH plus to high quality growth to drive sustainable high quality growth So if we go back to how we started '24, we saw a tougher consumer backdrop in Europe. And we took three very focused quality of sales actions. We stopped third party sales of our brands on digital platforms, platforms. We reduced the number of digital platforms we sold to. We improved inventory in relation to sales overall. So those were the three actions we took. And then in parallel, we leaned into the PVH plus execution in strengthening product relevance the consumer engagement, our marketing, the marketplace execution across both Tommy and Calvin. And you can really see the effect of the three qualitative sales actions with the improvements of the PVH plus execution next level in Tommy and Calvin in Calvin, you can see that indeed to see Q3 and Q4 coming back to high quality growth.

So high quality growth, stronger gross margin in D2C, and then you see season by season how we strengthen forward looking wholesale order books. Really excited and feeling great job by the team to then translate that into growth for fall twenty twenty five low single digit growth. And this is our team in Europe doing a great job in connecting putting more and more relevance and strength into the brands. Really strong market team execution, and really close partnership with our partners. So also connecting back to how we started '25, and I mentioned in my prepared remarks how we pulled together 300 global most important partners, many of them from Europe, And I was able to engage with many of them one on one and really seeing and hearing that they see the progress as well and that that translates into growth.

Yes. Hi, Jay. Just to put some financials behind that. As Stephan mentioned, we expect to return to growth And importantly, we expect Europe profitability in euros to also grow by low double percent this year. So it really does flow through the full P and L. Got it. Sounds great. Thank you so much.

Thank you. Our next question comes from Michael Binetti with Evercore ISI. Please go ahead.

Thanks taking my question. And Stephane, it's really nice to see the Europe order books turn positive. I know talked a lot through that journey. I know it took a lot of work. Very nice to see you guys worked hard on it. A bit more of a financial question, I guess, me. Zach as you look at the you gave us a big basket of margin drivers here, a fairly complicated year. As you look out past this year, how should we think about the multiyear, the 2026 margin profile? You have SG and A savings coming in, it sounds like mostly in the back half of the year. I think the run rate was two to 300 basis points annualized. You have about 50 basis points of CK disruption. From product this year. Is there any reason that doesn't just mechanically come back in 2026? And then also so it seems like there's a good basket of margin drivers as you look past this year into 2026. Are there any new headwinds that come online next year that we should be thinking about or any even tailwinds that I didn't mention here yet?

All right. First, thank you, Michael, for the call out on Europe. Credit goes to the teams and our partners. Great job by them. Coming back to your question now on the value drivers, so let me just start from a business perspective and then Zach will take you through more in detail We have big positive value drivers in the second half. That are not dependent on a change in the trajectory of the consumer for '25. So the first is European order books that coming back to growth in fall twenty twenty five. The second is that a big part of our cost efficiency work that we have been on now for a while is taking full hold in the back half. And then you see the Calvin Klein margin, as Sack mentioned, improving already in the back half. So you'll see us the year at a leaner, more profitable company. And then to the ASR accelerated share repurchase, you will see that we do that with a smaller share count. So what this means is that we'll come into 2020 and we're already working and planning for 2026 to to come into '26 with a step up in profit levels.

Then through the PVH plus execution, we keep building on that. Thank you, Stefan. I think what's most important Stephane has said is the actions that we're planning throughout the year as we progress from the first quarter to the fourth quarter are really built on things in our control. Stefan laid out what those pieces are. And so that work is either already confirmed for things like the European order books or well underway around much of the cost which is really probably the most powerful driver of improvement from the start of the year. So we expect fourth quarter operating margin to be much higher than 2024. And that's really the new starting point as we enter 2026 because the building blocks of stuff on laid out are really foundation building that raise the water level that we would then move forward into 2026 from there.

Okay, thanks a lot guys. Appreciate your help.

We'll next go to Dana Telsey with Telsey Group. Please go ahead. Hi, good morning everyone and nice to see the progress. Congratulations.

As you think about the connection, Stephane, between product and engagement, there's a lot going on in each brand. As you think of the timing of it, how do you think of it rolling out this year? How do you think of the different global regions And what does marketing spend look like to to drive this engagement? Thank you.

Yeah, thank you Dana. Know we have been very focused on systematic and repeatable approach to bring products strength, consumer engagement, marketing strength and then translating that to impact with the partners and our consumers. But sometimes it's better to describe this with concrete examples. So what you see right now in Calvin Klein with our underwear, cut through underwear campaign with Bad Bunny is really putting these pieces together. So what you will see is season every season going forward. You will see a cut through campaign from Klein and a cut through campaign from Tommy Hilfiger. So going back to the underwear Calvin Klein Bad Bunny, what we are doing there is we are leaning into our key growth categories and the most important category for Calvin Klein underwear. We're leaning into the most important hero product the Cottone Stretch, and we are putting a lot of innovation into that hero product, creating a new hero product with the most innovation in the industry. And then we build that into a cut through campaign and we collaborate with somebody like Bad Bunny, is one of the most streamed artists, one of the most popular acclaimed artists right now.

And then you see unlocking the growth category innovation in the hero product, the talent amplification from Bad Bunny, Then you see it in the impact in the doors and stores. Yes, you see it in the social media impact of reaching almost 30,000,000 on Calvin's Instagram page, the number of views tens of millions of views within the first few days on the Bad Bunny video. But then you see that translating into traffic [indiscernible] stores and e commerce sales of the Icon Cotton Stretch in many of our channels was up 20% to our previous Cotton Stretch products. So that's an example for Calvin Klein. On Tommy, you see the Tommy season by season bringing the Tommy lifestyle of classic American cool made current come to life. Tommy and the team just came back from The Caribbean having invited a number of really important talent partners to the brand, Patrick Schwarzenegger with a White Lotus connection, Madeline Klein, avi champion, to a Hilfiger resort themed event. And this will support our summer campaign in our wholesale doors, in our stores and it launches in May, but it covers the whole summer period. But already pre launch, we have 160,000,000, as I social media posts just from the talent posting while they were part of creating this event.

So what you will see going forward is season by season you will see cut through cut through campaign by cut through campaign connecting the improved product strength with improved marketing, with improved partner and in store execution. And then we'll be relentless of just keep improving.

And then the marketing spend?

The marketing spend, we continue to invest in growth, and marketing is one of the top priorities there.

Thank you.

Thanks, Dana.

Thank you. And next we'll go to Brook Roach with Goldman Sachs. Please go ahead. Good morning and thank you for taking my question. I was hoping you could elaborate on your relationship with your wholesale partners in North America as you execute the PVH plus plan What are your conversations trending like today? And what's your outlook for growing in your core and with the business that was just brought back from g three? Thank you.

Yes, so thanks Brooke. So very strong partnerships with our key wholesale partners. In North America and across the world. But specifically in North America, what the team is doing a really good job on is focusing in on each of the brands and driving product strength, product relevance in optimized spaces with the right marketing support. So Calvin Klein has a great milestone with Macy's this morning. Herald Square for those of you who are in New York today, Macy's flagship all the windows are taken over by Calvin Klein and the launch of Calvin Klein Women's. And marketing support by Lily Collins resonated really well with the Macy's consumer And you see early first couple of weeks, we are having the collection, putting the shops together, But that's what you will see from us, that consistency in driving product relevance, brand relevance, differentiation, to that North America wholesale consumer. So very excited about seeing the progress season after season.

Great, thanks so much.

We'll next go to Matthew Boss with JPMorgan. Please go ahead.

Great, thanks. So Stephane, could you elaborate on the recent change you've seen in North America just how you're planning inventory across DTC at both Calvin and Tommy over the course of the year? And then Zach, if you could just walk through drivers of first quarter gross margin, the decline and just the cadence of gross margin beyond the first quarter to consider?

Yes. Thanks, Matt. So let me start by the North America backdrop. And as we mentioned, we and looks like most everyone in the sector saw a step back from the consumer in February. So there is clearly a challenged backdrop We saw March slightly improving, stabilizing trends but as Easter is three weeks later this year than last year, is an important consumer moment in North America. We have to look at March and April together. But our outlook is reflecting the current trends that we see. And then our focus is to be fully on what we can control driving strength in the product the marketing, the marketplace execution. On the inventory side, we feel really good about our inventory levels and the composition. Because when you look at inventory we have right now, it's more fresh and less aged than same time last year, so stop freshness is really important to us as we become more data and demand driven. Then we have better investments coming into 2025 in core Essentials Hero products. One example of that is the Icon Cotton Stretch the new hero product with the Bad Bunny cut through campaign. And then we have inventory backing up transition from G3 on the women's sportswear.

So all in all, really good about that. Yes. And hi, Matt. For gross margin for the first quarter for the year, we're indicated down around two fifty basis points If you think about the drivers that's impacted us in the fourth quarter, you've got an increased promotional environment, especially in The U. S. We've got increased freight costs And then obviously, we've got some wholesale mix that's driving gross margin that doesn't have any impact on profitability. I think then as come into the first quarter, the only new item in there is really the intake of the G3 women's sportswear. That has around a 50 basis point negative margin and gross margin as we move from a licensing business model into a wholesale business model. So the full year we're expecting to be down around 100 basis points. That's around 50 basis points tied to the G3 intake we just talked about and the rest really explained by the impacts of some of the CK product delays, which will primarily affect the first half. So we think about that steady progression from that down to 50 landing to a full year 100. The wholesale mix will normalize We'll work on the freight impacts and that begins to normalize.

And we end the year with a number much closer to something really related tied to just the G3 business model transition.

We'll next go to our last question with John Kiernan with TD Cowen. Please go ahead.

Good morning. It's Krista Zuber on for John. Thank you taking our questions. Just one follow-up on the inventory You've made such tremendous inroads in cleaning up the channels. The focus on the disciplines, SKU planning and the rationalization. How should we think about given some of the product puts and takes that are happening this year with the transition from the license How should we think about the opportunity to accelerate your inventory turns given two years of what now appears to be a stabilization in your turns? Thank you.

Thanks, Christine. The way we think about it and the way we work with him and inventory is to season by season get better in the planning and the buying of the assortment, better with planning and buying of the inventory connecting to that assortment. So better and better optimize inventory to demand. And then we'll continue to learn. But long term, the goal is to continue to optimize inventory to demand. And then sometimes we learn when we go too lean then we have to take a step back in specific areas of the assortment like the number out of stock or a new product launch. But long term, you'll see that we'll continue to become more data and demand driven and step by step better and better optimize inventory to demand. Given that that was the last question, just want to thank you for being on this journey with us. We are in the middle of unlocking the full potential of Calvin Klein and Tommy Hilfiger, two of the most globally iconic and beloved brands. And 2024, was a year of significant progress in both brands or regions '25 you'll see us leaning into the next level execution at pace and building on the execution momentum of 2024.

And I'm really very proud of our team's work, our partners and we are full steam ahead. So looking forward to connecting again a quarter from now. Thank you.

You. And ladies and gentlemen, that does conclude today's program. Thank you for your participation. You may disconnect at any time.