PVH updates outlook, announces strategic changes to Calvin Klein
PVH Corp is predicting that its fourth-quarter and full year 2018 revenue will surpass expectations, reaching at least $2.40 billion and $9.57 billion, respectively.
On that note, the apparel maker behind iconic U.S. brands like Calvin Klein and Tommy Hilfiger, announced on Thursday that it would raise its fourth-quarter and full year outlook, as well as sharing a $120-million restructuring plan for its Calvin Klein business.
The strategic changes to Calvin Klein, which is PVH’s second-biggest sales segment after Tommy Hilfiger, will see the Calvin Klein 205W39NYC business relaunch under a new name, design approach and creative direction. As a result, the company announced that its 654 Madison Avenue store will close this spring.
Other changes will include the adoption of a newly formed 'Consumer Marketing Organization' (CMO), while the unit will also reorganize its North American division including joining the operations of its men’s Calvin Klein Sportswear and Jeans business.
The company said it expects to incur pre-tax costs of approximately $120 million over the next 12 months due to the Calvin Klein restructuring.
“These strategic initiatives will enable us to run a more modern, dynamic and effective business, as well as allow us to reinvest in the brand,” said Calvin Klein CEO, Steve Shiffman.
“Our industry is witnessing a historic transformation in consumer behavior which presents a significant growth opportunity as we look to grow the brand to $12 billion 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.”
The Calvin Klein brand struggled in its last quarter, pulling the group’s full revenue down and leading it to miss Wall Street estimates for the first time in at least two years.
Its most recent relaunched Calvin Klein 205W39NYC includes ready-to-wear luxury clothing such as oversized sweaters, tie-dyed dresses and plaid trousers, but seemed to fail to pull shoppers in.
Last quarter, PVH’s Chief Executive Officer Emanuel Chirico explained that some of the relaunched Calvin Klein Jeans “was too elevated” leading it to not sell as planned.
“We are disappointed by the lack of return on our investments in our Calvin Klein 205W39NYC halo business,” Chirico said.
The company equally tried to reach millenials by teaming up with top influencers like singer Justin Beiber and collaborated with Amazon.com Inc on a set of pop-up stores designed for shoppers to try on the jeans and order them through the retailer’s online app.
Belgian fashion designer Raf Simons, considered one of the most talented of his generation, has since left Calvin Klein as chief creative officer. He joined the brand less than three years ago, in August 2016 after four years at Dior.
No details have been given as to who will replace him or what he will do after his departure.
Looking ahead, PHV now expects its earnings per share on for the fourth quarter 2018 to be at least $1.75, which is above the high end of its guidance range by $0.15 per share.
Meanwhile, the company expects its full year 2018 earnings per share to be at least $9.50, compared to its previous forecast of $9.33 to $9.35.
“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,” said Chirico.
Earlier this week, PVH was also named a new strategic partner of Global Fashion Agenda.
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