Pvh Corp. · NYSE:PVH
Pvh — Investor Presentation (November 2016)
48 slides from Pvh's investor presentation, November 2016
Slide 1: Investor Update Winter 2016
INVESTOR UPDATE WINTER 2016 PVH
Slide 2: Safe Harbor
SAFE HARBOR We (PVH Corp.) obtained or created the market and competitive position data used throughout this presentation from research, surveys or studies conducted by third parties (including, with respect to the U.S. department and chain store rankings, the NPD Group/POS Tracking Service), inform
Slide 3: PVH by the Numbers
PVH BY THE NUMBERS PVH HISTORY ESTABLISHED IN 30,000+ PVH FOUNDATION 1881 (THE COMPANY’S PHILANTHROPIC DIVISION) HAS BEEN IN EXISTENCE FOR ASSOCIATES GLOBALLY 30+ YEARS 700,000+ OUR 2015 REPORTED REVENUES WERE OVER PEOPLE REACHED THROUGH 45% REVENUES GENERATED OUTSIDE OF $8.0 THE U.S. OUR SUPPLY CHA
Slide 4: We Live by Our Core Values
WE LIVE BY OUR CORE VALUES We live by our core values – which embody who we are, guide our decisions and inspire us 4
Slide 5: Corporate Responsibility Is Central to How We Conduct Business
CORPORATE RESPONSIBILITY (CR) IS CENTRAL TO HOW WE CONDUCT BUSINESS We aim to drive positive impacts throughout our value chain by EMPOWERING PEOPLE, PRESERVING THE ENVIRONMENT and SUPPORTING THE COMMUNITIES WHERE WE WORK AND LIVE. 5
Slide 6: Three Distinct Businesses, All Positioned for Global Growth
THREE DISTINCT BUSINESSES, ALL POSITIONED FOR GLOBAL GROWTH 2015 2015 2015 Global Retail Sales: $8.2 BN Global Retail Sales: $6.5 BN Global Retail Sales: $3.6 BN Revenues: $2.9 BN Revenues: $3.4 BN Revenues: $1.7 BN EBIT Margin*: 14.9% EBIT Margin*: 11.9% EBIT Margin*: 7.1% Constant Currency EBIT Co
Slide 7: PVH Is a Global Leader in the Apparel Industry
PVH IS A GLOBAL LEADER IN THE APPAREL INDUSTRY PVH is one of the largest global apparel companies with over $8 billion in revenues $12.4 2015 Revenue ($ in billions) $8.0 $7.4 $4.7 $4.5 $4.2 $3.8 $3.4 $3.1 $2.3 $2.2 $0.3 Source: Factset. 7
Slide 8: Calvin Klein and Tommy Hilfiger Are Key Drivers to Our Business
CALVIN KLEIN AND TOMMY HILFIGER ARE KEY DRIVERS TO OUR BUSINESS Calvin Klein & Tommy Hilfiger currently account for ~80% of PVH’s revenues and ~90% of PVH’s EBIT (1) Total 13% EBIT(1) by Revenue by 22% Business Business (2015) (2015) 42% 42% 45% 36% TOMMY HILFIGER CALVIN KLEIN HERITAGE BRANDS (1) Fi
Slide 9: PVH Has a Significant Global Presence
PVH HAS A SIGNIFICANT GLOBAL PRESENCE Approximately 45% of PVH’s revenues are generated outside the U.S. and nearly 2/3 of PVH’s EBIT is (1) subject to foreign exchange risk 9% 20% Total Revenue by EBIT(1) by Region (2015) Region (2015) 36% 27% 55% 33% 9% 11% U.S. Americas (excluding U.S.) Europe As
Slide 10: PVH Global Store Counts by Region
PVH GLOBAL STORE COUNTS BY REGION (AS OF OCTOBER 30, 2016) EUROPE (2) TOTAL STORES: ~1,625 Tommy Hilfiger: ~815 NORTH Calvin Klein: ~810 AMERICA (1) TOTAL STORES: ~625 Tommy Hilfiger: ~245 Calvin Klein: ~210 ASIA PACIFIC (6) Van Heusen: ~170 TOTAL STORES: ~2,425 LATIN Tommy Hilfiger: ~570 Calvin Kle
Slide 11: A Rich History of Sales and Earnings Growth
A RICH HISTORY OF SALES AND EARNINGS GROWTH Revenue & EPS Growth (2003 – 2015) $9,000 $7.05 $8.00 $7.30 ($8.43 Constant $7.03 Currency) $8,000 $6.58 $8,241 $7.00 $8,216 $8,020 $7,000 $6.00 $5.44 $6,000 $5.00 $4.31 $6,043 $5,891 $ Millions $5,000 $4.00 $3.21 $2.99 $4,637 $2.79 $4,000 $2.62 $3.00 $1.8
Slide 12: PVH Key Initiatives for 2016 and Beyond
PVH KEY INITIATIVES FOR 2016 AND BEYOND 12
Slide 13: Tommy Hilfiger
TOMMY ms HILFIGER
Slide 14: Tommy Hilfiger — Brand Overview
TOMMY HILFIGER — BRAND OVERVIEW 2015 REGIONAL BREAKOUT GLOBAL RETAIL SALES: REPORTED REVENUES: $6.5 BN $3.4 BN 5% 10% 5% 48% 46% 46% 39% 47% North America(1) Latin America(2) Asia Pacific(3) Europe(4) One of the world’s leading DESIGNER LIFESTYLE Brands Celebrates the essence of CLASSIC AMERICAN COO
Slide 15: Tommy Hilfiger — Brand Overview
TOMMY HILFIGER — BRAND OVERVIEW Hilfiger Collection: The pinnacle of Tommy Hilfiger Tailored: Targeting Tommy Hilfiger: Our core line, Hilfiger Denim: This line is the Tommy Hilfiger product 25 to 40-year-olds, this line which embodies the brand’s inspired by American denim offerings, blending the b
Slide 16: Tommy Hilfiger — Regional Distribution of Our Brand Portfolio
TOMMY HILFIGER — REGIONAL DISTRIBUTION OF OUR BRAND PORTFOLIO North America • • • • Europe • • • • Asia Pacific • • • • Latin America • • • 16
Slide 17: Tommy Hilfiger — Growth Opportunities
TOMMY HILFIGER – GROWTH OPPORTUNITIES PRODUCTS CHANNELS MARKETS GROWTH REGIONS WOMENSWEAR MEN’S TAILORED RETAIL ASIA PACIFIC LATIN AMERICA DIGITAL UNDERWEAR ACCESSORIES WHOLESALE COMMERCE 17
Slide 18: Tommy Hilfiger — Global Marketing & Communications
TOMMY HILFIGER — GLOBAL MARKETING & COMMUNICATIONS OBJECTIVE: Maximize investments to gain market share with existing consumers and attract & convert new consumers INVESTMENT: $150 million in global annual marketing spend FOCUS: Global Growth Categories Women’s apparel & accessories • Supermodel Gig
Slide 19: Tommy Hilfiger — Business Overview & Financials
TOMMY HILFIGER — BUSINESS OVERVIEW & FINANCIALS Tommy Hilfiger Business Summary 2015 Reported Revenues: $3.4 BN – International Revenues: ~$1.8 BN – North America Revenues: ~$1.6 BN 2015 Reported EBIT Margin(1): 11.9% 2015 Constant Currency EBIT Margin(1): 12.8% (1) EBIT margin excludes certain amou
Slide 20: Tommy Hilfiger International — Overview
TOMMY HILFIGER INTERNATIONAL — OVERVIEW • Healthy brand with premium positioning overseas • Tommy Hilfiger International EBIT margins reached peak levels of 13.9%(1) on a constant currency basis in 2015 2015 41% EUROPE 59% • Marketing efforts focused on digital and social media REVENUES WHOLESALE BY
Slide 21: Tommy Hilfiger North America — Overview
TOMMY HILFIGER NORTH AMERICA — OVERVIEW 2015 • Continued wholesale sales growth through key partners: 30% • U.S. – Exclusive partnership with Macy’s for sportswear; 26% opportunity to expand categories outside of sportswear REVENUES 70% through other wholesale partners BY DISTRIBUTION WHOLESALE MODE
Slide 22: Tommy Hilfiger Licensed Businesses
TOMMY HILFIGER LICENSED BUSINESSES OVER TIME, WE LOOK TO ASSUME MORE DIRECT CONTROL OVER VARIOUS LICENSED REGIONS ASIA PACIFIC LATIN AMERICA & MEXICO RETAIL SALES: ~$325MM (licensed businesses only) RETAIL SALES: ~$500MM JOINT VENTURE INDIA AUSTRALIA BRAZIL MEXICO (Formed joint venture on 11/30/16)
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Slide 24: Calvin Klein — Brand Overview
CALVIN KLEIN — BRAND OVERVIEW 2015 REGIONAL BREAKOUT GLOBAL RETAIL SALES: REPORTED REVENUES: $8.2 BN $2.9 BN 3% 18% 4% 21% 60% 19% 56% 19% 6% 4% 19% 19% North America(1) Latin America(2) Asia Pacific(3) Europe(4) 52% ONE OF THE BEST KNOWN DESIGNER NAMES IN THE WORLD. BOLD, PROGRESSIVE IDEALS. SEDUCT
Slide 25: Calvin Klein — Brand Overview
CALVIN KLEIN — BRAND OVERVIEW CALVIN KLEIN COLLECTION offers halo and inspiration to all levels of the brand, which are leveraged across multiple products, channels and price points. CALVIN KLEIN reflects the complete lifestyle of Calvin Klein offering fashion that is every bit as exciting as it is
Slide 26: Calvin Klein — Regional Distribution of Our Brand Portfolio
CALVIN KLEIN — REGIONAL DISTRIBUTION OF OUR BRAND PORTFOLIO Calvin Klein Calvin Klein Calvin Klein Calvin Klein Calvin Klein Calvin Klein Collection Platinum Jeans Underwear Performance North America • • • • • Europe • • • • • (Outlet) Asia Pacific (including Joint Ventures) • • • • • • (Australia &
Slide 27: Calvin Klein — Growth Opportunities
CALVIN KLEIN – GROWTH OPPORTUNITIES PRODUCTS CHANNELS MARKETS GROWTH REGIONS EUROPE DIGITAL ASIA PACIFIC JEANSWEAR UNDERWEAR STORES COMMERCE LATIN AMERICA SPORTSWEAR ACCESSORIES TRAVEL RETAIL SHOPS IN SHOPS 27
Slide 28: Calvin Klein — Global Marketing & Communications
CALVIN KLEIN — GLOBAL MARKETING & COMMUNICATIONS OBJECTIVE: To create marketing campaigns with one singular, cohesive and aspirational brand voice showcasing the Calvin Klein lifestyle INVESTMENT: With over $320 million in global annual marketing spend in 2015, (~50% funded by licensees), we leverag
Slide 29: Calvin Klein — Business Overview and Financials
CALVIN KLEIN — BUSINESS OVERVIEW AND FINANCIALS SUMMARY FINANCIALS Despite the fact that we brought back in house our two largest apparel categories in 2013, over 2015 Reported Revenues $2.9 BN 50% of the brand continues to be from licensing 2015 Reported EBIT Margin(1) 14.9% PAST TODAY 2015 Constan
Slide 30: Calvin Klein North America — Overview
CALVIN KLEIN NORTH AMERICA — OVERVIEW • Healthy positioning across wholesale and retail channels • Solid digital commerce growth, driven by recent 2015 REVENUES 55% 45% investments in website navigation and technology BY DISTRIBUTION WHOLESALE • Provocative 360°marketing campaigns are a driving forc
Slide 31: Calvin Klein International — Overview
CALVIN KLEIN INTERNATIONAL — OVERVIEW REVENUE BY REGION ASIA PACIFIC KOREA • Distribution primarily through retail channel (concession shops and free-standing stores) ~25% CHINA • Strong brand positioning across all categories CENTRAL & SOUTHEAST ~45% ASIA PACIFIC • Largest categories: Jeans and und
Slide 32: Calvin Klein — Licensing Continues to Be Important
CALVIN KLEIN – LICENSING CONTINUES TO BE IMPORTANT • Top 7 Partnerships Represented Over 80% of licensing and advertising revenue in 2015 • Over time, we look to assume more direct control over various licensed businesses where we have core competencies WOMEN’S APPAREL FRAGRANCE FOOTWEAR G-III COTY
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Slide 34: Heritage Brands — Overview & Financials
HERITAGE BRANDS — OVERVIEW & FINANCIALS SUMMARY FINANCIALS 2015 Reported Revenues $1.7 BN 2015 Reported EBIT Margin(1) 7.1% HERITAGE BRANDS Underwear / Dress Sportswear Swimwear Core Intimates Furnishings LICENSED BRANDS INCLUDE: CHAPS MICHAEL Michael Kors Geoffrey Beene Michael Kors Collection Kenn
Slide 35: Heritage Brands Categories: Strong Market Share Positions
HERITAGE BRANDS CATEGORIES: STRONG MARKET SHARE POSITIONS CATEGORY UNIT SHARE Neckwear > 50% 40% (1) Dress Shirts Woven Shirts 17% (1) (1) Knit Shirts 12% (1) Bras and Panties 11% (1) Men’s Swim 8% (1) Casual Pants 7% (1) Based on percentage of 2015 unit volume in US Department and Chain Stores comb
Slide 36: Heritage Brands Strategies
HERITAGE BRANDS STRATEGIES Brand management: • We are committed to designing and marketing quality, trend-right products that offer great value to our customers Leveraging and enhancing each division’s positioning in the market: • DRESS FURNISHINGS: Maintaining and expanding our positioning as we in
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Slide 38: PVH Financial History
PVH FINANCIAL HISTORY ($ in Millions, except per share data) Warnaco Acquisition 2011 2012 2013 2014 2015 Revenues $5,891 $6,043 $8,216* $8,241 $8,020 Gross Margin 52.0%* 53.8% 52.4%* 52.6%* 51.6%* (52.7%* Constant Currency) EBIT* $682 $752 $967 $921 $842 EBIT Margin* 11.6% 12.4% 11.8% 11.2% 10.5% (
Slide 39: PVH Consolidated Summary of 3Q16 YTD Performance
PVH CONSOLIDATED SUMMARY OF 3Q16 YTD PERFORMANCE 3Q16 YTD YoY Change Revenues $6.1BN reported +3% reported +4% constant currency* Non-GAAP Gross Margin* 53.1% Up 110bps Non-GAAP Gross Margin (constant currency)* 54.8% Up 280bps Non-GAAP EBIT* $647MM Down 2% (including foreign currency impact) (inclu
Slide 40: PVH Financial History: Free Cash Flow and Gross Leverage
PVH FINANCIAL HISTORY FREE CASH FLOW ($ in millions) GROSS LEVERAGE RATIO** $900 169% 180% 3.6 $800 160% $700 140% 3.4 3.3x $766 $600 120% 3.2 98% 3.0x 3.0x $500 100% 3.0 2.9x 77% $573 $400 80% $469 2.8 $300 60% 2.6 $200 19% 40% $100 20% 2.4 $110 $0 0% 2.2 2013 2014 2015 LTM 3Q16 2.0 Free Cash Flow
Slide 41: Appendix
APPENDIX Calvin Klein TOMMY SBHILFIGER HERITAGE BRANDS me
Slide 42: 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 43: 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 44: 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 GAAP Adjustments(1) Non-GAAP GAAP Adjustments(2) Non-GAAP GAAP Adjustments(3) Non-GAAP Total Ea
Slide 45: GAAP to Non-GAAP Net Income per Common Share Reconciliations (2014-3Q16)
GAAP to Non-GAAP Net Income per Common Share Reconciliations (2014-3Q16) GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) Q3 YTD 2016 Q3 YTD 2015 2015 2014 Impact of Impact of Foreign Constant Foreign Constant GAAP Adjustments(1) No
Slide 46: GAAP to Non-GAAP Revenue and Gross Margin Reconciliations
GAAP to Non-GAAP Revenue and Gross Margin Reconciliations GAAP to Non-GAAP Reconciliations Revenue and Gross Margin (Dollars in Millions) 2014(1) 2013(2) 2011(3) 2008(4) 2003(5) GAAP Revenue $ 8,241.2 $ 8,186.4 $ 5,890.6 $ 2,492.0 $ 1,569.0 Adjustments 30.0 (95.0) (21.0) Non-GAAP Revenue 8,216.4 2,3
Slide 47: GAAP to Non-GAAP Gross Debt/EBITDA Reconciliations
GAAP to Non-GAAP Gross Debt/Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliations GAAP to Non-GAAP Reconciliations Gross Debt/Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (Dollars in Millions, Except Ratios) LTM 2013(1) 2014(2) 2015(3) Q3
Slide 48: GAAP to Non-GAAP Cash Flow Reconciliations
GAAP to Non-GAAP Cash Flow Reconciliations GAAP to Non-GAAP Reconciliations Cash Flow (Dollars in Millions) 2013 2014 2015 Q3 YTD 2015 Q3 YTD 2016 LTM Q3 2016 Cash Flow from Operations $ 412 $ 789 $ 900 $ 388 $ 576 $ 1,088 Less: Capital Expenditures 237 257 264 169 163 258 Contingent Payments to Mr.