Q1 2020 PVH Corp Earnings Call

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Good day and welcome to the P. C H frame for sure Twentytwenty earnings Conference call.

Hi, I would like to turn the conference over to mistaken apartment to read the Safe Harbor statement. Please go ahead Mike.

Thank you operator.

Good morning, everyone and welcome to the PVH Corp. first quarter 2020, <unk> earnings Conference call. This webcast and conference call is being recorded on behalf of PDH and consistent copyrighted material. It may not be recorded rebroadcast or otherwise transmitted without PVH is written permission your participation in the question.

To answer session constitutes your consent to having anything you say appear on any transcript a replay of this call.

The information to be discussed include forward looking statements that reflect pvhs view as of April 1st 2020, a future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's FCC filings and the Safe Harbor statement included in the press release credit the subject of this call.

These risks and uncertainties include PDH is right to change it strategies objectives expectation band intentions, and it's easy to use significant cash flow to service its debt obligations significantly at this time because it 19 pandemic continues to have a significant impact on the company's business.

Financial condition cash flow and results of operations.

There are significant uncertainty about the duration and extensive the impact of the pandemic the dynamic nature of the circumstances means what I said on this call could change materially at any time, therefore, the operation of the company's business and its future results of operations could differ materially from historical track.

So then results or current descriptions estimates and suggestions.

PDH does not undertake any obligation to update publicly any forward looking statements, including without limitation any estimates or suggestions regarding revenue or earnings.

Generally the financial information and projections to be discussed will be on a non-GAAP basis as defined under FCC rules.

Reconciliations to GAAP amounts are included in PVH. Its first quarter 2020 earnings release, which can be found on www dot PDH dot com and in the company's current report on form 8-K furnished to the FCC in connection with it really at this time I'm pleased to turn the conference over to Mr. Manny turn.

CECO, chairman and CEO of PDH.

Good morning.

Everyone. Joining me on the school is that the Watson President luxury wall to wall, Blunden, Chief Financial Officer, and Dana Perlman Treasurer, Senior Vice President of businesses, though.

After relations.

I'd like to take a moment worse all is going on around those.

Most recently of small country. The report, although we go sports the systemic racism.

This of course to London, <unk>, social Justice in all countries.

A few years regarding soil purpose, which is the draws a controlled group.

One of the stuff, where you can do this is this blog solution quality within the walls or Copeland Rollins group and in society at large.

Look really wants to listen and learn we were also up beauty mortality palaces isn't proximity and training development programs to create new opportunities for growth.

So that we can include the representation across all levels and support all black and so she is excess units and leadership positions across all companies.

Furthermore, the Corona bar presented a dramatically impacted all business over the past anymore.

An important every region of all business, the health and wellbeing of or so to your consumers partners and the communities, where we operate married or popcorn element.

Throughout or almost 140 year history, we often see men trial injuries and I'm confident that successfully navigate backdrop as well we have strong financial discipline, a healthy strong balance sheet with $1.2 billion of overall liquidity.

And a wide range of global growth opportunities driven by Calvin Klein and Tommy Hilfiger.

Brian and all people all our two greatest assets.

And they will hold on food water during the first quarter.

Our associates and business leaders to manage through their passion dedication and enjoying what I was like beside each and every one of them for helping drive our business goals. Despite the challenges colder than 19 and done is presenting.

[noise] for working to first mission, we recently closed doors and then putting plans in place.

So when we opened stores around the world.

There's always an all warehouse and did have kept all businesses moving forward and those working from home <unk>, who am I cannot like everyone I'm all for their willingness and commitment.

Oh, Arconic, Calvin Klein and Tommy Hilfiger, Brian has continued to experience that's when consumer response over this period.

Demonstrating strong brands health and loyalty during the crisis.

Each brand has attracted new consumers visiting our sites for the very first party with good conversion and strong purchasing behavior over this period.

[noise] operating a diverse with large portfolios more which drawn geographic diversity is there's always been one of our schools.

Now more than ever.

Benefited from the diversification of all business.

For example, the fourth sizing much.

Expertise, we gained from our easier to have been incredibly valuable as weve novel navigated the cool Corona borrowers a course other regions.

This helped US get ahead of key decisions such as adjusting our marketing campaigns the ways to engage with consumers and drive our digital business during the temporary store closures.

As well as how to safely and most effectively we opened our schools wants restrictions were listed.

Additionally, we were able to reallocate resources to better support what Weve opened during this period focusing on how to.

Yes, you are owned and operated E com side and also working with all third party digital partners.

<unk> competitive advantages.

People, all brands and our diversified business model well what gives me great caught confidence in the long term health of our business.

And now moving on to the first quarter financial results nearly 20, Twond with strong brands held and increasing momentum across Tommy Hilfiger, and Calvin Klein and the majority of.

Regions, where we operate.

Unfortunately coded 19 had a significant impact on our business during the first quarter as our stores and all wholesale partner stores were closed for overseas and so on average during the quarter.

This resulted in revenue and all own stores being down 50% to 65% depending on the region, while our wholesale revenues declined about 40%.

Shipments to our wholesale partners were driven dramatically reduce across all markets.

Our digital businesses, both our own owned and with all wholesale partners had outstanding report performance and became our number one most critical child for business during the quarter.

With our European digital businesses being the strongest outperformer of any of our markets.

On the operating margins are our gross margins and this DNA rates under significant pressure as well wireless package every expense line, including marketing and made difficult decisions relating to payroll expense. Most of these measures really getting active until the end of the costs.

Sure.

In addition, we recorded about $100 million in reserves for future inventory markdowns and accounts receivable write off.

Given this operating environment Youre also been addressing our inventory levels to reflect the current demand picture and are working closely with our suppliers in the event of any meaningful shipping disruptions or delays.

Additionally, during the quarter, our licensing partners were significantly impacted.

Business disruptions as well we will continue to work closely with all licensing partners throughout the year as we are planning for their businesses to experience similar pressure what youre seeing in offices.

With a long term vision in mind, we took prudent and proactive measures to strengthen our balance sheet preserve liquidity and improve our financial strength to come out of the coldest crisis as she has a stronger company.

Overall, we ended the quarter with $1.8 billion of liquidity, our CFO, Mike Shaffer will discuss the specific steps, we took to strengthen our financial position in his comments.

As we not only navigate through the recovery. Please.

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We will continue to evaluate how we can further strengthen our balance sheet optimize our businesses and identify efficiencies, which will allow us to operate smarter and ultimately enhance our operating margin profiles, which we believe will drive enhanced long term returns for our stockholders.

I believe that this at these actions in totality will position us to successfully navigate the covert 19, San Dimas and emerge and overall stronger competitive position.

Before I hand things over the Stephens to go through our region and brand initiatives I would like to size. The end of reader, who served as CEO of Tommy Hilfiger, and PVH Youre always contributions to this company over his many years of service I also want to congratulate more time horizon.

On his promotion and I am confident that more time to successfully the Tommy Hilfiger and PDH Europe into the future as we capitalized on the significant future growth opportunities for our business was that as I turn it over the staff.

Thank you Mary and when giving you all enough day today from our regional for Brian I would like to start with US many mentioned reducing production but.

This has been a very different kind of quarter.

All of our broken regions have been heavily impacted by the cobot crisis without stores that our wholesale customers stores closed for six weeks a leverage during the quarter like relayed on the call share more details on how the numbers came out and give you any indication of Q2 trends.

But I would like to share with you is how we are successfully navigating l. brown regis through the different phases of this crisis, what our key learnings hubby.

Well a sharing some of the green shoots us we're starting to see what are you hearing else to drive an accelerated recovery as the wind with L. Brown and consumer post coated.

From a regional perspective, our regions came into this crisis at different times Asia and China in particular tenants first and most of recovery first then Europe was too closely followed by North America.

Starting with Asia, and China, They have provided us with the best learning for the recovery phase in our other Regis currently all of our stores in China Roe.

China started to reopen we have seen strong week over week improvements across the board.

For example, our realtor stores, so now approximately flat to last year, and our digital business up triple digits for both Calvin and Tommy.

We're experiencing very strong conversion and higher units per transaction is stores, a lower overall traffic trends.

To drive success during the store closures, we offered virtual clienteling and engage with VIP shopper through reach up with Lightstream doll brands to connect with consumers, which led to significant sales growth versus a typical day.

Then Europe follow closely after ratio, where we have also seen stronger week over week improvements currently about 85% of stores are also and trends are very encouraging reply for the UK market to reopen the early next week as we reopened stores, we have experienced strong conversion.

Favorable full price spreads with less promotional some plans we have faith lower overall traffic trends that have improved more is smaller to this versus big cities as consumers are shopping closer to home.

We have apply the data driven approach to be able to offer targeted promotions to increase sell out why loss for keep in margin relative to the stable.

Overall, we believe that Europes recovery will be about one calendar quarter behind the transparency in China.

For wholesale our fall order books that were up mid teens pre coded while now down low to mid teens for each of our brands as we work with our partners to consolidate product fees those to better match demand and to end the year clean on inventory as possible.

Lastly, in North America stores here, where the latest reopened and we will be up 85%. We opened by next week.

We're pleased to see how their customers are coming back in our own stores small doors top performing very well our domestic consumers are over indexing and they will be critical to target domestic customer for the remainder of the year as international consumers are traveling merchandise that we don't expect this trend to materially in.

Prove this year.

Our wholesale partners for business improved with the introduction of curbside pickup and ship from store digital conversion is significantly higher than last year, we're attracting a lot of new customers shopping outsize.

We believe that the recovery in North America formative slightly slower recovery trajectory of in Europe, and we expect the promotions will be elevator also similar to Europe, our wholesale partners stopped accepting shipments in March which has been a headwind for the business and we have always seen replenishment orders starts flowing.

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Cross reveal some brands, but we were hit by the covert crisis, we had a very strong focus on the short term navigation through that need to crisis, the health and wellbeing of our teams and consumers cash preservation expense reduction in inventory decisions to adjust to the current demand situation reduce.

A multiple approaches to manage our inventory such us canceling orders repurchasing a re flowing goods replatforming fabrics consolidating future collections of passing away. So I think core items, where we can achieve strong largest in upcoming thesis.

In parallel to hunkering down from a cash cost of inventory perspective, we redirected our focus early on to demand creation to where the culture mobile shopping.

We have supercharge, our ecommerce channels across all brands or regions, both owned and operated and we're collaborating very closely with T Mall Salon, though anomalous growing among others in ways that moves us to where the customers going both in terms of live events product launches as well as connecting our inventory.

From our bricks and motor stores to serve our own E commerce as well as part of platforms.

But it's exciting to see us at our consumers have expressed a strong demand for our brands across all digital platforms. A few examples our own digital businesses had excellent performance during the first quarter Cabot's digital revenues were up 40% as Tom its own digital business up over 60 per.

With triple digit increases in the second quarter today.

Our Calvin North America ecommerce business, turning to quarterly profit for the first time is seated on calls history.

In Asia, we furthered our partnership with T mall by featuring a virtual exhibit far CK, one product drop and our CK one key more club, so a strong consumer demand or sell throughs.

In Europe, we accelerated the rollout of connected E commerce with Salon window and about few allows ship from store penetration reached double digits for Salon, though in April and May.

North America, our out of some business benefited from significant growth in prime memberships and this month, we will participate in their summer sales the soft clients as they move their pride based to a little over.

In the product assortment across browser Lejus, we have seen the consumers to in an accelerated way going towards cash of essential products. There is a big increase in demand for our essential categories like underwear launch where T shirts, hooded athleisure active wear as well as James.

All these categories for core strength of both brands, we have read directive big product introduction and product collaboration to E Commerce and done some of them show in the digital our CK one of the large had an Instagram reach of 57 million people. We also launched our Tommy jeans Looney tunes cap.

So in the Lifestream partnership with T mall, achieving over 45 million impressions.

Lastly.

This crisis has made it clear that our product lead times have come down across the board to better match inventories to the current demand trends.

Our marketing has also been re directed towards social and digital to reflect the time, we're living in for Calvin We hope we hosted monthly livestream such as the lead Chubb using local talent in the campaigns Calvinist recently lost its price 2020 campaign hash tag.

Proud and by Calvinist across social digital and E. Commerce in over 20 markets initial sell through strong and the campaign collection had a plus 89% to increase in average commerce proposed.

As Tony we live streamed our spring collection with the ability for consumers to purchase directly from the events for wear now product told me also hosted for celebrity Livestream for a short video platform build when we secured 1.5 million views and helped us converse, both new and existing customers to.

Purchase.

All our brands have refocused on engaging with a cost over in a more interactive way than anytime before.

I would also like to take a step back and give some global brand highlights starting with Calvin.

Calvin Klein began in the first quarter with strong brand health, including very strong global awareness.

The Calvin Klein lifestyle is truly resonating with consumers. During this time particular, our underwear launch where active wear and were now offerings. We adapted our marketing message to reflect this through our upholding mitel. This campaign.

Our efforts for a successful as we saw significant growth in new consumer shopping our sites and we continue to focus on new customer acquisition as well as retention and conversion.

For example, our CK one launch which is our replay of died called agenda less collection from the 19 nineties cater to the younger consumer and now represents 10% of CK underwear sales in Asia.

Before the coded crisis hit we had already started to work with setting the forward looking brand direction for Calvin Klein and I'm pleased to share that the team has completed this work and we're looking forward to take the period in detail at a later time. So now I would just like to share that evolve brand direction.

Has built around going back to date College DNA of the brand and re connecting it to their consumer and culture of today is focused on helping sites unique strengths as one of few authentic global lifestyle brands and will be a very strong foundation to drive consumer engagement across the board growth for the.

Year to become.

The response from our own teams of external collaborators has been very strong.

Moving on to Tommy Hilfiger told me answer 2020, with a strong underlying momentum.

I would like to start with welcoming martinus, our CEO for Tommy Hilfiger Global PVH Europe.

Martinus being the co pilot behind the Tommy Hilfiger branded business success over the last few years leaves us very strong leader and value creator.

Tommy Hilfiger was recognized in the top 20 of those business index for the top 50 luxury brands, which drive which Brad ranks brands across consumer sentiment digital presses omnichannel performers sustainability reporting of financial performance.

We also had exceptional sell through of collaboration launches throughout the quarter, including Tommy Jeans, Loopnet Joe's capsule, which shows that our differentiation is a true advantage, especially in a market by China.

Moving on to Heritage, we're pleased to close on our sale of the Speedo business depends on the in April for approximately $170 million and we will look for additional opportunities to streamline and or exit businesses that are non core plus.

Our heritage brands business was under significant pressure, although the online businesses from our wholesale partners was a partial offsets.

The cash utilization trends, thus being accelerated by cold It that's working for us in both Calvin and Tommy is working against us in the more formal wear to work product candidates in heritage.

We are addressing these challenges by managing inventory levels more prudently lowering our cost base evaluating our store portfolio and reviewing additional ways to optimize to streamline the business.

Finally, as soon as many mentioned navigating through this crisis has made us even more aware of the many unique strengths we have to build on coming out of coated.

We have two of the most iconic brands in the market globally in Tommy Hilfiger, and Calvin Klein, both with very strong global awareness as well as big strong consumer basis around the world. We also have a very strong multichannel precedence in North America, Europe, and Asia, and we are increasing them.

During our reach tourists whether consumers folding to show and the crisis has made us move faster and get even closer to the coast over.

And once we have realized navigating through the immediate crisis is that many of the key learnings from during the crisis work are very tightly connected to what it will take to win both coated overall, we see that the coal that effects in our business reflects big accelerations of existing underlying consumer market trends.

An increased focus on E commerce product relevance and consumer engagement will be core priorities as we are driving tourists and accelerated recovery and with that I would like to turn it over to Mike.

Thanks.

Thanks.

Thanks, Stefan I want to briefly touch on the first quarter 2020 results the move onto the current state of the business.

As expected our business was significantly impacted by the quoted 19 pandemic as the majority of our stores in our wholesale partners stores were closed for six weeks on average during the quarter as result of the widespread store closures revenues from a retail stores were down approximately 50% to 65% depending on the region ship.

Thanks to a wholesale customers were sharply reduced as well, resulting in an overall decline at 41% in our global wholesale revenues.

Our directly operated digital ecommerce businesses were fully operational during the quarter and we experienced strong revenue growth in all regions up 40% versus the prior year with double digit to triple digit revenue increases during the period, while our stores were closed.

This growth in E commerce, partially offset declines in our brick and mortar in wholesale revenues.

Overall, our reported revenue was down 43% Tommy Hilfiger revenues were down 39% with international down, 32% and North America down 51%.

Calvin Klein revenue was down 46% was international down, 40% and North America, though 54% heritage revenues were down 47%.

In addition to the revenues decline or results were under significant pressure in the quarter due to $97 million increase in accounts receivable write offs and inventory reserves and the significant de leveraging of expenses. We continue to we continue to pay certain retail associates for all or most of the turned more stores were closed.

And the measures we are taking to reduce expenses didnt take effect until the end of the quarter.

The unprecedented revenue earnings decline as a result, as a pandemic resulted in a loss per share and a non-GAAP basis to 3003 cents for the first quarter.

On a GAAP basis due to the pandemic in reduction or market cap, we took non cash goodwill intangible asset charges of 933 million also we took noncash impairment charges totaling 16 million related to store assets and $12 million related to an equity method investment.

Moving on to the current state our second quarter in full year 2020 results will continue to be significantly negatively impacted by recorded 19 pandemic and we expected our revenues declined in the second quarter will be more pronounced in the first quarter, the duration and extent of the pandemic remains.

Highly uncertain our results could be impacted ways, we are still not able to predict today and as a result, we're not in that position to issue more detailed guidance for the second quarter or for the fiscal year.

We're continuing with the phase reopening of the stores, new us and around the world by mid June over 85% ago stores, we will reopen globally, although most of stores operating with reduced hours and occupancy levels, while sales remain down across all regions in the year over year basis.

Traffic and sales trends are improving each week.

Second quarter to date, we're seeing same store sales for brick and mortar stores that have reopened running about down 25% from North America.

Down 20% for Europe.

And down 25% for total Asia with China flat.

In China was the first countries to close and the first country to reopen with the pandemic.

All in second quarter to date for a total direct to consumer business, including stores that were close to a portion or all of the second quarter to date Anna directly operated digital commerce sites, we are running about down 65% for North America down 25% for Europe.

And down 11% to total Asia, the China is up 25%.

Additionally, most of our wholesale customers has now we opened the majority of the locations across all regions. However, due to the significant levels of inventory that remain in stores. The majority of our north American and European brick and mortar wholesale partners stopped accepting shipments beginning in March.

Which is not materially improved into the second quarter.

In response to this pandemic.

To the pandemic, we are taking every proportion to reduce or expenses and working capital. These actions started in mid April and are continuing into the second quarter MBS busy year.

We are reducing payroll costs, including salary and incentive comp.

Furloughs decreased working hours and hiring freezes as well taken advantage of applicable government will lead programs.

We are eliminating or reducing other discretionary and variable expenses, including marketing travel consulting in creative in design costs.

We are also tightly managing inventories, including reducing and canceling inventory commitments redeploying basic inventory items to subsequent seasons and consolidated in future seasonal collections as well as negotiating extended payment terms with our suppliers.

I want to emphasize that our priority has been on cash flow and liquidity. We ended the quarter with $1.8 billion liquidity, including cash of approximately 800 million and $1 billion available borrowings under our revolving credit facilities.

As previously announced we moved quickly to reinforce liquidity units than response to the pandemic.

We suspended share repurchases under our stock repurchase program in March following approximately 110 million. These purchases we completed in the first quarter.

And we suspended our cash dividend beginning with the second quarter.

We entered into a new 275 million 364 day revolving credit facility and issued an additional 175 million euro.

Our third three and 5% senior notes due 2024.

And we importantly, we obtained a waiver of the leverage and interest coverage.

Covenants under our senior credit facilities, three and including the first quarter of 2021.

We are cutting capital expenditure expenditures to approximately 190 million in 2020 from 345 million in 2019 with capital expenditures only for minimum requirements in our retail stores and for projects currently in progress related to our systems in warehouses. Additionally.

We closed on the sale of the speed on North America business dependent we will see the parent company is the speedo brands in April for proceeds of about 170 million.

We will give guidance for future quarters, new year. Once there is more clarity on the impact in duration of the coated 19 and done.

And with that operator, we'll open it up for questions.

Okay.

Thank you if you would like to ask a question casing know by pressing star one on your telephone keypad, if you're using a speakerphone. Please make sure. Your mute function is turned off to allow you're sick now to reach Eric.

[noise] again, that's down one to ask the question.

Well now take our first question in the queue comes from Erinn Murphy from Piper Sandler. Please go ahead, Sir your line is now open.

Great. Thanks, Good morning, everybody and I guess my first question on for Joe composition on the other side at Cook at 19, you've referenced in his script kind of 10 transit athleisure comfort curious how durable you see that Howard.

Performing particularly your expectations and then on the heritage business is it still makes strategic sense in a post.

Yeah.

Yes.

And when it comes to the capitalization trended products does the travel that we saw a pre recall that we see the coldest text accelerating revenue.

Every everything we see in the data and how the consumer is shopping is saying that trend will continue and its core to explore what excites us there is.

The big Cashel product categories like underwear T shirts, hooded, including data seats that those are all core to our too big for us.

I guess on the heritage starting Aaron.

I would say is we're taking a hard low.

I see that in the decision to sell Speedo business, which was a good business that this didn't fit strategically where we are moving the company and I think we'll take a hard look at.

Continuing to prune the heritage business back and look for streamlining opportunities in the future will not seen return on investment in return on invested capital. So I think you'll continue to be aggressive in Melbourne area.

Okay. That's helpful. And then I guess my second question is just around.

The strength of digital.

Your views around those retail footprint at your own breakout and baby balls, and we expect to be kind of closer or a net opener for for the next few years and then just any comments on toric store, because I know, there's a bit heavier hedge.

Where do you see role going forward.

Okay.

I think when we look at the when we look at the store portfolio I think we're taking a hard look at.

How that how that leads to develop and I think those stores that were.

Six months ago, four months ago cash flow positive marginally profitable I think those stores to the pressure that we put on from a pandemic and to shift to digital.

Really two is really pointing to the need to reevaluate those stores and look to streamline the portfolio and I think that will continue both particularly here in the United States and I think to some degree in Europe as we look at that portfolio in Asia, where we are under developed.

So when we view China just about every market in Asia, We've got good brand positioning while there seems to be brick and mortar opportunity. There. So I think there will be a net opener and I think in more mature markets will probably be a net closer over time.

The second quarter or the second question as you could imagine we see CHRW tremendous results positive results in our Permian population stores smaller cities. So these are really driven by stores that are really driven by the consumer and that geographic market, both year, Europe Asia and if I.

Okay and will we are doing dramatically hurt by tourist locations stores, we just think about the business Orlando Las Vegas.

Won in Asia.

Hong Kong that market that drives offices in Europe, Paris, Milan, London, those stores, which are a big profit produces without that international tourism those stores is down significantly more.

And the overall averages and all permanent population stores across the board are much closer to flat ultimately down slightly.

Your next question.

Thank you well now take our next question.

Bob Java from Guggenheim. Please go ahead your line is open.

Hi, good morning.

And just from that perspective of inventories, Jim if you could give us your view on.

The progression towards supply demand getting back in balance both within your business, but also within many of your customers just in terms of I get a timeline or how you really see it playing out and then the second question is just can you talk a little bit about distribution around.

Door closures and.

Wholesale door closures and how you're approaching that so that you think through the rest of this year and into next year.

You are going to make Mike.

To the inventory question I'll come back on distribution so.

Above in each region, we had this period of closure goodwill in the pipeline goods were flowing and.

You see that in our inventories are inventories are not reflective of the second quarter demand.

And there are.

Balances are reflective of of goods that we will we will be liquidating throughout the year.

Our expectation is that we will be good cleaner each quarter as we move through the year.

But we will carry some goods over.

Basic core spring Kratos White features on the where.

That don't change that will not have significant change and we believe can sell next year, we will carry pack and hold according to.

Our spring service for next year, so and that number's going to be this quote around $250 million. So in effect I don't think you'll see the inventories truly refers to mess with sometime in the first half of next year.

Greetings and things Bob only when you think about distribution were clearly watching this closely.

Could you should meaning that we know the wholesale channel the department store channel that Keystone Q globally, Europe, and North America, specifically is under tremendous pressure and I think inevitably we're going to C store closures and contractual business, we've already seen diagnoses and will be re.

This is real estate.

And consolidation and I think it's clear to us.

This is not an environment, where you want to get too far ahead into cells.

From an inventory on the unit demand point of view for fall, we're being very cautious our buying for.

Based on what we're seeing in our order books, we're not planning on excess.

Replenishments within season, as Mike said, we've got plenty of core to support the most profitable sizable business now underwear business, our basic sportswear business those businesses inventories for that and believe the demand like comps the fashion sportswear and things like that we will.

The buying very very tightly and thats going to continue as we watch both virus.

Pack, but also just the inevitable acceleration of devices causes are closed the.

To close to closing them.

So we'll see our hurdle.

Next question.

Thank you will now take our next question from Michael and Nashi from Credit Suisse. Please go ahead. Your line is open.

Hey, good morning, guys. Thanks, rather detailed.

Yes, I think many said it related to your comment that Calvin Dotcom, just turn profitable as we look at your overall digital business.

And even ramping up the digital chops and there is been capacity I think really relied on the wholesale partners to capture the digital consumer for you and all the spending that it takes to drive traffic sites in the digital Capex that goes with it.

Can you talk a little bit about how equipped TTR today, if the output of this whole period in the consumer engaging directly with the brands online. After this how does how did the how does your digital business overall influence your gross margins SGN, a and operating margins.

I think is.

This is impacting the.

First quarter profitability the.

The digital business both of our own size and our pure plays digital players production orders like Q2, more Amazon Zohydro ER those both wholesale partners pure but those are some of our most profitable businesses and Raleigh.

So efficiencies built into our.

Our.

Our own E com business and scale, which has really turned those businesses much more profitable for us so really the E com business.

No negative impact and wall on our profitability in the first quarter.

That profitability impact is really driven by the reduced sales volume expense initiatives that really began late in the fourth quarter as a source.

Towards closing, we continue to pay people for a long before we start Faro and take other initiatives, hoping that this will be quicker.

So I think you'll see those start to become more in line as we get the second half the year expense ratios and our margins were impacted by the reserves we took.

Total $100 million, a big portion of that towards margins.

Our future markdowns that we are anticipating second quarter. So I think thats would have much more of the impact on our on our profitability margins and the loss that was generated and then finally I'll just say at this demand curve on E. Commerce continues we are seeing on top.

Ability significantly improve in that channel of distribution.

Both from our direct to consumer where we're doing everything selling directly and particularly where we are working more third party business that by part of our most profitable business.

I guess, just as a follow up to that.

Scales that business going to be your own digital business at scale is that going to be positive to your long term.

Long term margins I know at a certain point, it's going to vary.

Variable cost structure.

I guess.

Last one follow up.

Im curious about the for the number of wholesale Packaway inventory said by 250 million. What's the response from the factories, while they're seeing you in your peers packaway inventory, which inevitably means they're going to have capacity issues over the next year do you need to support them in any way to make sure the capacities, there and you need it and student start taking physical asset.

System for the new normal how should we think about that.

Okay. So we'll take the second life on the suppliers in how we're trying to support and look where we are working with our suppliers and the leadership and form to keep them healthy to keep them on track our supply base in general consists of big players rather than smaller players. So there is some stability.

In our mix, we do over financing program that allows us some flexibility with our vendors as well so.

Is there is pressure in that in the whole supply base.

As people have been canceling orders and doing the pack and hold so.

The only offsets to that has been that many of the factories were closed and demand was down we now see our factories back to pretty much in normal levels.

Open, but still dealing with social distancing and some of the issues around.

The pandemics or less efficiency.

And they just continue to make adjustments to try to work in the new World and we're doing everything we can to help and communication is key which.

We're communicating of funds that we can adjust modified do whatever they can trying to work together.

But I don't believe it's going to requires any significant material.

Support above and beyond what was the in a normal course.

Coming back to your question on E Commerce distribution choices, we make going forward will follow where the consumer is going and we see big opportunities. Both for owned and operated E Commerce and Thats Man I mentioned, the third party commerce and the connections between the two as scale.

So we'll continue to improve our profitability in those channels as well as to our continuous improvements in execution and that's something that I mentioned in my notes that.

We're very pleased to see how our teams across the world leading into E Commerce and as you know is close to its about continuous improvements on multiple parts and we see both the demand being there and ups increasingly profitable, helping us tapping into that demand.

Thank God.

Next question why not take our next question from Jay So from you'd be at please go ahead.

Great. Thanks, So much you just a follow up on the comments about gross margin in that sort of 97 million on inventory accounts receivable that has taken the charges taken this quarter now so the fact that unless you made some reactions that you took came at the end of first quarter. So we didn't see a whole lot of those.

Impact in Q1.

Given sort of more directional color on how you see gross margin in Twoq, playing out and how you see estimate dollars trending in Q2 relative to where they landed in Q1.

On the on the gross margin front I think we're going to see a leveling off year over year you should see.

Based on the response that we're seeing the favorable response that we've seen as we opened our stores and the new and not needing to be as many as promotional as we anticipated.

We're encouraged by that we think that there is a positive positive impact.

That will see overall compared to first quarter.

From a margin perspective.

We'll now and then in addition, if you think about our business from a gross margins will review the mix of business in the second quarter in particular that will shift.

More so to a retail.

Models, given the fact that wholesale in the second quarter will be under more pressure.

That will also have a positive impact on margins overall offset by the world and the promotional nature just in general what should be out there as everybody is clearly slowing summer inventory through the second quarter.

Early third quarter.

The expenses it was.

With the spread between the prior year in this year. As you said was is only we didn't have a full quarter of savings in Q1 in Q2, you will see that spread get line.

We'll see we'll see additional savings as we as we get to full quarter of the benefit rather than flush.

Got it okay. Thank you tomorrow.

Well now take our next question.

From Dana Telsey from Telsey Advisory Group. Please go ahead. Your line is now open.

Thank you good morning, everyone.

Regarding the topic of product lead times that Stephane mention how do you frame that in terms of the target and what it means for margin and inventory levels going forward. Thank you.

Thanks, Dan our stuff is going to talk to that Dana. Thank you for the question, it's an important one and one and us being.

Very clear coming out of the crisis, where we will continue to really have to improve the lead times and as you know there are multiple components. Our lead times. There is there is lead times connected to core replenishment that can get us down to one to two months replenishment and under it.

Read and react capabilities to seeing when demand trends take off to two then react to dose versus being bought upfront. So we'll work and then there are the overall product development lead times that have to come down and will come down and.

Both in Calvin and Tommy and the Heritage Division were working with digital life things.

Supply chain and the for saying and product development. So that will calculate side. So we've come back later on this specific targets, but it's very clear that it's a combination of those three activities to date I'm just going to add to this is an area where assessment has been working with our product teams are sourcing team.

And our logistic issues and I think in a pre pandemic we were.

Very optimistic about being able to demonstrate some of those benefits going into second half of 20 Twond as the second half of 2020. Unfortunately, those benefits that will be there I think you're going to get the math.

From a financial perspective, this year because of all the noise around depends on that because of the issues and the need to carry excess inventory and so as not to stop the channels with excess goods.

But I think as we get into 2021 really could start to see some of those benefits discusses brought to the company working with our teams very closely to really get those benefits on lead times that should enhance margin and hopefully over time reduce our inventory carrying.

Next time, thank you.

Thank you well now take our next question from Heather Balsky from Bank of America. Please go ahead.

Thank you.

And yes, there are lot of questions with regard to very shaping of interest accretion footprint given the Kobe crisis that.

What kind of closures in accelerated and the shift online the accelerated to help us just from a bigger picture I think about.

What this omni.

On a gross algorithm perspective.

Eric wholesale is pretty high.

Margins channel ecommerce sample to strengthening.

How you're thinking about.

We don't have that I think us step in so doing well leases, we need to move whether consumers moving new to golar consumers shopping.

Trying in the mix of good of this crisis.

Brian.

To give you any.

Vested with specific guidance about sales growth in what what will be shrinking will be growing what if we could do it will be given guidance right. Now. It's just it's just a is coming at us very fast we're locked into very fast we use a common inventories.

In wholesale retail in the digital channel, we're not not silos likely had been in the past that we can use inventories across channels.

And I think thats, allowing us to flexibility to to react and it's also built in a level of conservatism and lease for the next.

The nine month that we just can't be chasing goods or growth the way we might have.

In a different.

Timeframe on a different economic situation. So I'd love to give you more caller I'd like to have more color exactly what's going to happen, but I think in some ways. This is going to see how agile every we can be competitors are going to be in order to read that what's going to be coming at us from the.

The wholesale department store channel, what's going to be coming out of the all in the brick and mortar retail channel and having the system capability and logistics capability to take advantage of the growth on digital which this year will grow we will go from 2019, which we thought we had a good deal with leaders about 12% of our belief.

Good.

This is going to be a significant growth.

Driven by the demand and also driven by the pressures that was the latest channel.

Yes, just to build on one side of it has served US well, it's the consumer we had to start with the crossover and the consumer shops across all channels increasingly so there is an ecommerce piece under its a bricks and mortar piece and that will continue to be a bricks and mortar periods, we see when we open.

Up our stores again that the consumer is coming back slightly ahead of our internal forecast study and so for us is going to be about the omni channel approach to say in a shopping region. How is the consumer shopping across digital and physical channels and come out as far as we're going to match.

We've got a notch.

What were the consumer demanded.

Thank you.

Yes.

Thank you I will now take our next question from.

Jamie Merrimack from Bernstein. Please go ahead your line is open.

Good morning, Thank you asked a fun and many does factor that being where the consumer it sounds like in the quarter I'd emphasize that omni channel capabilities.

The ability is like ship from store and criticized.

Great.

I'm just wondering either systems investments now need to be made to separate the omni channel activities over the longer term and and how should we think about that.

Thanks.

Just just.

To start answering your question Insistently Youre right. This quarter the crisis drove us to move faster on connecting digital with physical stores and we were assessment as surprised on how fast we can move on to us and.

One one big asked freight costs to connect stale inventory in physical stores to serve our digital channels. So when it comes to invest again.

Anybody in this everybody in this industry has to continuously invest.

Two.

Into those capabilities when it came to the ship from store capability is both a lower investments have cost or impact on what we expected, but overtime, we will have to come.

Continues to to invest in those capabilities coming back again to where the customers go.

Yes.

That said we had.

We give guidance on Capex is 190 million in their R&D investments on the capital side that we're making on on E. Commerce Omnichannel shipped from store all those pieces.

Those who really redeployed GT basically have moved investors that we would have made another energy business is progressed into that sector and I think that that redeployment will continue into future periods.

That again 195 million is significantly lower than our started caps and I'd put I think if you're thinking about our caps and they'll be in line with that I'll start the leverage of games.

In dollars and as a percentage channel.

Next question.

Thank you.

Our next question comes from Matthew Boss from JP Morgan. Please go ahead.

Great. That's funny, maybe any material difference in demand recovery from here that you're planning for as we think about Europe first as you lap based on what is so far preopening and with that what's the level of promotional activity that you're seeing necessary to drive demand in Europe versus the us today.

Okay.

Let's talk about the promotional levels as always the promotional level is lower in Europe, and the United States.

And I stayed.

This this doesn't change that we see in Europe, very strong full price selling.

Across the board and or excuse me, our in our full price stores and in our other channels, we we really targeted or promotions very efficiently in the USA.

When we initially open we came out of the box very strong for promotions and review, we were anticipating even higher promotions and what actually happened in stores today, we see that also that initial promotional cadence and as Susan.

Doing on our Pos basis that gave us the flexibility as we saw demand exceeded our expectations. We have pulled back on the promotional cadence overall.

And I would compare the promotional cadence in the us to be slightly more than it was this time last year, but not nearly as the promotional as reported is going to be going forward.

I hope that gives you some color.

That's great color that to Buck.

Okay and I think is we're going to take the last question is right now it's just about this after 10 and.

Can you try to get back to business last question offering.

Thank you well take our last question from all my aside from Evercore. Please go ahead, Sir your line is now open.

Thanks for squeezing me Atlantic.

Got it if you guys are well to two quick questions number one it's been a particular question. So I think about the stores that were opened in the first quarter.

Versus second quarter, our stores and the kind of percentage versus the total overall possible store hours. If you will that percentage going to go up or down into Q. My assumption is in stores are less open into Q overall.

Versus one here, but I want to kind of get confirmation on that and then second question. Stephen I was really curious you talked about Calvin Klein than what you guys have done down the brand.

And thats in the DNA harkening back to the kind of iconic DNA, maybe a little bit more.

The information insight around that are we talking about Brooke shields every time, a marquee Mark I would appreciate your color there. Thanks guys.

Okay. Thank you Stephanie a chance to put the marketing campaign together, but broken into side.

Thank you as I sort of question on more on on well clearly as we go through second quarter with the store.

If you take the month of February out of the equation, we're going to be significantly more open in the second quarter than than we were in the first quarter.

As a new source right now I think as the same will enroll our disclosure we're about 85% open mid June so by the end of this weekend that 85% of our stores will be open store store hours are less I think that store hours on average.

Probably down 15% to 20%.

Hawk number.

To give you a sense that Scott. It's also store capacity is down so we can all that so many people in at a time in some locations we have lines outside the store all those things are impacting US yes, our track our store traffic is down significantly more than ours.

Our sales traffic, that's driven by a couple of things consumers customers are out in shopping around shopping with a purpose they need something they are out there they're shopping the notches browsing their shopping and secondly, I think we'll be very effective how we're converting customers we are awfully strong value.

And our product, which we really saw drum.

In February and coming out of the fourth quarter, we Soto tremendous momentum in our spring product globally.

Calvin and Tommy Hilfiger, and that momentum as the customers come in and they voted voting, they're really hitting that target I think the stuff is not going to deliver as you know in Calvin organization, we don't announce marketing campaigns way ahead of time until they're ready to be announced but I didn't give just a flavor of what what was.

Brian.

Just just coming back to two to what I shared earlier is what the Tms dollar really rallied to go back MD told us the Calvin DNA covering some some of those talents that you mentioned, but what they do from there is to make sure that they understand what's made the brand iconic and less than a.

Some become a $10 billion plants and then they collect those components dose DNA components to the consumer and culture. Today, you will see it you'll see you'll see it gradually coming out you'll see their social media you will see it in collaboration as you will see it in an increased focus on modern essential.

If you think about it Calgary as Frank Philosophy, Kevin was 20 years ahead, when he focused on on the essential products one thing Calvin kept back.

Coming back to what what's the meaning of each product costs the intense behind each product never been more relevant today. So you will see us not to mention do they see it overtime.

Thank you everyone is really appreciate thanks for taking the time on this call.

No FFO speaking to you in August.

With our second quarter results, everyone. Please stay safe and healthy have a great day.

Ladies and gentlemen, this concludes today's call. Thank you for your participation you may now disconnect.

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Good day and welcome to the P C Hey, Frank for sure Twentytwenty earnings Conference call.

Hi, I would like to turn the conference over to stay in a parallel to read the Safe Harbor statement. Please go ahead.

Thank you operator.

Good morning, everyone and welcome to the PVH Corp. first quarter 2020 earnings Conference call. This webcast and conference call is being recorded on behalf of PDH and consists of copyrighted material. It may not be recorded rebroadcast or otherwise transmitted without pvhs written permission your participation in the question.

The answer session constitutes your consent to having anything you say appear I know you transcript a replay of this call.

The information to be discussed includes forward looking statements that reflect pediatric view as of April for 2020, a future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's FTC filings and the Safe Harbor statement included in the press release I did the subject of this call.

These risks and uncertainties include PDH is right to change it strategies objectives expectation band intention and if need to use significant cash flow to service its debt obligations significantly at this time because it 19 pandemic continues to have a significant impact on the company's business.

Financial condition cash flow and results of operations.

There are significant uncertainty about the duration and extensive the impact of the pandemic. The dynamic nature of the circumstances means what is said on this call could change materially at any time. Therefore, the operation of the company is mats and its future results of operations could differ materially from historical track.

I said that muddled or current descriptions estimates and congestion.

PVH does not undertake any obligation to update publicly any forward looking statements, including without limitation any estimates or suggestions regarding revenue or earnings.

Generally the financial information and projection to be discussed will be on a non-GAAP basis as defined under assay field.

Reconciliations to GAAP amounts are included in PVH. Its first quarter 2020 earnings release, which can be found on W. W. W. Got PVH dot com and in the company's current report on form 8-K furnished to the FCC and connection but they're really at this time I'm pleased to turn the conference over to Mr. managers.

Go chairman and CEO of PDH.

Good morning.

Everyone. Joining me on the cool stuff from Watson President luxury brought you walk London to fall there for losses for Dana Perlman or Treasurer, Vice president of students as well.

After the relations.

I'd like to take a moment worse or what's going on around.

Most recently up small country, we looked at port, although we go back the systemic racism.

That's core to them so.

Social Justice North country.

Regarding the bio closes which is to draw Xbox and old good.

One of the best ways, we can do that.

Well really shows quality.

In the walls of our company.

Well all industry and in society at large.

Youre, creating wants to listen and learn we are also appealing mortality allocated between <unk> and training development programs to great new opportunities for growth.

So that we can include good representation across all levels and support all black associates.

So in a 10 leadership positions across all company.

Furthermore, the Corona water pandemic has dramatically impacted our business over the past month.

Lots in every region of all this is the health and wellbeing of are supposed to this.

Rumors <unk> and the communities, where we operate married or popcorn at all.

Hello, almost 140 year history, we have been faces many challenges and I'm confident that successfully navigate backdrop as well we have strong financial discipline.

Healthy strong balance sheet with $1.2 billion overall liquidity and a wide range of global growth opportunities driven by Calvin Klein and Tommy Hilfiger.

All right and.

And our people are two greatest assets.

And they will hold on schools way during the first quarter.

Our associates and business leaders, who demonstrated their passion dedication and enjoy and when I was locked inside each and every one of them for helping drive alternatives dispose. Despite the challenges covert nice them at present.

We're working to first mission, we recently closed doors and then why don't we played to successfully we opened schools around the world.

As always in all warehouse.

Kept all businesses moving forward and those working from home <unk>, who either and I cannot buy every one of them all with Arizona and commitment.

Oh, Arconic, Calvin Klein and Tommy Hilfiger, Brian has continued to experience that's when when consumer response over this period.

Integrating strong bronto and loyalty during the crisis.

Each brand attracted Lukas <unk> visiting our sites for the very first pawn with good conversion and strong purchasing behavior over this period.

Operating a diversified portfolio of brands, which drawn geographic diversity with has always been one of our schools.

Now more than ever.

Benefited from the diversification of all business.

For example, what size in much the expertise and then from are easier to have been incredibly valuable as weve novel navigated the corona borrowers across other regions.

This helped US get ahead of key decisions such as adjusting our marketing campaigns the ways to engage with consumers and drive our digital there who's going to temporary store closures.

As well as Carlos safely and most effectively we open loss was once restrictions are lifted.

Additionally, we were able to reallocate resources to better support what was open during this period focusing on how to.

Yes, you are owned and operated comps right and also working with our third party digital partners.

<unk> competitive advantage.

Our people our brands and well diversified business model, what gives me great call confidence in the long term bulk the ball business.

And now moving on to the first quarter Financial result, we asked me 2020 with strong brands health and increasing momentum across Tommy Hilfiger, and Calvin Klein and among draw your.

Regions, where we operate.

Unfortunately coal good 19 had a significant impact on our business during the first quarter as our store and all wholesale partners stores will close were overseas and so on average during the quarter.

This resulted in revenue and all own stores being down 50% to 65% depending on the region, while our wholesale revenues declined about 40% as shipments to our wholesale partners were driven dramatically reduced across all markets.

Our digital businesses, both our own owned and with all wholesale partners had outstanding <unk> performance and became our number one most critical channel because business during the quarter.

With our European digital businesses.

Along with outperformer of any of our markets.

On the operating margins are our gross margins NSP anyways.

The significant pressure with well.

While we tackled every expense line, including marketing and made difficult decisions related payroll expense. Most of these measures didnt get inactive until the end of the quarter.

In addition, we recorded about $100 million human reserves for future inventory markdowns and accounts receivable write off.

Given that the operating environment, we will also be in addressing our inventory levels to reflect the current demand picture and are working closely with our suppliers in the event of when you will should be disruptions will delays.

Additionally, during the quarter a licensing partners were significantly impacted.

Business disruptions as well, we will continue to work closely with a licensing partners throughout the year as we are planning for their businesses to experience similar procure to what we are seeing in offices.

These are long term view in mind.

And proactive measures to strengthen our balance sheet preserve liquidity and improve our financial strength to come out of the coldest crisis, which shows a stronger company.

Overall, we ended the quarter with $1.8 billion of liquidity.

Our CFO March April will discuss the specific steps, we took to strengthen our financial position in his comments.

As we know navigate through the recovery.

We will continue to evaluate how would you further strengthen our balance sheet optimize our businesses and identify efficiencies, which will allow us to operate smarter and ultimately.

Handsaw operating margin profile, which we believe will drive enhanced long term returns for our stockholders.

Believes that this add these actions in totality will position us to successfully navigate the covert might do them damage and emerge and overall stronger competitive position.

Before I hand things over the specimens to go through our region and brand initiatives I would like to size. The end agree to who served as CEO, Tommy Hilfiger, and PVH Youre always contributions with company over many years of service.

I also want to congratulate more time has been on his promotion and I am confident that more time to successfully the Tommy Hilfiger and PVH Europe into the future as we capitalized on the significant future growth opportunities for our business was out of I'll turn it over this spring.

Thank you Mary and when giving you all have an update today from our regional for Brown I would like to start with US many mentioned that moves in production, but this has been a very different kind of quarter, where all of our browser and regions have been heavily impacted by the cold required for the without.

Doors that our wholesale customers stores.

Close put six weeks on average during the quarter.

Mike will later on the call share more details on how the numbers came out and give you any indication of Q2 trends.

But I would like to shareholders. How we are successfully navigating l. brown riggio through the different phases of this crisis, what ARPU learning how to be as well as sharing some of the green shoots, but we're starting to see what gearing up to drive an accelerated recovery at the win with L. Brown and consumer pull.

Cold.

From a regional perspective, our results came into this crisis at different times Asia, and China in particular Canyon first and most of that coupled with first then Europe was too closely followed by North America.

Starting with Asia, and China, They have provided us with the best learning for the recovery phase in our other region currently all of our stores in China Roe.

The China started to reopen we've seen strong week over week improvements across the board.

For example, a reopen stores so now approximately flat to last year, and our digital business up triple digits for both Calvin and Tommy.

We're experiencing very strong conversion and higher units per transaction stores, a lower overall traffic trends.

Drive success during the store closures, we offered virtual appliance, telling them engage with VIP shopper through each up with light screamed all brands to connect with consumers, which led to significant sales growth versus uptick okay.

The euro follow closely off trade show, where we have also seen strong week over week improvements currently about 85% of our stores are also im trends are very encouraging.

We're planning for the UK market to reopen the early next week as we reopened stores, we have experienced strong commercial unfavorable full price trends with less promotional some plan.

We have faith lower overall traffic trends that have improved more than smaller fit us versus big cities of consumer shopping closer to home.

Apply the data driven approach to be able to offer targeted promotions to increase sell out why malls, but keep in margin relative to stable.

Overall, we believe that Europes recovery will be about wanting calendar quarter behind the trends for a few in China.

For wholesale our fall order books that were up mid teens pre covert well know down low to mid teens for each of our brown as we work with our partners to consolidate productivity.

To better match demand and the Europe clean on inventory as possible.

And lastly in North America stores here, where the latest reopened and we will be up 85%. We opened by next week.

We're pleased to see how that customers are coming back and our old stores small doors top performing very well our domestic consumers are over indexing and they will be critical to target that domestic customer for the remainder of the year.

International consumers, so traveling much less and we don't expect this trend to materially improved this year.

The whole Pier Park, a tool business improved with the introduction of curbside pickup and ship from store.

Digital conversion at significantly higher than last year, we're attracting a lot of new customers shopping outside.

We believe that the recovery in North America, we call it a slightly lower recovery trajectory of in Europe, and we expect our promotions will be elevated offer pivotal to euro our wholesale partners stopped accepting shipments in March which has been a headwind for the business and we have only seen replenishment orders start let me.

Yup.

Cross rebuilt some brown when we were hit by the Colby crisis, we had a very strong focus on the short term navigation through that need to crisis, the health and wellbeing of our teams and costs are most cash preservation expense reduction and the inventory decision to adjust to the current demand situation right.

Using multiple approaches to manage our inventory such us counselling orders re purposing every flowing goods re platforming proper cross holidayed in future collection of passing away stuff that core items, where we can achieve strong margins.

Upcoming increases.

In parallel to hunkering down from a cash cost an inventory perspective, we redirected I'll focus early on to demand creation to where the culture mobile shopping.

We have supercharge, our ecommerce channels across all brands and retailers both owned and operated and we are collaborating very closely with small cell lung going I'm not calling among others.

That moves us to where the customer it's going both in terms of live event product launches as well as connecting our inventory from our bricks and motor stores to serve our all E commerce as well as part of the platform.

What it's exciting to seek us out our consumers have expressed a strong demand for our browser across all digital platforms. A few examples our own digital businesses had excellent performance during the first quarter Cabot's digital revenues were up 40% and Tom its own digital business up over 60 per.

With triple digit the increases in the second quarter today.

Our Calvin North America ecommerce business turned a corporate profit for the first partners CK adult calls history.

In Asia, we furthered our partnership with T mall by featuring a virtual exhibit far CK one product.

And our CK one key more club so a strong consumer demand of sell throughs.

In Europe, we accelerated the rollout of connected E commerce with so long ago and about few allows ship from store penetration reached double digits for Salon, though in April and May.

North America, our out of some business benefited from significant growth in prime memberships and this month, we will participate in their summer sales, but softlines, let's say move their prior to October.

In the product assortment across broken weakness, we are seeing the cost silhouettes.

Elaborated way going towards cash of essential products. There is a big increase in demand for our essential categories by underwear launch where T shirts, who it is at least sure active wear as well as Jean.

All these categories our core strength of both brands, we have redirected big product introduction of product could operations through E Commerce and done some of them show in the digital or CK. One of the large haven't Instagram reach of 57 million people. We also launched our Tommy jeans Luna chose capsule.

In the Lightstream partnership with T mobile achieving over 45 million in question.

Lastly.

This crisis, that's very clear that our product lead times have come down across the board to better match inventory to the current demand trends.

Our marketing helpful for being re directed towards social and digital to reflect the time we are living.

For Calvin we hope, we hope that monthly lightstream, such as the reach up using local talent in the compared.

Calvin recently lost its price 2020 campaign hashtag proud in my Calvin across social digital and E. Commerce in over 20 markets initial sell through is strong and become payment collection.

The 89% to increase in average comments proposed.

A tolling, we live streamed spring collection with the ability for consumers to purchase directly from the events for wear now product.

Let me also hosted for celebrity live streams are short video platform build when we secured 1.5 million views and helped us converts both new and existing customers to purchase.

All brands have refocused on engaging with a customer and a more interactive way than anytime before.

I would also like to pick the step back and give some global brand highlights starting with Calvin.

Calvin Klein began in the first quarter with strong brand health, including very strong global awareness.

Calvin Klein lifestyle is truly resonating with consumers. During this time particular, our underwear launch where active wear and where I know offerings. We adapted our marketing message to reflect this through our upholding might topics compared.

Our efforts were successful as we saw significant growth in new consumer shopping our sites and we continue to focus on new customer acquisition as well as retention and conversion.

For example, our CK one launch which is our replay of died clinic gender less collection from the 99 to cater to the younger consumer and now represents 10% of CK underwear sales in Asia.

Before the Colgate crisis hit we had already started to work with settings are forward looking Brown director for Calvin Klein and I'm pleased to share that the team has completed this work and we're looking forward to take you through it in detail other data.

So now I would just like to share that evolve brand direction Thats built around going back to date College DNA over brand and read connecting it to the consumer and culture of today, it's focused on helping sites unique strengths as one of few authentic global lifestyle brands and will be a very strong foundation.

To drive consumer engagement, a profitable growth for the year to become.

The response from our own cadence of extending our collaborators has been very strong.

Moving on to Tommy Hilfiger told me after 2020 with a strong underlying momentum.

I would like to start with welcoming martinus, our CEO for Tommy Hilfiger Global PVH Europe.

Martinus being the co pilot behind the Tommy Hilfiger brand a business success over the last few years leaves us very strong leader and value creator.

Tommy Hilfiger was recognized in the top 20 of gold business index for the top 50 luxury brands, which rock, which Brian Reits Brown's across consumer sentiment digital presses omnichannel performance sustainability reporting.

Actual performance.

We also had exceptional sell through of collaboration launches throughout the quarter, including Paul May June Luna drove capsule, which shows that our differentiation is a true advantage, especially in markets like China.

Moving off the heritage, we're pleased to close on our sale of the Speedo business depends on the Naperville for approximately $170 million and we will look for additional opportunities to streamline and or exit businesses that are non core plus.

Our heritage brands business was under significant pressure, although the online businesses from our wholesale partners was a partial offset.

The cash utilization trends, thus being accelerated by cold It that's working for us in both Calvin and Tommy it's working against US in the more formal wear to work product candidates in heritage.

We are addressing these challenges by managing inventory levels more prudently lowering our cost base evaluating our store portfolio and reviewing additional ways to optimize to streamline the business.

Finally, as soon as many mentioned navigating through this crisis has made us even more aware of the many unique strength, we have to build on coming out of coated.

We have two of the most iconic brands in the market globally in Tommy Hilfiger on Calvin Klein, both with very strong global awareness as well as big strong consumer basis around the world. We also have a very strong multichannel precedence in North America, Europe, and Asia, and we are increasing the.

Switching now reached to us whether closer lids voting to show and the crisis has made us move faster and get even closer to the coast over.

And what we have realized navigating through the immediate crisis is that many of the key learnings from during the crisis, where a very tightly connected to what we repaid to win both coated overall, we see that the coal that affects an old business reflects big accelerations of existing underlying consumer market trends.

An increased focus on E commerce product relevance and consumer engagement will be core priorities as we are driving for some accelerated recovery and with that I would like to turn it over to Mike.

Thanks.

Thanks.

Thanks, Stefan I want to briefly touch on the first quarter 2020 results the move onto the current state of the business.

As expected our business was significantly impacted by the Kogut 19 pandemic as the majority of our stores in the wholesale partners stores were closed six weeks on average during the quarter as result of the widespread store closures revenues from a retail stores were down approximately 50% to 65% depending on the region ship.

Thanks to a wholesale customers were sharply reduced as well, resulting in an overall decline at 41% in our global wholesale revenues.

Our directly operated digital ecommerce businesses were fully operational during the quarter and we experienced strong revenue growth in all regions up 40% versus the prior year with double digit to triple digit revenue increases during the period, while our stores were closed.

This growth in E commerce, partially offset declines in our brick and mortar in wholesale revenues.

Overall, our reported revenue was down 43% Tommy Hilfiger revenues were down 39% with international down, 32% and North America, 51%.

Calvin Klein revenue was down 46% was international down, 40% and North America, though 54% heritage revenues were down 47%.

In addition to the revenues decline or results were under significant pressure in the quarter due to $97 million decrease in accounts receivable write offs and inventory reserves and the significant de leveraging of expenses. We continue to we continue to pay certain retail associates for all or most of the combo stores were closed.

And the measures we are taking to reduce expenses didnt take effect until the end of the quarter.

The unprecedented revenue earnings decline as a result of depends on the resulted in a loss per share in a non-GAAP basis 3003 cents for the first quarter.

On a GAAP basis due to the pandemic and reduction in the market cap, we took non cash goodwill intangible asset charges of 933 million also we took noncash impairment charges totaling 16 million related to store assets and 12 million related to an equity method investment.

Moving on to the current state our second quarter and full year 2020 results will continue to be significantly negatively impacted by the coven 19 pandemic and we expected our revenues declined in the second quarter will be more pronounced in the first quarter, the duration and extent of the pandemic remain.

Highly uncertain.

Results could be impacted ways, we are still not able to predict today and as a result, we're not in the positions issue more detailed guidance with the second quarter or for the fiscal year.

We're continuing with the phase reopening of the stores in the us and around the world by mid June was 85% of those stores, we will reopen globally, although most of stores operating with reduced hours and occupancy levels, while sales remains down across all regions on a year over year basis.

Traffic and sales trends are improving each week.

Second quarter to date with seeing same store sales for brick and mortar stores that have reopened running about down 25% from North America.

Down 20% for Europe.

And down 25% for total Asia with China flat.

In China was the first country to close and the first country to reopen with the pandemic.

All in second quarter to date for a total direct to consumer business, including stores that will close to a portion or all of the second quarter to date and directly operated digital commerce sites, we're running about down 65% for North America down 25% for Europe.

And down 11% with total Asia, the China is of 25%.

Additionally, most of our wholesale customers has now we opened the majority of the locations across all regions. However, due to the significant levels of inventory that remain in stores. The majority of our north American and European brick and mortar wholesale partners stopped accepting shipments beginning in March.

Which has not materially improve into the second quarter.

In response to this pandemic.

To the pandemic, we have taking every proportion to reduce or expenses and working capital. These actions started in mid April and are continuing into the second quarter and the rest of the year.

We are reducing payroll costs, including salary and incentive comp.

Total loans decreased working hours and hiring freezes as low taking advantage of applicable government will lead programs.

Eliminating or reducing other discretionary and variable expenses, including marketing travel consulting and creative in design costs.

We will also tightly managing inventories, including reducing and canceling inventory commitments redeploying basic inventory items to subsequent seasons and consolidated in future seasonal collections as well as negotiating extended payment terms with our suppliers.

I want to emphasize that our priority has been on cash flow and liquidity. We ended the quarter with 1.8 billion as liquidity, including cash of approximately 800 million and 1 billion of available borrowings under our revolving credit facilities.

As previously announced we moved quickly to reinforce the liquidity units than response to the pandemic, we suspended share repurchases under a stock repurchase program in March following approximately $110 million repurchases. We completed in the first quarter and we suspended our cash dividend beginning with this sets and.

Order.

We entered into a new 275 million 364 bit revolving credit facility and issued an additional 175 million euro.

Our third three and 5% senior notes due 2024.

And we importantly, we obtained a wave of the leverage and interest coverage cost covenants under our senior credit facilities through and including the first quarter of 2021.

We are cutting capital expenditure expenditures to approximately $190 million 2020 from 345 million in 2019 with capital expenditures only for minimum requirements in our retail stores of for projects currently in progress related to our systems in warehouses. Additionally.

We closed on the sale of the speed on North America business dependent group plc, the parent company as the Speedo brands in April for proceeds of about 170 million.

We will give guidance for future quarters in the year. Once there is more priority on the impact in duration of the cold in 19 dependent.

And with that operator, we'll open it up for questions.

Thank you if you would like to ask a question casing nobody pricing.

On on your telephone keypad.

We are using a speakerphone. Please make sure your mute function is turned off to allow your signature retiring.

Again, that's down wanted to ask a question.

Well now take our first question in the queue comes from Erinn Murphy from Piper Sandler. Please go ahead, Sir your line is now open.

Great. Thanks, Good morning, everybody I guess my first question is on for Joe composition on the other side it could get 19, you've referenced in the correct kind of trends with athleisure comfort curious how durable you'll see that Howard.

Forming particularly your expectations and then on the heritage business as it will make strategic sense in a post world.

Yes.

Her and when it comes to the capture that station trended products does the travel that we sold pre covidien, we see the coldest text accelerated with us.

Every everything we see in the data and how the consumer is shopping is saying that trend will continue.

And its core to its what excites us there is.

The big Cashel product categories like underwear T shirts coded including data seats the dose for all core throughout two big routes.

I guess on the Heritage Sato Aaron.

I would say is we're taking a hard low.

You can see that in the decision to sell Speedo business, which was a good business that is due to fit strategically where we are moving the company and I think we'll take a hard look at.

Continuing to prune the heritage business that we look forward streamlining opportunities in the future will not to return on investment in return on invested capital. So I think.

We will continue to be aggressive in Melbourne area.

Okay. That's helpful. And then I guess my second question is just around.

The strength of digital.

Your views around those leaflets footprint figure on breakout and baby, Paul and I can be kind of closer or net opener for the next few years and then just any comments on tore it for us because I know, there's a bit heavier head.

Where do you.

So going forward.

Okay.

I think when we look at the when we look at the store portfolio I think we're taking a hard look at.

How that how that leads to develop and I think those stores that were.

Six months ago, four months ago cash flow positive marginally profitable I think those stores with the pressure that we put on from a pandemic, adding to shift to digital.

Really two is really pointing to the need to reevaluate those stores and look to streamline the portfolio and I think that will tend to FFO, particularly here in the United States and I think to some degree in Europe as we look at that portfolio in Asia, where we are under developed.

What we sell for review of China, just about every market in Asia. We've got good brand positioning while there seems to be brick and mortar opportunity. There. So I think there will be a net opener and I think in new more mature markets will probably be a net closer over time.

The second quarter or the second question as you could imagine we see CHRW tremendous results positive results in our permanent population stores smaller cities cities that really driven by stores in the world driven by the consumer and that geographic markets, both year Europe Asia and in Walker.

Okay.

And we'll we'll be in dramatically hurt by tourist locations stores, we just think about the business Orlando Las Vegas.

Won in Asia.

How long that market that drives offices in Euro Paris, Milan, London, those stores, which are big profit produces without that international tourism, both stores is down significantly more than local languages and all permanent population stores across.

First of all that much closer to flat ultimately down slightly.

Your next question.

Thank you well now take our next question.

Bob Java.

You can point. Please go ahead your line is open.

Hi, good morning.

And just from that perspective of inventories, Jim if you could give us your view on.

The progression towards supply demand getting back in balance both within your business, but also within many of your customers just in terms of I get a timeline or how you really see it playing out and then.

Second question is just can you talk a little bit about distribution around.

Door closures in.

Wholesale door closures and how you're approaching that so that you think through the rest of this year and into next year.

You are going to make Mike.

Two.

Good question I'll come back on distribution so.

Well above in each region. We had this period of closure goodwill in the pipeline goods were flowing and.

You see that in our inventories our inventories are not reflective of the second quarter demand.

And there are our balances are reflective of of goods that we will we will be liquidating throughout the year.

Our expectation is that we will just get cleaner each quarter as we move through the year.

But we will carry some goods over basic core spring product White T shirts underwear.

That don't change that will not have significant change and we believe can sell next year, we will carry pack and hold was put into.

Our spring Assortments for next year, so and that number is going to be this quote around $250 million. So in effect I don't think you will see the inventory truly reflects the medical sometime in the first half of next year.

Great.

Thanks, Bob folding when you think about distribution were clearly watching this closely.

Distribution, meaning that we know the wholesale channels. The department store channel that we saw in Q globally, Europe, and North America, specifically, you talk a tremendous pressure.

Thank you definitely we're going to seek store closures and contractual business, we've already seen diagnoses and will be we purposely real estate.

And consolidation and I think it's clear to us.

This was not an environment, where you want to get too far ahead when you sell.

From an inventory of drilling unit demand point of view for fall, we're being very cautious hour by would fall.

Based on all what we're seeing in our order books, we're not planning on excess.

Refurbishment within a season as Mike said, we've got plenty of core to support the most profitable sizable business not underwear business, our basic sportswear business, both businesses inventories for that and believe the demand like helps the fashion sportswear and things like that we will.

The volumes very very tightly when that's going to continue as we watch both occur virus.

But also just the inevitable acceleration that the viruses causes the closed the.

To close to close again.

So we'll see how hurdle.

Next question.

Thank you everyone now take our next question from like the Nashi from Credit Suisse. Please go ahead. Your line is open.

Hey, good morning, guys. Thanks for all the detail.

No I think manages that it related to your comment that Calvin Dotcom does turn profitable as we look at your overall digital business.

I know you've been ramping up the digital chops and there is been capacity I think really relied on the wholesale partners to capture the digital consumer for you all the spending that it takes to drive traffic to their sites in the digital Capex that goes with it.

Can you talk a little bit about how equipped uses you are today.

For the difficult period in the consumer engaging directly with the brands online. After that's how does how does the how does your digital business overall influence your gross margins SG M&A and operating margins.

I think is.

The.

Impacting the first quarter profitability we.

The digital business.

Also our own size and our fueled by digital players production partners like Q2, more Amazon Zions, though.

Wholesale partners pure play those are some of our most profitable businesses and Raleigh.

So in efficiencies.

New to our AR.

Our own E com business and scale, which.

Really terminals business is much more profitable for us so really I.

E Com business.

No negative impact and wall on our profitability this quarter.

That profitability impact is really driven by the reduced sales volume expense initiatives that really began late in the fourth quarter as a source.

Stores closed we continue to pay people for a model before we start parallel and say other initiatives, hoping that this would be quicker.

So I think you'll see those start to become more in line as we get the second half of the year expense ratios and our margins were impacted by the reserves we took.

Total $100 million, a big portion of that fourth margins.

Each markdowns.

A second and third quarter. So I think thats would have much more impact on R&D on our profitability margins and the loss that was generated and then finally I'll just say is.

This demand curve on E. Commerce continues we are seeing our profitability significantly improve in that channel of distribution.

Both from a direct to consumer where we are doing everything is selling directly and particularly where we're working on those qualities layers that that by part of our most profitable business.

I guess, just as a follow up to law.

Upscale as that business going to be your own digital business at scale is that going to be positive to your long term to your long term margins I know at a certain point, it's going be very highly variable cost structure.

And I do last one follow up.

Im curious about the for the number of wholesale passing away inventory said by 250 million. What's the response from the factories, while they're seeing you and your peers packaway inventory, which inevitably means they're going to have capacity issues over the next year do you need to support them in any way to make sure. The capacities there when you need it and do they need to start taking physical asset.

System for the new normal how should we think about that.

Full has sold north, Texas, but second.

On the suppliers in how we're trying to support and well look where we are working with our suppliers and the newer shipment for me to keep them healthy to keep them on track our supply base. In general consists of the good players rather than smaller players. So there is some stability in that mix, we do over financing program that allows.

With some flexibility with our vendors as well so.

Is there is pressure in that in the whole supply base.

As people have been canceling orders and doing the pack and hold so.

The only offsets to that has been that many of the factories were closed and demand was down we now see our factories back to pretty much in normal level.

Open, but still dealing with social distancing and some of the issues around.

The pandemics or less efficiency.

And they just continue to make adjustments to try to work in the new World and we're doing everything we can to help and communication with key which.

We're communicating of funds that we can adjust modified do whatever they can trying to work together.

But I don't believe it's going to require any significant material.

Support above and beyond what would be in normal course.

Coming back to your question on E Commerce distribution choices, we make going forward will follow whether consumers going and we see big opportunities both for owned and operated E Commerce and Thats not I mentioned, the third party commerce and the connections between the two at scale.

So we'll continue to improve our profitability in those channels as well as to our continuous improvements in execution and that's something that I mentioned in my notes that.

We're very pleased to see how our teams across the world are leaning into E Commerce and as you know it's close to its about continuous improvements on multiple parts and we've see both the demand being there and ups increasingly profitable, helping us tufting into that demand.

Okay program.

Okay.

Okay.

Next question will now take our next question Jay So from you'd be at please go ahead.

Great. Thanks, so much just a follow up on the comments about gross margin in that sort of 97 million on inventory accounts receivable that was taken with charges taken this quarter and also the fact that on SGN Ace and reactions that you took came at the end of first quarter. So we didn't see a whole lot of those that the impact in Q1 is give us what it more directional color on how you see.

Gross margin in Twoq, playing out and how you see US you made dollars trending in Q2 relative to where they went in Q1.

On this on the gross margin front I think we're going to see a leveling off year over year distributions to unit.

Based on the response that we're seeing the favorable response that we see as we opened our stores and the new and not needing to do as many as promotional as we anticipated.

We are we're encouraged by that and we think that there is a positive positive impact.

That will see overall compared to first quarter.

From a margin perspective unit will now and then in addition, if you think about our business from a gross margin point of view the mix of business in the second quarter in particular that was shipped.

More so to a retail.

Model given the fact that wholesale in the second quarter will be under more pressure.

That will also have a positive impact on margins overall offset by the world and promotional nature just in general what should be outdoor everybody.

Slings former inventories in the second quarter is early third quarter.

Expenses it was.

With the spread between the prior year in next year. As you said was is only we didn't have a full quarter of savings in Q1 in Q2, you will see that spread get loyal.

We'll see we'll see additional savings as we as we get the full quarter of the benefit resin flush.

Got it okay. Thank you so mark.

Well now take our next question.

From Dana Telsey from Telsey Advisory Group. Please go ahead. Your line is now open.

Thank you good morning, everyone.

Regarding the topic of product lead times that Stephane mention how do you frame that in terms of the target and what it means from margin and inventory levels going forward. Thank you.

Thanks.

This is going to talk to that Dave.

Thank you for the question, it's an important long and wind up being.

Very clear coming out of the crisis, where we will continuously how to improve the lead times and as you know there are multiple components on lead times. There is there its lead times connected to core replenishment that can get us down to one to two months replenishment and under his leadership.

React capabilities to seeing when demand trends take off due to that and react to those versus being bought up products. So we'll work and then there are the overall product development lead times that have to come down and really come down on them.

Both in Calvin and Tommy and there at this division were working with digital life thing.

The supply chain that before saying and product development. So that would calculate size. So we have come back later on with specific targets, but it's very clear that it's a combination of those three activity.

And then I'm just going to Ed. This is an area that assessment has been working with our product teams are sourcing teams and our logistic issues and I think pre pandemic we were.

Very optimistic about being able to demonstrate some of those benefits going into second half of 20 Twond as the second half of 2020, Unfortunately those benefits.

We'll be there I think of that together math.

From a financial perspective, this year because of all the noise around depends on that because of the issues and the need to carry excess inventory and so as not to stop the channels with excess goods.

But I think as we get into 2021 view, we really to start to see some of that benefits. The step is brought to the company working with our teams very closely to really get both benefits on loose on that should enhance margin and hopefully overtime reduce our inventories area.

Next question Q.

Thank you well now take our next question from Heather Kos gains from Bank of America. Please go ahead.

Thank you Mike.

And now are there a lot of questions with regard to very shaping of interest accretion footprint given the Kobe crisis with.

We'll go closures in accelerated and and the ship online the accelerated can you help us it's much much bigger picture I think about.

What this omni.

From a growth algorithm perspective.

Eric wholesale is pretty high.

Margin channel, but you commerce samples at strengthening and just how you're thinking about.

Go ahead.

Takeouts Stephens said is really well, so we need to move whether consumers moving needs to go with consumers shopping.

Trying in the midst of this.

Of this crisis.

Trying to give.

To give you any.

Vested group specific guidance about sales growth in what what will be shrinking we'll be rolling what if we can do it would be giving guidance right. Now. It's just it's display is coming out at very fast will walk you through very fast we use a common inventories.

In wholesale retail into digital channel, we're not we're not spyros likely had been in the past that we can use inventories across channels.

And I think that allowing us the flexibility to truly that and it's also built in a level of conservatism on lease for the next six to nine months that we just can't be chasing goods will grow the way we might have.

In a different.

Timeframe on a different economic situations. So I'd love to give you more color I'd like to have more color exactly what's going to happen, but I think in some ways. This is going to see how agile every week can be competitors are going to be in order to believe that what's going to be coming out on from the.

Wholesale Department store channel, what's going to become a reality the all in the brick and mortar retail channel and having the system capability and logistics capability to take advantage of the growth on digital which this year will grow we will go from 2019, which was what we have a good deal with Google about 12% of our busy.

This is done to be a significant growth.

Driven by the demand and also driven by the pressures that with the latest job.

Yes, just to build a one bedroom set us while it's the consumer we have to start with the coast over on the consumer shops across all channels, increasing this though there is an E commerce piece under its a brick and mortar piece on that would continue to be bricks and mortar periods, we see when we open.

Our stores again that the consumer.

It's coming back slightly ahead of our internal forecast study and so for us is going to be about the omni channel approach to say in a shopping region. How is the consumer shopping across digital and physical channels uncommitted funds were going to match.

We've got a notch.

Right at the customer demand.

Thank you.

Yes.

Thank you I'll now take our next question from.

Jamie Mariama from Bernstein. Please go ahead your line is open.

Good morning, Thank you I, just on and and many of those factor that being where the consumer it sounds like in the quarter as you emphasized that omni channel capabilities.

EBITDA is like shipped from store.

Relatively quickly.

I'm just wondering either systems investments that now needs to be made picked up quite the omni channel activities over the longer term and and how should we think about that.

Thanks.

Just just.

To start answering your question Insistently Youre right. This quarter the crisis drove us to move faster on collecting digital that physical stores that lever assessment that surprised so how fast we could move on that.

Hawaiian one big outbreak horse to connect stale inventory in physical stores to serve our digital channels. So when it comes to invest us again.

We had anybody in that everybody in this industry has to continuously invest.

Two.

Into those capabilities when it came to the ship from store capability resource a lower investments have cost or impact on what's the mix expected, but overtime, we will have to come.

Continues to reinvest in those capabilities coming back again to whether customers go.

Yes.

Just had we had.

We give guidance on Capex is 190 million in their R&D investments on the capital side that we're making on on E. Commerce Omnichannel shipped from store all those pieces.

Those were really redeployed, we basically have moved investments that we would have made in other words and business into that into that sector and I think that that we deployment will continue into future periods.

Yes, again 195 million is significantly lower than our historical caps and but I think if you're thinking about perhaps than they've been in line with what our historical levels have been.

In dollars and as a percentage is channel.

Next question.

Thank you.

Our next question comes from Matthew Boss from JP Morgan. Please go ahead.

Great. That's funny, maybe any material difference in demand recovery from here that you're planning for as we think about Europe versus the last based on what is so far we openings and with that what's the level of promotional activity that you're seeing necessary to drive demand in Europe versus the us today.

Okay.

Let's talk about the promotional levels as always the promotional level is lower in Europe, and the United States.

And I'd say.

This this doesn't change that we've seen in Europe, very strong full price selling.

Across the board and or excuse me.

Oh price stores and in our other channels, we we really targeted or promotions very efficiently in the USA.

When we initially opened we came out of the box very strong for promotions will review, we were anticipating even higher promotions on what actually happened in the stores today, we see that also that initial promotional cadence and has since we.

Doing on our pls spaces that gives us the flexibility as we saw demand exceeded our expectations. We have pulled back on the promotional cadence overall.

I would compare the promotional cadence in the us to be slightly more than it was this time last year, but not nearly as the promotional as report is going to be going forward.

I hope that gives you some call.

That's great color best of luck.

Okay, and I think we were going to fulfill last question is right now just about this after 10 and.

And we try to get back to business. So last question offering.

Thank you well take our last question from Omar Saad from Evercore. Please go ahead, Sir your line is now welcome.

Thanks for squeezing me in Manny.

Greg If you guys are well to two quick questions number one it's been a particular question. So I think about the stores that were opened in the first quarter.

Versus second quarter, our stores and ahead of the percentage versus the total overall possible store hours. If you will that percentage going to go up or down into Q. My assumption is in stores are less open into Q overall.

Versus lumpier, but I want to kind of get confirmation from that and then second question staff and I was really curious you talked about Calvin Klein to what you guys have done there on the brand.

Looking at it DNA harkening back to the kind of iconic DNA, maybe a little bit more.

The information insight around that are we talking about Brooke shields are we talking about marquee Mark I would appreciate your color there. Thanks guys.

Oh, I guess seven a chance to put the marketing campaign together, but relocating to drive.

Thank you I think sort of question on more.

On.

Clearly as we go through the second quarter with the store.

If you take the month of February added the equation, we're going to be significantly more open in the second quarter than than we were in the first quarter rapidly.

So right now I think as we say in the in all our disclosure we're about 85% open mid June so by the end of this weekend about 85% of our stores will be open store score out our lab.

Same store hours on average are probably down 15% to 20%.

Hawk number.

Ill give you a sense that it's Scott. It's also store capacity is down so we can only that so many people in at a time and some locations we have lines outside the store all those things are impacting us where our track our store traffic is down significantly more.

Our sales traffic, that's driven by a couple of things consumers customers that are out in shopping or Allen shopping with a purpose. They lose something they are out there they're shopping the notches browsing their shopping and secondly, I'd say, we're being a very effective we're converting customers we are awfully strong.

Value and our product, which we really saw jump.

In February and coming out of the fourth quarter, we Soto tremendous momentum in our spring product globally.

Calvin and Tommy Hilfiger, and that momentum as the customers coming in and they voted voting, they're really hitting that target has taken off the stuff is not going to give our as you know when the Calvin organization, we don't announce marketing campaigns way ahead of time until they're ready to be announced but I think it gives us the flavor of what locally.

Brian.

Just just coming back to what I shared earlier, it's what the Tms dollar really well is to go back MD told us the Calvin DNA covering some some of those comments that you mentioned, but what they do from there is to make sure that they understand what's made the brand I call. It can resonate.

Some become a $10 billion brought on and then they collect those components dose DNA components to the cost of our culture today, you'll see it you'll see you'll see it gradually coming out you receive their social media you will see it in collaboration with you will see it in an increased focus on modern essential.

If you think about it Calvinist Frank philosophy calendar was 20 years ahead, when we focus on on the essential products, one think Calvin kept stock.

Coming back to what is what's the meaning of each product costs. The intense behind each product. It's never been more relevant today. So you will see us Nitin mentioned, you'll see it overtime.

Thank you everyone is really appreciate thanks for taking upon on this call.

We look forward speaking to you in August.

With our second quarter results, everyone. Please stay safe and healthy have a great day.

Ladies and gentlemen, this concludes today's call. Thank you for your participation you may now disconnect.