Q1 2024 PVH Corp Earnings Call

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Operator: Good morning, everyone, and welcome to today's PVH first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Good morning, everyone and welcome to today's P. P. H first quarter 2024 earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Operator: Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one keys on your telephone keypad. Please note, this call may be recorded, and I'll be standing by should you need any assistance. It is now my pleasure to turn today's program over to Sheryl Freeman, Senior Vice President of Investor Relations. Please go ahead.

Speaker Change: Later, you will have an opportunity to ask questions. During the question and answer session.

Speaker Change: They registered to ask a question at any time by pressing the star and one Keith on your telephone keypad.

Speaker Change: Please note this call may be recorded and I'll be standing by should you need any assistance.

Speaker Change: It is now my pleasure to turn today's program over to Cheryl Freeman Senior Vice President of Investor Relations. Please go ahead.

Sheryl Freeman: Thank you, Operator. Good morning, everyone, and welcome to the PVH Corp. First Quarter 2024 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer, and Zach Coughlin, Chief Financial Officer. This webcast and conference call is being recorded on behalf of PPH and consists of copyrighted material. It may not be recorded, rebroadcast, or otherwise transmitted without PBH's written permission.

Sheryl Freeman: Thank you operator, good morning, everyone and welcome to the PVH Corp, first quarter 2024 earnings conference call, leading the call today will be Stefan Larsson, Chief Executive Officer, and Dr. Coghlan, Chief Financial Officer. This webcast and conference call is being recorded on behalf of PVH and consist of copyrighted material.

Sheryl Freeman: It may not be recorded rebroadcast or otherwise transmitted without pvh's written permission.

Sheryl Freeman: Your participation constitutes your consent to having anything you say appear in any transcript or replay of this webinar. The information to be discussed includes forward-looking statements that reflect PVH's view as of June 5, 2024, of future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's SEC filings and the safe harbor statement included in the press release that is the subject of this report. These include PVH's right to change its strategies, objectives, expectations, and intentions, and the company's ability to realize anticipated benefits and savings from divestitures, restructurings, and similar plans, such as the planned cost-efficiency action announced in August 2022 and completed in 2023, the 2021 sales asset set and exit from its Heritage Brands menswear and retail businesses, and the November 2023 sale of the Heritage Brands women's intimate apparel business to focus on its Calvin Klein and Tommy Hilfiger businesses.

Sheryl Freeman: Participation constitutes your consent to having anything you say appear on any transcript or replay of this call.

Speaker Change: The information to be discussed includes forward looking statements that reflect pvh's view as of June 5th 2020 for future events and financial performance. These statements are subject to risks and uncertainties indicated in the Companys SEC filings and the Safe Harbor statement included in the press release that is the subject of this call. These include PVH is right.

Speaker Change: The change its strategies objectives expectations and intention and the companys ability to realize the anticipated benefits and savings from divestitures restructuring and similar plans such as the plant cost efficiency actions announced in August 2022, and completed in 2023, the 2021 sales assets and exit from its heritage.

Speaker Change: Brands menswear and retail businesses and the November 2023 sale of the heritage Brands' women's intimate apparel business to focus on is Calvin Klein and Tommy Hilfiger businesses.

Speaker Change: PVH does not undertake any obligation to update publicly any forward looking statement, including without limitation any estimate regarding revenue or earnings generally the financial information and projections to be discussed will be on a non-GAAP basis as defined under SEC rules reconciliations to GAAP amounts are included in PVH as first quarter 2020.

Sheryl Freeman: PBH does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimates regarding revenue or earnings. Generally, the financial information and projections to be discussed will be on a non-GAAP basis as defined under SEC Rules.

Speaker Change: For earnings release, which can be found on www dot PVH dot com and in the company's current report on form 8-K furnished to the SEC in connection with the release at this time I am pleased to turn the conference over to Stefan Larsson.

Sheryl Freeman: Reconciliation to gap amounts is included in PVH's first quarter 2024 earnings release, which can be found on www.pvh.com and in the company's current report on Form 8K, filed with the SEC in connection with the release. At this time, I am pleased to turn the conference over to Stefan Larsson. Thank you, Sheryl, and good morning, everyone, and thank you for joining our call today. I would like to start by thanking all our associates around the world for delivering another quarter of strong performance. Your passion, your creativity, and hard work make all the difference.

Stefan Larsson: Thank you Cheryl and good morning, everyone and thank you for joining our call today I would like to start by thanking all of our associates around the world for delivering another quarter of strong performance your passion your creativity and hard work makes all the difference.

Stefan Larsson: I feel very good about how we are delivering on our near-term commitments while steadily steering towards our long-term vision to build Calvin Klein and Tommy Hilfiger into the most desirable lifestyle brands in the world and make PVH one of the leading brand groups in our sector. We delivered our first quarter in line with our revenue expectations and achieved a stronger-than-expected double-digit EPS growth year-over-year, driven by our disciplined execution of the PVH cluster. We drove three percent growth in our direct-to-consumer business on a constant currency basis, which was offset by declines from a cautious wholesale channel and our proactive strategic quality-of-sales initiative.

Stefan Larsson: I feel very good about how we are delivering on our near term commitments, while steadily steering towards our long term vision to build Calvin Klein and Tommy Hilfiger into the most desirable lifestyle brands in the world and make PVH one of the leading brand groups in our sector.

Stefan Larsson: We delivered our first quarter in line with our revenue expectations and achieved a stronger than expected double digit EPS growth year over year, driven by our disciplined execution of the PVH class Plaza.

Stefan Larsson: We drove 3% growth in our direct to consumer business on a constant currency basis, which was offset by declines from a cautious wholesale channel and our proactive strategic quality of sales initiatives.

Stefan Larsson: Importantly, we drove 350 basis points of gross margin expansion and increased our EBIT margins by 80 basis points on a non-gap basis year over year, exceeding our guidance. Looking ahead, we are reaffirming our revenue outlook for the full year and raising our EPS guidance, reflecting the confidence we have to continue to execute with impact while being prudent given the continued macro headwinds. For the year, this translates directly into growth in Asia and North America, while in Europe, against a tough macro, our focus is on quality of sales to further strengthen our unique market position in the region for long-term brand accretive growth.

Stefan Larsson: <unk>, we drove 350 basis points of gross margin expansion and increased our EBIT margins by 80 basis points on a non-GAAP basis year over year exceeding our guidance.

Stefan Larsson: Looking ahead, we are reaffirming our revenue outlook for the full year and raising our EPS guidance, reflecting the confidence we have to continue to execute will impact while being prudent given the continued macro headwinds for the year. This translates directly into growth in Asia and North America.

Stefan Larsson: While in Europe against a tough macro our focus is on quality of sales to further strengthen our unique market position in the region for long term brand accretive growth.

Stefan Larsson: In all that we do, building brand desirability for both Calvin and Tom is the most important thing, and it is the foundation for all five of our growth drivers. It's exciting to see how much traction our PVH Plus plan execution is already achieving in the consumer-facing parts of the plan. We now have multiple proof points showing how we consistently, in a systematic and repeatable way, drive some of the strongest engagements in the industry, all by going back to the unique brand DNA of each of our brands and connecting them to what's relevant today.

Stefan Larsson: In all that we do building brand desirability for both Calvin and Tommy is the most important and it is the foundation to all five of our growth drivers. It is exciting to see how much traction are PVH plus plan execution is already achieving into consumer facing parts of the plan. We now have multiple.

Stefan Larsson: Proof points, showing how we consistently in a systematic and repeatable way drive some of the strongest engagements in the industry all by going back to the unique brand DNA of each of our brands and connecting them to what's relevant today kalle.

Stefan Larsson: Calvin is driving some of the highest consumer engagement in the history of the brand, fueled by cut-through campaigns with globally relevant mega-tasks. We saw the impact of this work earlier this year with the launch of our spring campaign featuring Jerry Mellon-White, and we're excited to build on this strong momentum as Calvin's global product engine takes hold. Tommy is also cutting through on a new level and increasingly participates in the most relevant cultural moments in the world, connecting back to the brand's classic American cool DNA and making it hyper-relevant for today.

Calvin is driving some of the highest consumer engagement in the history of the broad fueled by top through campaigns with globally relevant Mega talent. We saw the impact of this work earlier this year with the launch of our spring campaign, featuring Gerry Mallon wide and we are excited to build on the strong momentum of <unk>.

Stefan Larsson: <unk> global product engine takes hold.

Stefan Larsson: Tommy's return to New York Fashion Week was named one of the top ten fashion shows of the season globally. And at the Met Gala, Tommy dressed all eight members of K-pop band Stray Kids for their first appearance on the Met steps and generated more conversation online than any other brand at the event.

Speaker Change: Tommy your thoughts or cutting through on a new level and increasingly participate in the most relevant cultural moments in the world.

Speaker Change: <unk> back to the brand's classic American cool, DNA, and making its hyper relevant for today.

Speaker Change: <unk> returned to New York Fashion week was named one of the top 10 fashion shows of the see some globally and at the met Gala Tommy dressed all age members of K pop band stray kids for their first apparent on the met steps and generated more conversational line than any other brand that event.

Stefan Larsson: The strong brand and consumer engagement across both Calvin and Tommy is a result of our disciplined PVH Plus execution, where the lead times for consumer engagement impact are shorter than our product lead times. Even though we're already seeing early product traction leading to double-digit growth in key categories with pricing power and gross margin improvement, most of our product improvements will come over time, starting with fall 2024, and then continue to strengthen season by season.

Speaker Change: The strong brand and consumer engagement across both Calvin and Tommy as a result of our disciplined PVH plus execution, where the lead times for consumer engagement impact or shorter than our product lead times, even though we are already seeing early product traction leading to double digit growth in key counter.

Speaker Change: With pricing power and gross margin improvement most of our product improvements will come over time, starting with fall 2024, and then continue to strength to see some by season.

Stefan Larsson: A critical enabler to our product strength is the development of our data and demand-driven operating model, where we continue to optimize inventory to better match demand, with inventory currently down 22% versus the same time last year. We are constantly improving how we plan, buy, and allocate our inventory and taking concrete actions to move the needle here. One such action is that during this year and next, we are rolling out source-tagged RFID in both brands across all of our channels globally, which will drive incremental revenue.

Speaker Change: A critical enabler to our product strength is the development of our data and demand driven operating model, where we continue to optimize inventory to better match demand with inventory currently down 22% versus the same time last year.

Speaker Change: We are constantly improving how we plan buy and allocate our inventory and taking concrete actions to move the needle here.

Speaker Change: One such action is during this year and next we are rolling out source tagged RFID in both brands across all of our channels globally, which will drive incremental revenues. Another area. We are improving our cell location, where we have already reduced initial allocations from 90% to <unk>.

Stefan Larsson: Another area we are improving is allocation, where we have already reduced initial allocations from 90 percent to 70 percent, which means that 30 percent of our inventory is now directly allocated based on consumer demand signals in season. As I mentioned before, each of our five growth drivers is important on its own, and it's when we increasingly play them all together that the real power of PVH plus comes through.

Speaker Change: 70%, which means that 30% of our inventory is now directly allocated based on consumer demand signals in season.

Speaker Change: As I mentioned before each of our five growth drivers, it's important on its own and its when we increasingly play them. All together that's the real power of PVH plus comes through.

Stefan Larsson: Now, let me share some highlights from the first quarter on how we executed across our two iconic brands and three regions, starting with Calvin Klein. The global brand continues to gain strength across all consumer-facing parts of the PVH Plus plan, from product and marketing to how we show up in the marketplace. Calvin entered the quarter with unprecedented momentum following the highly successful launch of our spring campaign. We built on that momentum through the quarter with global talent like Kendall Jenner, John Cook, and Jenny Kim. Kevin also teamed up with actress Zendaya to tease the launch of its spring collection, creating a custom look for her challenger's movie premiere in Rome.

Speaker Change: Now, let me share some highlights from the first quarter on how we executed across our two iconic brands and three regions starting with Calvin Klein.

Speaker Change: The global brand continues to gain strength across all consumer facing parts of the PVH plus plan from product and marketing to how we show up in the marketplace.

Speaker Change: Calvin entered the quarter with unprecedented momentum following the highly successful launch of our spring campaign, we build on that momentum through the quarter, we global talent like Kendall Jenner, John Cook and Jenny Kim Kevin also teamed up with actress sundial to tease the launch of its spring collection.

Speaker Change: Creating a custom look for her challenge tourists movie premiere in Rome.

Stefan Larsson: We continue to elevate our direct-to-consumer experience with a new global store concept, which recently launched in Dusseldorf and Rome. Next week, we launch a global flagship store on the iconic Champs-Élysées in Paris. And on the product and brand side, I'm thrilled to welcome Veronica Leone as Creative Director for Calvin Klein Collections and equally delighted to share that Calvin Klein plans to return to the runway in 2025.

Speaker Change: Continued to elevate our direct to consumer experience with a new global store concept, which recently launched in diesel Dorf enroll next week, we launched a global flagship store on the Iconix Chantilly same Paris.

Speaker Change: On the product and brand side I'm thrilled to welcome <unk> as creative director for Calvin Klein collection, and equally delighted to share that Calvin Klein plans to return to the runway in 2025.

Stefan Larsson: Calvin Klein has always had a unique positioning in the market, with a strong consumer following from underwear, fragrance, jeans, to more refined dressing, all the way to the runway. The collection and the runway will create an aspirational halo for the brand, adding new dimensions of desirability to the already strong foundation in product and market. Turning to Tommy Hilfiger. After having kicked off the spring season with a historic return to the runway, Tommy followed up with a spring campaign featuring Kendall Jenner and friends wearing some of our best seasonal must-haves, including the iconic Tommy polo.

Speaker Change: Calvin Klein has always had a unique positioning in the market with a strong consumer following from underwear fragrance genes to more refined dressing all the way to the runway the collection and the runway will create aspirational halo for the brand, adding new dimensions of desirability to the oil.

Speaker Change: A strong foundation in product and marketing.

Speaker Change: Turning to Tommy Hilfiger, after having kicked off the spring season with a historic return to the runway Tommy followed up with our spring campaign, featuring Kendall Jenner and friends wearing some of our best see snow must apps, including the iconic Tommy polo in Europe alone the campaign drove poll.

Stefan Larsson: In Europe alone, the campaign drove Polo sales up by over 30% compared to last year, reinforcing the relevance of this hero product to the consumer's wardrobe. The highly-anticipated Stray Kids campaign also launched during the quarter, first in Asia, then followed by a global release, which drove significant social engagement globally. Last month, we solidified our presence in the world of sports and entertainment at the Miami Grand Prix, headlined by Kendall Jenner, Lewis Hamilton, and George Russell.

Speaker Change: Those sales up by over 30% compared to last year reinforcing the relevance of this hero product to their consumers wardrobe.

Speaker Change: The highly anticipated stray kids campaign also lost during the quarter first in Asia, then followed by a global release, which drove significant social engagement globally.

Last month, we solidified our presence in the world of sports and entertainment at the Miami Grand Prix headlined by Kendall Jenner Lewis Hamilton and George Russell.

Stefan Larsson: And looking ahead, we will continue to drive brand desire and consumer engagement, spotlighting the best of Tommy's summer lifestyle through a special event in Mykonos with global talent, all hosted by Tommy himself. It's early days for Leah in her role as Tommy Hilfiger Global President, and she's already making a big positive difference. And, together with her team, leaning in to take the brand to the next level. Now, let me turn to our regional performance, starting with North America.

Speaker Change: And looking ahead, we will continue to drive brand desire and consumer engagement spotlighting the best of Thomas Summer lifestyle through a special event in Mykonos with global talent all hosted by Tom <unk> himself.

Speaker Change: It's early days for Lee in her role as Tommy Hilfiger Global precedent and she is already making a big positive difference and together with her team leaning in to take the brand to the next level.

Speaker Change: Now, let me turn tell regional performance, starting with North America.

Speaker Change: Very proud of our team continued to drive strong PVH class execution in a tough macro achieving high quality revenue growth led by D to C, which increased mid single digits and followed by growth in wholesale which for Calvin and Tommy increased 2%, our Tommy and Calvin businesses together delivered.

Stefan Larsson: I'm very proud of our team continuing to drive strong PVH plus execution in a tough macro, achieving high quality revenue growth led by D2C, which increased mid-single digits and followed by growth in wholesale, which for Calvin and Tommy increased 2%. Our Calvin and Tommy businesses together delivered 3% revenue growth, which was fueled by strength in higher average order value and commercial, as well as lower promotions year over year. I'm pleased with how our Tommy and Calvin businesses combined achieved a 10.5% EBIT margin, marking another quarter of double-digit margin and making it the third consecutive quarter of delivering over 500 basis points of margin improvement compared to the prior year.

Speaker Change: 3% revenue growth, which was fueled by strength and higher average order value and conversion as well as lower promotions year over year.

Speaker Change: I am pleased with how our Tommy and Calvin businesses combined achieved a 10, 5% EBIT margin, marking another quarter of double digit margin and making it the third consecutive quarter of delivering over 500 basis points margin improvement compared to the prior year.

Stefan Larsson: Indeed2See, both brands delivered positive comps driven by strength in product category offense, hero products, and a much improved shopping experience. It's exciting to see the elevation of our digital shopping experience leading to double-digit demand growth in the channel.

Speaker Change: Indeed to see both brands delivered positive comps driven by strength in product category offense hero products and much improved shopping experience, it's exciting to see the elevation of our digital shopping experience leading to double digit demand growth in the channel.

Stefan Larsson: For wholesale, we also delivered high-quality positive comps for Calvin and Tommy by continuing to work very closely with our key partners to improve product, presentation, staffing, and inventory availability. Both brands are very well positioned to continue to win share with the North American consumer and drive significant EBIT margin expansion in a brand creative way. Let me now turn to our international business. In Europe, consistent with our plan, revenue was down low double digits year over year.

Speaker Change: For wholesale we also delivered high quality positive comps for Calvin and Tommy through continuing to work very closely with our key partners to improve product presentation staffing and inventory availability.

Speaker Change: Both brands are very well positioned to continue to win share with the North American consumer and drive significant EBIT margin expansion in a brand accretive way.

Speaker Change: Let me now turn to our international business in Europe, consistent with our plan revenue was down low double digits year over year importantly, as a result of our actions we are driving much higher gross margins and a further strengthening our unique brand position and pricing.

Stefan Larsson: Importantly, as a result of our actions, we're driving much higher gross margins and are further strengthening our unique brand position and pricing power in the market. Our quality of sales focus had an approximate 6% revenue impact in the quarter, which represented roughly half of the revenue decline. We continue to expect a four-year quality of sales revenue impact of approximately 5%. As we shared previously, we have seen tough macro conditions, especially in our two biggest markets, the U.K. and Germany, where consumer sentiment is challenged and our wholesale partners are cautious.

Speaker Change: Power in the market our quality of sales focus had an approximate 6% revenue impact in the quarter, which represented roughly half of the revenue decline. We continue to expect a full year quality of sales revenue impact to be approximately 5%.

Speaker Change: As we shared previously we have seen tough macro conditions, especially in our two biggest markets, the UK and Germany, where consumer sentiment is challenged and our wholesale partners are cautious and in this tougher macro our focus continues to be on quality of sales to set ourselves up for profitable.

Stefan Larsson: And in this tougher macro environment, our focus continues to be on quality of sales to set ourselves up for profitable brand accretive growth over the long term. As a reminder, the three main quality of sales actions we are taking in the region include, from mid-year, we'll stop all third-party sales of our brands on digital platforms. We have also significantly reduced the number of digital platforms that we sell to, while at the same time strengthening our collaboration with our best partners.

Speaker Change: <unk> brand accretive growth over the long term.

Speaker Change: As a reminder, the three main quality of sales actions. We're taking in the region include from mid year will stop all third party sales of our brands on digital platforms. We have also significantly reduced the number of digital platforms that we sell to while at the same time strengthening our.

Speaker Change: <unk> with our best partners, we're also improving inventory in relation to sales overall to avoid having too much inventory.

Stefan Larsson: We're also improving inventory in relation to sales overall to avoid having too much inventory. While still early in the year, through these actions, we have already made significant progress. We have lowered clearance sales by nearly 50% as we began the year with much improved stock freshness.

Speaker Change: Still early in the year through these actions we have already made significant progress we have lowered clearance sales by nearly 50% as we began the year with much improved stock freshness in.

Stefan Larsson: In D2C, where we have the most direct control over the consumer experience, in full price channels across both stores and e-commerce, we drove a double-digit increase in spring 2024 product sales, while prior season clearance sales and inventory were down double-digits. In wholesale, as we shared previously, our full order book finalized at down high single digits versus the prior year, reflecting the cautiousness in the channel. However, we're seeing encouraging sequential improvements for pre-Spring 2025 orders, and next week, we'll kick off the market launch of the main Spring 2025 season.

Speaker Change: Indeed to see where we have the most direct control over the consumer experience in full price channels across both stores and E. Commerce, we drove a double digit increase in spring 'twenty four product sales, while prior season clearance sales and inventory were down double digits.

Speaker Change: In wholesale as we shared previously our full order book finalized are down high single digits versus the prior year, reflecting the cautiousness in the channel. However, we're seeing encouraging sequential improvements for pre spring 'twenty five orders and next week, we'll kick off the market.

Speaker Change: Launch of the main spring 2025 season, and I'm very encouraged by the product innovation and newness. Our teams are bringing across key categories for both Tommy and Calvin.

Stefan Larsson: And I'm very encouraged by the product innovation and newness our teams are bringing across key categories for both Tommi and Calvin. Finally, as we shared yesterday, Martijn Hagman, CEO of Tommy Global and PVH Europe, will be leaving the business.

Speaker Change: Finally, as we shared yesterday martyre hog month, CEO of <unk> Global and PVH Europe will be leaving the business and I want to think of our time for his 15 years of loyal service to PVH, helping to build our European region into the market, leading and highly profitable business we have today.

Stefan Larsson: And I want to thank Martijn for his 15 years of loyal service to PBH, helping to build our European region into the market-leading and highly profitable business we have today. I feel very good about Leah Ritz-Goldman now officially on board as Tommy Hilfiger Global President, reporting directly to me, and David Sandman, our Chief Supply Chain Officer, becoming our interim CEO for Europe. Since David joined us, he has played a unique role in the company, being a key leader driving PBH plus performance all the way from product creation to marketplace execution. He has already spent a lot of time in Europe, together with our regional leaders, so he will have a running start.

Speaker Change: I feel very good about Lea rich Goldman now officially on board as Tommy Hilfiger Global precedent reporting directly to me and David <unk>, Our chief supply chain officer, becoming our interim CEO for Europe.

Speaker Change: Since David joined US. He has played a unique role in the company being a key leader driving PVH plus performance all the way from product creation to marketplace execution. He has already spent a lot of his time in Europe together with our regional leaders. So he will have a running start.

Stefan Larsson: In parallel, we have started a search for our permanent European leader. Moving on to Asia-Pacific, the region delivered overall revenue growth of 3% in constant currency, led by high single-digit growth in DTC. China delivered high single-digit growth in local currency, with double-digit growth in Japan and Korea, also in local currency.

In parallel we have started a search for a permanent European leader.

Speaker Change: Moving on to Asia Pacific The region delivered overall revenue growth of 3% in constant currency led by high single digit growth in DTC, China delivered high single digit growth in local currency with double digit growth in Japan and Korea also in local currency.

Stefan Larsson: We continue to drive high relevance with our consumers in Asia by connecting our strong product category and hero product defense with mega talent and rising stars. Our brand ambassadors, John Cook and Jenny Kim, continue to fuel Calvin's brand engagement across the region. And for Tommy, the Formula One Shanghai Grand Prix with Lewis Hamilton and Tommy himself, as well as local celebrities and influencers, boosted brand heat in the market. Revenue and market share for our business continue to set new records on Douyin as we further explore new ways to engage consumers. On Tmall, Tommy the Man hosted his first live stream shopping experience for the brand, which ranked number one on the chart.

Speaker Change: We continued to drive high relevance with our consumers in Asia by connecting our strong product category and hero products defense with Mega talent and rising stars our brand Ambassador as John Cook and Jenny Kim continue to fuel the Calvin brand engagement across the region and for Tommy the Formula one.

Speaker Change: Shanghai Grand Prix with Lewis Hamilton, and told me himself as well as local celebrities and Influencers boosted brand heat in the market.

Speaker Change: Revenue and market share for our business continued to set new records for <unk> as we further explore new ways to engage consumers.

Speaker Change: On T Mall told me demand hosted its first livestream shopping experience for the brand, which ranked number one on the channel.

Stefan Larsson: Following a successful Lunar New Year this past quarter, we are now in the early days of the big consumer moment 618, which will be followed by Chinese Valentine's Day in July. Recently, I spent a week with our teams in China and Japan, walking in stores across multiple cities, and firsthand was able to see how much untapped growth potential we still have in the region. In closing, for the first quarter, we again delivered on our plan.

Speaker Change: Following a successful lunar new year. This past quarter. We are now in the early days of the big consumer moment, $6 18, which will be followed by Chinese Valentine's day in July.

Speaker Change: Recently, I spent a week with our teams in China, and Japan walking stores across multiple cities and firsthand was able to see how much untapped growth potential we still have in the region.

Speaker Change: In closing for the first quarter, we again delivered on our plan, we drove high quality growth in both Asia and North America, while we in Europe, given the tough macro took us a long term view of increasing quality of sales strengthening our market position for the long term.

Stefan Larsson: We drove high-quality growth in both Asia and North America, while we in Europe, given the tough macro, took the long-term view of increasing the quality of sales, strengthening our market position for the long term. We continue to build out the PVHPlus execution momentum, led by significant strength in consumer engagement and brand desirability across both Calvin and Tommy, resulting in high-quality D2C growth with strong margin expansion. The build-out of our data and demand-driven supply chain continues to generate value, and we are investing in growth while driving increased cost dissipation.

Speaker Change: We continue to build out the PVH plus execution momentum led by significant strength in consumer engagement and brand desirability across both Calvin and Tommy resulting in high quality D to C growth with strong margin expansion the build out of our data and demand driven supply chain continue.

Speaker Change: Is to generate value and we are investing in growth, while driving increased cost discipline.

Stefan Larsson: Through our PBH Plus plan, we're moving PBH into a leading brand builder with two of the most desirable lifestyle brands in the world. What's making all this happen is our strong leaders and teams across the company. And I want to, again, thank you for the great work you do. And with that, I'll turn the call over to Zach to discuss the financials in more detail. Thanks, Stefan, and good morning.

Through our PVH plus plan, removing PVH into leading brand builder with two of the most desirable lifestyle brands in the world, What's making all this happen is our strong leaders and teams across the company and I want to again. Thank you for the great work, you do and with that I'll turn the call over to <unk>.

Speaker Change: <unk> to discuss the financials in more detail.

Zachary James Coughlin: My comments are based on non-GAAP results and are reconciled in our press release. As Stefan discussed, we are pleased with our solid first quarter results, driven by our iconic brands and disciplined execution of the PBH Plus. We exceeded both our top and bottom line guidance, largely due to the timing shifts in wholesale shipments and expense phases. We delivered an operating margin of 10 percent, up 80 basis points versus last year and better than planned, driven by 350 basis points of gross margin expansion.

Speaker Change: Thanks, Stefan and good morning, My comments are based on non-GAAP results and are reconciled in our press release.

Stefan discussed we are pleased with our solid first quarter results driven by our iconic brands and disciplined execution of the PVH plus plan, we exceeded both our top and bottom line guidance largely due to the timing shifts in wholesale shipments and expense phasing.

Speaker Change: We delivered operating margin of 10% up 80 basis points versus last year and better than planned driven by 350 basis points of gross margin expansion.

Zachary James Coughlin: Our performance for the quarter reflects our disciplined focus on driving higher quality sales and improved profitability. Importantly, our inventory at quarter end is down 22% compared to last year and is well positioned to support our plans for the rest of the year. Additionally, we returned $200 million to shareholders during the first quarter through the repurchase of 1.8 million shares of Common Sense. We remain committed to $400 million of total share buybacks for the year. We also refinanced 525 million euros of Euro notes in the quarter with the issuance of our first ever green bonds, underscoring our commitment to sustainability and ensuring our continued strong liquidity position.

Speaker Change: Our performance for the quarter reflects our disciplined focus on driving higher quality of sales and improved profitability.

Speaker Change: Importantly, our inventory at quarter end is down 22% compared to last year and is well positioned to support our plans for the rest of the year.

Additionally, we returned $200 million to shareholders during the first quarter through the repurchase of one 8 million shares of common stock and remain committed to $400 million of total share buybacks for the year, we also refinanced $525 million or euro notes in the quarter with the issuance of our first ever green bonds underscoring our.

Speaker Change: <unk> to sustainability and ensuring our continued strong liquidity position.

Zachary James Coughlin: Looking forward, following our solid first-quarter performance, we are reaffirming our four-year revenue and operating margin outlook and raising our EPS outlook to $11 to $11.25 per share from previously $10.75 to $11. We remain on track to deliver our 2024 financial plan with the improvement in EPS coming from lower interest expense and an improved tax rate. I will now discuss our first quarter results in more detail and then move on to our hours.

Speaker Change: Looking forward following our solid first quarter performance, we are reaffirming our full year revenue and operating margin outlook and raising our EPS outlook to $11 to $11 25 per share from previously 10, 75% to 11.

Speaker Change: We remain on track to deliver our 2024 financial plan with the improvement in EPS coming from lower interest expense and an improved tax rate.

Speaker Change: I will now discuss our first quarter results in more detail and then move on to our outlook.

Zachary James Coughlin: Revenue for the first quarter was down 10% versus last year, including a 1% negative impact from exchange and a 3% decline from the sale of the Heritage Intimates business. We delivered our revenue plan for the quarter, beating our guidance by 1% due to a small shift in the timing of wholesale shipments from the second quarter into the first quarter. Starting from a regional perspective, first quarter revenue for international businesses was down 8% on a constant currency basis.

Speaker Change: Revenue for the first quarter was down 10% versus last year, including a 1% negative impact from exchange and a 3% decline from the sale of the heritage Intimates business, we delivered our revenue plan for the quarter, beating our guidance by 1% due to a small shift in timing of wholesale shipments from the second quarter into the first quarter.

Speaker Change: Starting from a regional perspective first quarter revenue for our international businesses was down 8% on a constant currency basis sales in our Asia Pacific business were up 3% on a constant currency basis with strong growth in DTC across all markets.

Zachary James Coughlin: Sales in our Asia-Pacific business were up 3% on a constant currency basis with strong growth in DTC across all markets. In China, we delivered high single-digit growth in local currency. However, sales for Asia-Pacific were down 2% on a reported basis.

Speaker Change: In China, we delivered high single digit growth in local currency.

Speaker Change: Sales for Asia Pacific were down 2% on a reported basis.

Zachary James Coughlin: Sales in our European business were down 12% in euros, as expected, due to the strategic decision to focus on higher quality sales in the region, as previously discussed, along with the continued challenging macroeconomic environment. As Stefan mentioned, our quality of sales focus accounted for 6% of our decline in European revenues this quarter but also delivered higher gross margins in the region, which were up approximately 200 basis points versus last year.

Speaker Change: Sales in our European business were down 12% in euros as expected due to the strategic decision to focus on higher quality of sales in the region as previously discussed along with the continued challenging macroeconomic environment.

Speaker Change: As Stefan mentioned, our quality of sales focus accounted for 6% of our decline in Europe revenues. This quarter, but also delivered higher gross margins in the region, which were up approximately 200 basis points versus last year.

Zachary James Coughlin: In North America, sales for our Tommy Hilfiger and Calvin Klein businesses combined grew 3% as we delivered another quarter of growth in both our retail stores and owned and operated e-commerce business, with total DTC up mid-single digit. Wholesale sales were up low single digits and better than planned due to a shift in timing of wholesale shipments from the second quarter into the first quarter this year, as retailers are taking inventory earlier than planned due to strong sell-through of our products in their stores.

Speaker Change: In North America sales for our Tommy Hilfiger, and Calvin Klein businesses combined grew 3% as we delivered another quarter of growth in both our retail stores and owned and operated ecommerce business with total DTC up mid single digits wholesale sales were up low single digits and better than planned due to a shift in timing.

Speaker Change: Wholesale shipments from the second quarter into the first quarter. This year as retailers are taking inventory earlier than planned due to strong sell through of our products in their stores importantly, gross margins were up nearly 500 basis points with significant improvements in both brands and across all channels.

Zachary James Coughlin: Importantly, gross margins were up nearly 500 basis points with significant improvements in both brands and across all channels. From an overall PVH channel perspective, we continue to drive performance in our direct-to-consumer business. Overall revenue in our DTC businesses was up 3% on a constant currency basis. Our retail store revenues were up 5% on a constant currency basis, with growth in both brands in all regions.

Speaker Change: From an overall PVH channel perspective, we continue to drive performance in our direct to consumer business.

Speaker Change: <unk> revenue in our DTC businesses was up 3% on a constant currency basis, our retail store revenues were up 5% on a constant currency basis with growth in both brands and in all regions.

Zachary James Coughlin: In our owned and operated e-commerce business, strong growth in North America and in APAC and local currency was more than offset by a planned reduction in Europe as we focus on driving in-season product performance while significantly lowering prior season clearance sales through our sites and reducing our own sales on third-party platforms. Importantly, Spring 2024 product sales were up double digits compared to Spring 2023. As a result of the decline in Europe, overall PVH owned and operated revenue was down 5% on a constant currency basis.

Speaker Change: In our owned and operated E Commerce business strong growth in North America and in APAC in local currency was more than offset by a planned reduction in Europe as we focus on driving in season product performance, while significantly lowering prior season clearance sales through our sites and reducing our own sales on third party platforms import.

Speaker Change: <unk> spring 2024 product sales were up double digits compared to spring 'twenty three.

Speaker Change: As a result of the decline in Europe overall, PVH owned and operated E. Com revenue was down 5% on a constant currency basis.

Zachary James Coughlin: Within wholesale, we remain focused on strong quality of sales and winning with our key wholesale partners. But we also see retailers continuing to take a cautious approach, particularly in Europe. Total wholesale revenue was down 17%, including a 6% decline from the sale of the Heritage Intimates business and the impact from the quality of sales focus in Europe that I mentioned earlier.

Speaker Change: Within wholesale we remain focused on strong quality of sales and winning with our key wholesale partners, but we also see retailers continue to take a cautious approach, particularly in Europe.

Speaker Change: Total wholesale revenue was down 17%, including a 6% decline from the sale of the heritage intimates business and the impact from the quality of sales focus in Europe that I mentioned earlier.

Zachary James Coughlin: The decrease was in line with our expectations other than the favorable timing shift in North America I mentioned previously. Looking forward to wholesale, as Stefan mentioned earlier, we are encouraged by the early signs of our Spring 2025 order book, where we see our orders sequentially improving compared to Fall 2024. Turning to our global brands, Calvin Klein revenues were up 1% in constant currency and flat on a reported basis, with growth in North America, while the international business was flat in constant currency. Tommy Hilfiger revenues were down 9% on a constant currency basis and down 10% on a reported basis.

The decrease was in line with our expectations other than the favorable timing shift in North America I mentioned previously.

Speaker Change: Looking forward for wholesale as Stefan mentioned earlier, we are encouraged by the early signs of our spring 2025 order book, where we see our orders sequentially improving compared to fall 2024.

Speaker Change: Turning to our global brands Calvin Klein revenues were up 1% in constant currency and flat on a reported basis with growth in North America, while the international business was flat in constant currency Tommy.

Speaker Change: Tommy Hilfiger revenues were down 9% on a constant currency basis and down 10% on a reported basis in the Tommy business growth in North America was more than offset by a decline in the international business as the strategic shift to higher quality sales and macroeconomic challenges impacting Europe way much more heavily on the Tommy business.

Zachary James Coughlin: In the Tommie business, growth in North America was more than offset by a decline in the international business as the strategic shift to higher quality sales and macroeconomic challenges impacting Europe weigh much more heavily on the Tommie business. In the first quarter, we delivered a record-high gross margin of 61.4%, an increase of 350 basis points compared to last year, with approximately two-thirds due to channeling customer mix as we grew our higher-margin DTC business and decreased sales to lower-margin accounts, and approximately one-third due to lower raw material costs.

Speaker Change: Yeah.

Speaker Change: In the first quarter, we delivered record high gross margin of 61, 4% an increase of 350 basis points compared to last year with approximately two thirds due to channel and customer mix as we grow our higher margin DTC business and decreased sales to lower margin accounts and approximately one third due to lower raw material costs.

Zachary James Coughlin: SG&A expense as a percent of revenue was 51.4%, an increase of 270 basis points versus last year. The increase is comprised of approximately 250 basis points due to the higher DTC mix and approximately 250 basis points from the deleveraging expenses on lower revenues, partially offset by an approximately 200 basis point improvement due to cost efficiencies realized from actions we have taken to reduce people costs and prudent management of expenses. Expenses in the first quarter were slightly lower than planned due to a shift in the timing of expenses into the second quarter.

Speaker Change: SG&A expense as a percent of revenue was 51, 4% an increase of 270 basis points versus last year.

Speaker Change: The increase is comprised of approximately 250 basis points due to the higher DTC mix and approximately 250 basis points from the deleveraging of <unk> expenses on lower revenues, partially offset by an approximately 200 basis point improvement due to cost efficiencies realized from actions, we have taken to reduce people costs and prudent management of <unk>.

Speaker Change: Expenses.

Speaker Change: Expenses in the first quarter were slightly lower than planned due to a shift in timing of expenses into the second quarter.

Zachary James Coughlin: In total, EBIT for the quarter was $195 million, and nearly flat compared to $199 million in the prior year, as the strong gross margin improvement almost entirely offset the impact of revenue. Operating margin expanded 80 basis points last year to 10%, with a significant improvement in our North America business to 10.5% for Tommy Hilfiger and Calvin Klein combined. The improvement in North America reflects a nearly 500 basis point improvement in both gross margin and SG&A versus last year and marks another quarter with a double-digit operating margin, another important step in our PBH Plus plan commitment to achieve low teens operating margins in the North America region. Our tax rate for the quarter was approximately 19%.

Speaker Change: In total EBIT for the quarter was $195 million and nearly flat compared to $199 million in the prior year as the strong gross margin improvement almost entirely offset the impact of the revenue decline.

Speaker Change: Operating margin expanded 80 basis points last year to 10% with significant improvement in our North America business to 10, 5% for Tommy Hilfiger, and Calvin Klein combined they.

Speaker Change: The improvement in North America reflects a nearly 500 basis point improvement in both gross margin and SG&A versus last year and marks another quarter with a double digit operating margin. Another important step in our PVH plus plan commitment to achieve low teens operating margins in the North America region.

Speaker Change: Our tax rate for the quarter was approximately 19%.

Zachary James Coughlin: Earnings per share increased 14% versus last year to $2.45, exceeding our earnings guidance by $0.30. Approximately $0.20 of that is due to the favorable shifts in timing of revenue and expenses between the first and second quarters I mentioned earlier. Approximately $0.05 is due to a lower tax rate and interest expense, and the remainder is due to modest business improvement compared to expectations. Now, moving on to our outlook. Starting with the second quarter,

Speaker Change: Earnings per share increased 14% versus last year to $2 45 exceed.

Speaker Change: Exceeding our earnings guidance by 30.

Speaker Change: Approximately <unk> of that is due to the favorable shifts in timing of revenue and expenses between the first and second quarter I mentioned earlier, approximately <unk> <unk> due to a lower tax rate and interest expense and the remainder is due to modest business improvement compared to expectations.

Speaker Change: And now moving onto our outlook.

Speaker Change: Starting with the second quarter.

Zachary James Coughlin: We are projecting second quarter revenue to decline 6% to 7% as reported and 5% to 6% on a constant currency basis compared to the prior year, including a 3% decline due to the sale of the Heritage Intimates business. While we are projecting first quarter trends in our direct-to-consumer businesses to continue into 2Q with low single-digit growth on a constant currency basis, we expect this will be more than offset by a similar decline in wholesale revenue, primarily in Europe, for the reasons I mentioned earlier.

Speaker Change: We are projecting second quarter revenue to decline, 6% to 7% as reported and 5% to 6% on a constant currency basis compared to the prior year, including a 3% decline due to the sale of the heritage Intimates business.

Speaker Change: While we are projecting first quarter trends in our direct to consumer businesses to continue into two Q with low single digit growth on a constant currency basis. We expect this will be more than offset by a similar decline in wholesale revenue primarily in Europe for the reasons I mentioned earlier.

Zachary James Coughlin: We expect our second quarter operating margin to be modestly higher than last year, with higher gross margins more than offsetting the loss of leverage due to the decline in revenue. Our second quarter EBIT is projected to be nearly flat compared to last year, despite the shift in timing of expenses into the second quarter that I mentioned earlier. Earnings per share is expected to be approximately $2.25, up approximately 14% compared to $1.98 in the prior year. Our tax rate for the second quarter is estimated at approximately 20%, and interest expense is projected to be approximately $20 million.

Speaker Change: We expect our second quarter operating margin will be modestly higher than last year with higher gross margins more than offsetting the loss of leverage due to the decline in revenue our second quarter EBIT is projected to be nearly flat compared to last year. Despite the shift in timing of expenses into the second quarter that I mentioned earlier earnings per share is expected to be.

Approximately $2 25 up approximately 14% compared to $1 98 in the prior year, our tax rate for the second quarter is estimated at approximately 20% and interest expense is projected to be approximately $20 million.

Zachary James Coughlin: Overall, while shifts in timing of revenue and expenses are affecting our results in the first and second quarters, we expect our first half 2024 business performance to be in line with our original plan. Now moving on to the full year, we continue to navigate a tough macro environment, including the soft consumer backdrop and a conservative wholesale environment.

Overall, while shifts in timing of revenue and expenses are affecting our results in the first and second quarters. We expect our first half 2020 for business performance to be in line with our original plans.

Speaker Change: Now moving onto the full year.

Speaker Change: We continue to navigate a tough macro environment, including the soft consumer backdrop, and a conservative wholesale environment and we remain on track to deliver the business outlook, we shared in April.

Zachary James Coughlin: And we remain on track to deliver the business outlook we shared in April. As such, we continue to project revenue to decrease by six to seven percent on both a reported and constant currency basis compared to last year, including a two percent decline due to the sale of the Heritage Intimates business and a one percent decline due to the 53rd week in 2023. Regionally, our look is also unchanged, with sales for the North America Calvin Klein and Tommy Hilfiger businesses combined planned to grow low single digits versus 2023, with mid-single digit growth in the DTC business tempered by wholesale. Asia-Pacific is planned to grow high single digits on a constant currency basis, with growth projected in all markets led by DTC.

Speaker Change: As such we continue to project revenue to decrease by 6% to 7% on both a reported and constant currency basis compared to last year, including a 2% decline due to the sale of the heritage intimates business and a 1% decline due to the 50 <unk> week in 2023.

Speaker Change: Regionally our outlook is also unchanged with sales for the North America, Calvin Klein and Tommy Hilfiger businesses combined planned up low single digits versus 2023 with mid single digit growth in the DTC business tempered by wholesale.

Speaker Change: Pacific is planned to grow high single digits on a constant currency basis with growth projected in all markets led by DTC.

Zachary James Coughlin: In Europe, it was planned down high single digits in euros, with DTC planned down low single digits with modest comp door growth offset by reductions in our own sales on third party platforms. We are also reaffirming our projected operating margin for the year will be approximately flat to 2023. We continue to expect our four-year gross margin rate to increase approximately 200 basis points compared to 2023, reaching an all-time high with approximately half of the increase due to channeling customer mix as we grow our higher-margin DTC business and decrease sales to lower-margin wholesale accounts, and approximately half due to lower raw material costs, which were elevated during the first half of 2023 as we leverage our scale with a globally aligned product assortment.

Speaker Change: And Europe is planned down high single digits in euros with DTC planned down low single digits with modest comp store growth offset by reductions in our own sales on third party platforms.

Speaker Change: We are also reaffirming our projected operating margin for the year will be approximately flat to 2023.

Speaker Change: We continue to expect our full year gross margin rate to increase approximately 200 basis points compared to 2023, reaching an all time high with approximately half of the increase due to channel and customer mix as we grow our higher margin DTC business and decreased sales to lower margin wholesale accounts and approximately half due to lower raw material costs.

Speaker Change: <unk>, which were elevated during the first half of 2023, as we leverage our scale with globally aligned product assortments.

Zachary James Coughlin: We continue to plant SG&A expense dollars down for the full year in 2024 as compared to 2023, but we expect SG&A as a percentage of revenue to increase approximately 200 basis points, more than explained by DTC mix and deleverage on revenue. And, as I discussed in April, we have already begun the work on the next phase of Growth Driver 5 with a PVH Plus plan to simplify our operating model and drive efficiency. Interest expense is now projected to be approximately $75 million versus approximately $88 million previously, as the interest rate on the debt refinancing in April was better than planned.

Speaker Change: We continue to plan SG&A expense dollars down for the full year in 2024 as compared to 2023, but expect SG&A as a percentage of revenue to increase approximately 200 basis points more than explained by DTC mix and deleverage on revenue.

Speaker Change: And as I discussed in April we have already begun the work on the next phase of growth driver five of the PVH plus plan to simplify our operating model and drive efficiencies.

Speaker Change: Interest expense is now projected to be approximately $75 million versus approximately $88 million previously as the interest rate on the debt refinancing in April was better than planned and we expect our tax rate will be approximately 20% versus approximately 21% previously with.

With these improvements in interest and tax we are raising our non-GAAP EPS guidance by 25 to.

Speaker Change: To a range of $11 to $11 25.

Speaker Change: Compared to $10 75 to $11 previously.

Zachary James Coughlin: And we expect our tax rate will be approximately 20% versus approximately 21% previously. With these improvements in interest and tax, we are raising our non-GAAP EPS guidance by $0.25 to a range of $11 to $11.25 compared to $10.75 to $11.00 previously. Before we open it up for questions, I want to reiterate that we are pleased with our first quarter results and remain confident in our ability to win in a tough environment.

Speaker Change: Before we open it up for questions I want to reiterate that we're pleased with our first quarter results and remain confident in our ability to win in a tough environment. We continue to work relentlessly to drive results and as Stephane talked about earlier, we are laser focused on executing the five key growth drivers of the PVH plus plan.

Zachary James Coughlin: We continue to work relentlessly to drive results, and as Stefan talked about earlier, we are laser-focused on executing the five key growth drivers of the PVH Plus plan, bringing together the consumer-facing value drivers of product, consumer engagement, and marketplace with our underlying operating engines to deliver sustainable, long-term, profitable growth. And with that, Operator, we would like to open it up to questions. If you would like to ask a question at this time, please press star 1 on your telephone keypad. You may remove yourself at any time by pressing star 2.

Speaker Change: Taken together, the consumer facing value drivers of product consumer engagement and marketplace with our underlying operating engines to deliver sustainable long term profitable growth.

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

Speaker Change: If you would like to ask a question at this time. Please press star one on your telephone keypad.

Speaker Change: You may remove yourself at any time by pressing star two.

Operator: Once again, if you would like to ask a question at this time, please press star 1. Our first question will come from Matthew Boss of J.P. Morgan. Please go ahead.

Once again, if you would like to ask a question at this time, Please press star one.

Stefan Larsson: So Stefan, could you elaborate on the progression of sell-through trends at wholesale that you're seeing for both Tommy and Calvin? to opportunities you see remaining with product innovation and newness as we think about the fall and then spring of 25. And then for Zach, maybe could you just elaborate on the drivers of the North America profitability inflection that we saw in the first quarter and any change in the multi-year path to mid-teens operating margins? Thank you, Matt. And good morning.

Speaker Change: Our first question will come from Matthew Boss with Jpmorgan. Please go ahead.

Matthew Robert Boss: So Stefan could you elaborate on the progression of sell through trends at wholesale that youre seeing for both Tommy and Calvin and speak to opportunities you see remaining with product innovation and newness as we think about the fall and then spring of 'twenty five and then for Zach maybe.

Zach: Could you just elaborate on drivers of the North America profitability inflection that we saw in the first quarter and any change in the multiyear path to mid teens operating margin.

Stefan Larsson: And let me start with the sell-through question because, overall, we see that the quality of sales actions that we are taking is taking hold. So, what that means is it's enabling stronger in-season sell-throughs, less... end-of-season clearance, and creating more openings for repeat orders out of our never-out-of-stock part of the assortment. So we have a much better inventory composition than last year in both wholesale and DTC.

Zach: Thank you, Matt and good morning, and let me start with the sell through question because what we're seeing now is in the marketplace. Overall, we see about the quality of sales actions that we're taking is taking hold so what that means is it's enabling stronger in.

Speaker Change: So sell throughs less.

Speaker Change: End of <unk>, and creating more openings for repeat orders out of our never out of stock part of the assortment. So we have a much better inventory composition than last year in both wholesale and D to C. Can also see that in our gross margin rates coming up in wholesale when it comes to.

Stefan Larsson: You can also see that in our gross margin rate coming up. In wholesale, when it comes to wholesale in Europe, we have two important positive reads since the last time we spoke. So even though fall 2024 order books were cautious based on last year's extremely warm fall start and the excess inventory that that led to in the market, we have had very positive reactions from our partners on our fall 2024 product improvements in both Tommy and Cal.

Speaker Change: Wholesale in Europe, we have two important positive reads since last time, we spoke so even though fall 'twenty 'twenty four order books were cautious based on last year's fixed stream the warm fall starts and excess inventory.

Speaker Change: Led to in the market, we have had very positive reactions from our partners on our fall 2024 product improvements in both Tommy and Calvin.

Stefan Larsson: So the innovation we put into the product category of Hero Products, building out performance, tech, and dress casual, has really been well received. And important to note is that we just sold in pre-spring 2025 order books in Europe, and we see sequential improvements versus fall 2024, as both Zach and I mentioned in our prepared remarks. Next week, we have all our sales teams in Amsterdam for our main spring 2025 market launch.

Speaker Change: So the innovation, we put into the product category hero products building outperformance tech dress casual.

Speaker Change: Really being well received.

Speaker Change: And important to note. This we just sold increased spring 2025 order books in Europe, and we see sequential improvements versus fall 2020 for us.

Speaker Change: Both second I mentioned in our prepared remarks next week, we have all our sales teams in Amsterdam for our main spring 2025 market launch.

Stefan Larsson: We go through all the product and market strength that we will bring to the market for that season and continue to build out this pre-spring trend. Finally, for the North America wholesale perspective, you can see in this quarter that we had a stronger pull through from our accounts, and sell through keeps improving. So that drove the comp sales growth in wholesale for both Calvin and Tommy in North America.

Speaker Change: Go through all of the product and market strength that we will bring to the market for that season.

Speaker Change: <unk> continued to build out this pre spring trend.

Speaker Change: Finally for the North America wholesale perspective, you could see in this quarter that we had a stronger pull through from our accounts as sell through keeps improving so that drove the comp sales growth in wholesale for both Calvin and Tommy North America, and before I hand, it over to <unk> for you in North America.

Stefan Larsson: And before I hand it over to Zach for your North America question, I just want to share how good I feel about our leaders and teams in North America really bringing our brands to life to win with both the international and domestic consumers. So this quarter drove growth for both Calvin and Tommy, both D2C and wholesale, doing it the high-quality way, average order value up, conversion up, and lower promotions. And for the third consecutive quarter, as we mentioned, 500 basis point margin improvement, EBITS margin of 10.5%, something I would say, Zach and I would say most people thought was tough to get to a year ago when we set that out two years ago.

Speaker Change: And just want to.

Speaker Change: Just wanted to share how.

Speaker Change: Good I feel about our leaders and teams in North America, really bringing our brands to life to win with both the international and domestic consumers. So this quarter.

Speaker Change: <unk> growth in both Calvin and Tommy both D to C and wholesale doing it a high quality way average order value up conversion up lower promotions.

Speaker Change: And for the third consecutive quarter as we mentioned 500 basis point margin improvement to EBIT margin of 10, 5% something I would say second I wish had most people.

Speaker Change: So it was tough to get to a year ago, when we set that out two years ago.

Stefan Larsson: And we just, it's the disciplined PVH plus execution in the region when it comes to the product category of fans, hero product build out, consumer engagement, better execution in e-commerce, better execution in stores, and with our partners. So really encouraged there, but Zach.

Speaker Change: And we just it's a disciplined PVH class execution in the region. When it comes to the product category offense hero product build out consumer engagement better execution in ecommerce better execution in stores and with our partners. So really encouraged there but yes.

Speaker Change: Yes.

Zachary James Coughlin: Yeah, great. I'm Matt, and thanks for the question on North America profitability. Stefan said, we're really pleased with the business performance in North America. As we said earlier in Stefan's reader, a third straight quarter of greater than 500 basis points of operating margin improvement. In reality, for the first quarter alone, it was closer to 1,000 basis points.

Speaker Change: Great Hi, Matt and thanks for the question on North America profitability as Stefan said, we're really pleased with the business performance in North America, We said earlier and Stefan is really a third straight quarter of greater than 500 basis points of operating margin improvement in reality for the first quarter.

Speaker Change: Alone it was closer to 1000 basis points. So as good as that sounds the underlying details are actually just as solid from there. So as Stefan said growth in both brands and across channels. So I think thats starting from the top line a great story for gross margin expansion for the 500 basis points of improvement on each as that impact of that better product.

Zachary James Coughlin: So as good as that sounds, the underlying details are actually just as solid from there. As Stefan said, growth in both brands and across channels. So I think that's starting from the top line, a great story. For gross margin expansion, four to 500 basis points of improvement on each, as the impact of that better product coming through and lower reliance on discounts really shows up. And on SG&A, as a percent of revenue, also down four to 500 basis points, as we've really worked on rewiring how the region works to make it run more efficiently. So I think, and most importantly, we're seeing significant EBIT margin across both brands and all channels. So the composition of the overall improvement to the 10.5 is coming from everywhere.

Speaker Change: Coming through in lower reliance on discounts really shows up in SG&A as a percent of revenue also down 4% to 500 basis points as we really work done rewiring, how the region works to make it drive more efficiently. So I think and most importantly, we are seeing significant EBIT margin across both.

Speaker Change: And all channels. So the composition of the overall improvement of the 10 and a half is coming from everywhere, So and I think as we pull back then and look and see what that means our confidence in getting to the low teens for North America that we've committed to remains very high and I think it's our best proof point as Stefan has said is when you marry.

Stefan Larsson: So, I think, you know, as we pull back then and look and see what that means, our confidence in getting to the low teams for North America that we've committed to remains very high. And I think our best proof point, as Stefan said, is when you marry the power of the PBH Plus plan value drivers coming together, you see the sort of improvements that we're seeing. Thank you. Our next question will come from Bob Drbul on behalf of Guggenheim. Please go ahead. Hi, good morning.

Speaker Change: The power of the PVH plus planned value drivers coming together you see the sort of improvements that we're seeing.

Speaker Change: Great Best of luck.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question will come from Bob <unk> with Guggenheim. Please go ahead.

Stefan Larsson: Um, I was wondering if you could spend some more time on your just talking a little bit more about, you know, how you feel about the positioning of the brands with the quality of sales initiatives underway. And can you just expand some more on the thoughts on the leadership changeover in your company? Yeah, absolutely. Thank you, Bob.

Speaker Change: Hi, good morning.

Robert Scott Drbul: I was wondering if you could spend some more time on Europe, just talk a little bit more about.

Speaker Change: How you feel about the positioning of the brands with the quality of sales initiatives underway and can you just expand some more around the thoughts on the leadership change over in Europe.

Stefan Larsson: So if we look at Europe, we landed the quarter almost exactly in line with our plans and that we communicated last quarter. So last quarter, we shared that we had seen the consumer backdrop in Europe become tougher, especially in our two biggest markets, UK and Germany, with a very cautious wholesale channel coming out of that. And therefore, we decided to pull back in the near term and take quality of sales actions now to position us to drive high quality growth and margin expansion for the long term.

Speaker Change: Yes, absolutely. Thanks, you evolve so if we look at Europe, we learned of the quarter almost exactly in line with our plans and that we communicated last quarter. So last quarter. We shared that we have seen the consumer backdrop in Europe become tougher, especially in our two biggest markets.

Speaker Change: UK and Germany, very cautious wholesale channel coming out of that and therefore, we decided to pull back in the near term take quality of sales actions now to position us to drive high quality growth and margin expansion for the long term and as I mentioned relating to Matt's question.

Stefan Larsson: And as I mentioned, relating to Matt's questions, the quality of sales actions is starting to take hold. From a market position in Europe, we have a uniquely strong market position. We just received back our quarterly consumer and brand study that we do here internally, and looking at a market like Germany, sector leading performance in brand love, visibility, and consideration by most often. I'm very encouraged by that.

Speaker Change: The quality of sales actions are starting to take hold.

Speaker Change: From a market position in Europe, we have a uniquely strong market position. We just received back our quarterly call Cimarron brand study that we do here internally.

Speaker Change: Looking at a market like Germany sector, leading performance same brand love.

Its ability consideration by most often so very strong market position and in this tough environment. Our goal is to not have too much inventory of key pricing power in the market. It's very easy in a situation like this to push low quality sales empty calories in the market, we won't do that because.

Speaker Change: We have a long term brand building a value, creating focus and thats. What builds are so strong in Europe and more concretely when it comes to the quality of sales actions, you'll see it easily and fastest in D. C, where we mentioned that 50% less clear S sales in the quarter and 10%.

Speaker Change: Increase in new spring seasonal sales so very encouraged by that and then you add the sequentially improvement some wholesale pre spring and now coming into spring.

Stefan Larsson: And then you add the sequential improvements of wholesale pre spring and now coming into spring with continuing to strengthen the PVH plus execution in product marketing marketplace execution. When it comes to the leadership change, so this quarter we thanked Martijn after 16 years of being with the company. He has been the CEO of Tommy Hilfiger Global and PVH Europe.

Speaker Change: We are continuing to strengthen the PVH class execution and product marketing marketplace execution.

Speaker Change: When it comes to the leadership change so.

Speaker Change: This quarter, we thank mark time after 16 years.

Speaker Change: Leaving the company he has been the CEO of Tommy Hilfiger, Global and PVH Europe.

Stefan Larsson: When LIA is now in place, as Tommy Global President reporting directly to me, it follows the same brand structure as we set up for Calvin when Eva Serrano came in a year ago. We can already see the positive performance from Calvin from that. So we're mirroring that structure for Tommy. With LIA coming in, flattening the structure, this was the right time to make this change. David Sadman is taking the interim CEO role in Europe.

Speaker Change: <unk> is now in place as Tommy Global precedents reporting directly to me.

Speaker Change: It follows the same brand structure as we setup for Calvin with <unk> Serono came in a year ago, we can already see the positive performance in Calvin from that so we are mirroring that structure for Tommy.

Speaker Change: Leah coming in flattening the structure. This was the right time to make this change David sovereign is taken the interim CEO role in Europe. David has played a unique role in the company not the typical supply chain leader. He is part of product creation with a global brands all delayed too.

Stefan Larsson: David has played a unique role in the company, not the typical supply chain leader. He's part of product creation with the global brands, all the way to consumer, in-store, sell-through, meeting our partners. He has also spent a lot of time with our teams in Europe.

Speaker Change: <unk> our in store sell throughs meeting our partners, Yes also spend a lot of time with our.

Stefan Larsson: He has been based and led for many years in Europe during his career, so he knows Europe, he knows our teams, and he's off to a running start. Thank you. Thank you. Our next question will come from Michael Binetti with Evercore ISI. Please go ahead.

Speaker Change: Our teams in Europe has been based in a lead.

Speaker Change: For many years in Europe during his career so he knows Europe. He knows our teams and he is off to a running start.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question will come from Michael Binetti with Evercore ISI. Please go ahead.

Zachary James Coughlin: Hey, guys. Thanks, and congrats on a nice quarter. Hey, Stefan, I think the first quarter, so that's the first time we've seen the top-line impacts of the strategic pullback in Europe. I think in the first quarter, you said gross margin in Europe was up 200 basis points, but I wonder if you could help us. I think you have a lot of input costs going in the right direction with cotton and frayed and maybe some channel mix there, obviously, with the whole field.

Speaker Change: Hey, guys, thanks, and congrats on nice quarter.

Stefan Larsson: It seems like more of the improvement on the margins from actually changing the structure of the business in Europe is still ahead of us. Could you maybe walk us through at a higher level how to think about the next few quarters on profitability as we see you come out of the initial phases on the top line? And then, Zach, on the gross margin guidance for the year, you spoke of new products in spring up 10%, clearance down 50%, and allocations down to 70% from 90%.

Michael Charles Binetti: I think the first quarter. So the first that's the first time, we've seen the topline impacts of the strategic pullback in Europe I think in first quarter. You said gross margin in Europe was up 200 basis points, but I wonder.

Michael Charles Binetti: If you could help us I think you have a lot of input costs going in the right direction with Tottenham train and maybe some channel mix. There obviously, a wholesale it seems like more of the improvement in the margins from actually changing the structure of that business. In Europe are still ahead of US could you maybe walk us through at a higher level.

Michael Charles Binetti: Think about the next few quarters on profitability Hasnt seen commodity initial phases on the top line and then Xactly.

Speaker Change: On the gross margin guidance for the year, you spoke to the new products and spring up 10% clear.

Speaker Change: Clearance down 50%.

Speaker Change: Allocations.

Speaker Change: Down to 70% from 90, so David's initiatives with Johnson progress I guess the guidance suggest the gross margin gains are slowing a little bit. After first quarter are there other headwinds, we should think about or just appropriate to make some <unk>.

Stefan Larsson: So David's initiatives are showing some progress. I guess the guidance suggests the gross margin gains will slow a little bit after the first quarter. Are there other headwinds we should think about, or is it just appropriate to take some conservative posture in the macro?

Speaker Change: Perfect posture in the macro.

Zachary James Coughlin: Well, thank you, Michael. And let me start on the gross margin rate. So really exciting to see this quarter that we drove an all-time high gross margin rate for the company. And when we look at the outlook that we are communicating for the rest of the year, the guidance, it's also an all-time high. So that all-time high is central to the PVH Plus plan work we do in terms of going back to the DNA of the brands and, in a very systematic, repeatable way, driving product strength through two ways. So you see the gross margin rate come up through two parts. The first is the category of innovation in hero products, the right level of newness, and the improvement in planning, buying, and allocation that we mentioned.

Speaker Change: So thank you Michael let me start on the gross margin rate, so really exciting to see this quarter that we drove an all time high gross margin rate for the company.

Speaker Change: And when we look at the outlook that we're communicating for the rest of the year at the guidance. It's also all time high so thats all time high of central to the PVH plus plan work, we do in terms of going back to the DNA of Nebraska and in a very systematic repeatable driving <unk>.

Speaker Change: Product strength.

Through two ways. So you see the gross margin rate come out through two parts. The first is the category offense, the innovation and hero products the right level of newness the improvement in planning and buying allocation that we mentioned that's driving pricing power on gross margin up also from David and the supply.

Stefan Larsson: That's driving pricing power and gross margin up. Also, David and the supply team's great work in driving the cost of goods down by the way we purchase, and the way we platform raw materials. So you will see that engine kick into gear more and more over the year and over the coming few years, actually.

Speaker Change: <unk> team's great work in driving cost of goods down by the way we have purchased delay we platform raw materials. So you will see that amgen kick into gear more and more over the year and over the coming few years actually so it's a mix between the consumer facing pricing power.

Stefan Larsson: So it's a mix between the consumer facing pricing power and the underlying demand driven supply chain coming. And Michael, you know, we had a strong first quarter for gross margin of over 61% and an all-time high. I think some of the key drivers under there also lay out where we're headed for the rest of the year. So we helped by the channel mix.

Speaker Change: And underlying demand driven supply chain coming in.

Speaker Change: Yes, Michael.

Speaker Change: Strong first quarter for gross margin over 61% and an all time high I think some of the key drivers under there also lay out where we're headed for the rest of the year. So it helped by channel mix in the first quarter DTC penetration grew by around 500 basis points. So we get the gross margin lift there and the work that Stefan just talked about that were <unk>.

Zachary James Coughlin: In the first quarter, DTC penetration grew by, you know, around 500 basis points. So we get the gross margin lift there. And the work that Stefan just talked about that we're doing in Europe, the quality of sales work there, you know, to a certain extent around the world, as well as help to drive that gross margin improvement, that's about two-thirds of the 350 basis points. And then on top of that, we're still comparing versus last year on product costs around raw materials that were a lot higher. So that's about 1 3rd.

Speaker Change: Doing in Europe with quality of sales work there to a certain extent around the world as well as help to drive that gross margin improvement is about two thirds of the 350 basis points and then on top of that we're still comparing versus last year to product cost around raw materials that were a lot higher so thats about one third I think as we looked at for.

Zachary James Coughlin: I think as we looked down for the full year, we said up approximately 200 basis points. For Q2 and Q3, we can expect increases in that general range. And the reason why those come off from the first quarter is we start to see some of the diminishing effect around product costs as those began to show up in products as the year progressed last year.

Speaker Change: Full year, we've said up approximately 200 basis points for Q2 and Q3, we can expect increases in that general range and the reason why those come off from first quarter as we start to see some of the diminishing effect around the product costs as those begin to show up in products as the year progress last year, but the work around the quality.

Zachary James Coughlin: But the work around quality sales continues on for the rest of the year. In the fourth quarter, we do start to annualize both some of the macro improvements as well as some of the work around quality of sales that we started at the end of last year. And that's why you see the flow of margin as we go through.

Speaker Change: This continues on for the rest of the year fourth quarter, we do start to annualize both some of the macro improvements as well as some of the work around quality of sales that we started at the end of last year as well and Thats why you see the flow of margin as we go through but I do think it's worth noting as we talked about record set record setting highest gross margin in the first quarter for the full year.

Zachary James Coughlin: But I do think it's worth noting, as we talked about record-setting highs for gross margin in the first quarter. For the full year as well, we're calling gross margin around 60%, also an all-time high. So I think that's a good way to sort of see the proof coming through from the quality of work around the PBS plus drivers and quality. Okay, thanks a lot, guys. I appreciate it.

Speaker Change: As well.

Speaker Change: <unk> gross margin around 60% also all time high so I think thats, a good way to sort of see the proof coming through from the quality of work around the PVH plus drivers and the quality of sales work.

Okay. Thanks, a lot guys I appreciate it.

Jay Daniel Sole: Thank you. Our next question will come from Jay Sole with UBS. Please go ahead.

Speaker Change: Thank you. Our next question will come from Jay sole with UBS. Please go ahead.

Jay Daniel Sole: Great, thank you. Regarding inventory down 22%, how do you feel about the composition and, alongside that, progress with the supply chain initiatives? Thanks. Thanks, Jay.

Jay Daniel Sole: Great. Thank you regarding inventory down 22%, how do you feel about the composition.

Speaker Change: And alongside that progress with the supply chain initiatives.

Stefan Larsson: Yes, we continue as we set out in the PVH plus plan, and we made it more specific through the quarters where we have heads down executing on building out the supply chain, the demand-driven supply chain to optimize better and better optimize inventory in relation to demand. Then you see that we're down 22% in inventory versus last year. We are that with better availability. We are improving our planning, buying, and allocation. I mentioned RFID earlier.

Jay Daniel Sole: Thanks Jay.

Speaker Change: Yes, we continue to as we set out in the PVH plus plan and we've made it more specific through the quarter square, we are heads down executing on building out the supply chain the demand driven supply chain is to optimize better and better optimize inventory in relation to demand.

Speaker Change: Do you see that we are down 22% in inventory versus last year, we are that we had better availability.

Speaker Change: We are improving our planning buying and allocation I mentioned RFID, if not a novel.

Speaker Change: Thing, but it's a very effective so and we're rolling that out.

Speaker Change: For the cross across every brand every channel across the company and that will then that's RFID will enable us to know.

Speaker Change: Exactly where every piece of inventories, which will enable us to further improve planning further improved buying and be more granular on the allocation.

Stefan Larsson: It's not a novel thing, but it's very effective: exactly where every piece of inventory is, which will enable us to further improve planning, further improve buying, and be more granular on the allocation. The allocation example I shared in my prepared remarks, which is 30% of the inventory in D2C is now allocated based on demand signals. So you will see us continue to build this out quarter by quarter by quarter over the next few years. And that is something that will create a lot of value. And as Zach mentioned, it's the underlying engine that will fuel the consumer-facing improvement. Got it.

The allocation example, I shared in my prepared remarks, which is 30% of the inventory in D. C is now allocated based on demand signals. So you will see us continue to build this out over quarter by quarter by quarter over the next few years. So that is something that will.

Speaker Change: It creates a lot of value.

Speaker Change: Jack mentioned this is the underlying.

Speaker Change: And that will fuel the consumer facing improvements.

Speaker Change: Got it thank you so much.

Jay Daniel Sole: Thank you Jay.

Jay Daniel Sole: Thank you so much. Thank you. Thank you. Our next question will come from Dana Telsey with the Telsey Group. Please go ahead.

Speaker Change: Thank you. Our next question will come from Dana Telsey with Telsey Group. Please go ahead.

Dana Lauren Telsey: Hi, good morning, everyone. Stefan, as you think about the PVH Plus plan and the drivers behind it, how do you think it's coming together in regards to the consumer? And given the improvements in gross margin that you have, how do you see the expansion into 25 as you think about the balance of this year and beyond? Thank you. Yeah, thanks, Dana. It's the PVH plus plan. We are very focused on these five growth drivers, and we will be relentless in executing all of them. And it's when we have progress in each that's when the real strength unlocks.

Dana Lauren Telsey: Hi, good morning, everyone.

Speaker Change: Finally, as you think about the PVH plus plan on the drivers behind that how do you think it's coming together in regards to the consumer.

Speaker Change: And given the improvements in gross margin that you have how do you see the expansion until 'twenty five as you are thinking about the balance of this year and go forward. Thank you.

Speaker Change: Yes, Thanks Dana.

Speaker Change: The PVH plus plan.

Speaker Change: We are very focused on these five growth drivers and we will be relentless on executing all of them and it's when we have progress in each that's when the real strength unlocks. It starts to your point it starts with driving brand engagement and what's really encouraging to see is that it's also where.

Stefan Larsson: It starts, to your point, with driving brand engagement. And what's really encouraging to see is that this is also where we have shorter lead times. If you look at brand engagement improvement versus product improvement, brand engagement has shorter lead times. And I'm super pleased to see that both Calvin and Tommy are really cutting through on a brand desirability level, consumer engagement, and social, again, sector leading performance in many of those steps.

Speaker Change: We have the shorter lead times. So if you look at brand engagement improvement versus product improvement brand engagement have shorter lead times and I'm Super pleased by seeing that both Calvin and Tommy is really cutting through on our brand desirability level of consumer engagement social.

Speaker Change: Again sector, leading performance in many of those steps and this is also connecting back to the underlying reason to believe in what we're setting out to do with Calvin and Tommy because the kind of brand status under consumer engagement in the brand love from the consumer globally.

Stefan Larsson: And this is also connecting back to the underlying reason to believe in what we are setting out to do with Calvin and Tommy because the kind of brand stats and the consumer engagement and the brand love from the consumer globally that you see now, you can't buy that. There are very few brands in the world who have that kind of underlying love and have collided with culture.

Speaker Change: What you see now you can't you can't buy that you. There are very few brands in the world, who have that kind of underlying in love and have collided with culture and then the way our teams now trade cut through campaigns amplify with Mega talent connect them to the cultural conversation.

Stefan Larsson: And then the way our teams now create cut-through campaigns, amplify with mega talent, and connect them to the cultural conversation. Yeah, super exciting because that then enables us to connect to that brand engagement and brand love. We build out over time stronger, stronger product execution, and stronger marketplace execution. And then, to your final part of your question, that will then drive gross margin expansion over time. So I see that, again, we are early in the execution, but seeing some of the highest brand engagement steps in the industry across the board. So kudos to the teams for really, really doing that.

Speaker Change: Yes Super exciting because that then enables us to connect to that brand engagement and brand love, we build outs overtime strongest stronger product execution stronger marketplace execution, and then to your final part of your question Industrial then drive.

Speaker Change: Margin expansion over time, so I see that again, we are early.

Speaker Change: In the execution, but seeing some of the highest brand engagement stats in the industry across across the board. So kudos to the teams are really really doing that.

Speaker Change: Okay.

Speaker Change: Thank you.

Dana Lauren Telsey: Thank you. Thank you. Our next question will come from John Kernan with TD Cowan. Please go ahead.

Speaker Change: Thank you. Our next question will come from John Kernan with TD Cowen. Please go ahead.

John David Kernan: Good morning. Thanks for taking my question. You know, we're two years into the PBH Plus plan. There have been quite a few questions already on today's call.

Speaker Change: Good morning, Thanks for taking my question.

Speaker Change: <unk>.

Speaker Change: Two years into the PVH Pos plan has been quite a few questions.

Speaker Change: On today's call, obviously that gross margin has shown.

John David Kernan: And obviously, the gross margin has shown sizable improvements since that plan. The question now is whether SG&A rates have offset some of the 300 basis points plus of gross margin approved. What's your clearest line of sight into the long-term margin potential of the business, and how top-line dependent are you on those long-term targets? Thanks, John.

Speaker Change: Sizable improvement since that plan I guess the question now is SG&A rates have offset some of that 300 basis points plus of gross margin improvement.

Speaker Change: Whats your clear line of sight into the long term margin potential of the business and how top line dependent are you on those.

Speaker Change: Im sorry, guys.

Stefan Larsson: To your point, we're two years in. But if you ask me to start with just giving an assessment of where we are on the journey, Eva is still only one year into her leadership of Calvin.

John: Thanks, John.

Speaker Change: To your point to a two year thing, but if you asked me to start with just giving an assessment of where we are on the journey.

Speaker Change: Eva is still only one year into a leadership of Calvin.

Speaker Change: And we had her team already getting strong traction on engagement, taking massive action on product and experience improvements.

Stefan Larsson: And with her team already getting strong traction on engagement, taking massive action on product and experience improvements, Leah is on board since April, early, coming in very strong, mirroring the successful structure in Calvin, starting to move product innovation improvements already for spring 25, early innings for the demand-driven supply chain that we talked a lot about. We're driving growth in North America, both DTC and wholesale. We're in the beginning stages of tapping into that full potential ahead of what most of us thought we were going to do at this point.

Speaker Change: It's on board since April are coming in very strong mirrored the successful structure in Calvin.

Speaker Change: Starting to move.

Speaker Change: Product innovation improvements already for spring 'twenty five early in <unk> for the demand driven supply chain that we talked a lot about.

Speaker Change: We are driving growth in North America, both DTC and wholesale we are in the beginning to tap into that full potential ahead of us.

Speaker Change: Most most of our stores, we were going to.

Speaker Change: Execute at this point.

Stefan Larsson: Asia is one of our growth engines, and there is a lot of potential still ahead of us. I spent a week with our teams there just a few weeks ago in both China and Japan, and most of the growth potential is still ahead of us.

Speaker Change: One of our growth and just a lot of potential still ahead of US I spent a week with our teams there just a few weeks ago in both China and Japan most of the growth potential still ahead of us.

Stefan Larsson: We are operating in a very tough macro consumer backdrop in Europe, proactively taking the right steps there to set us up for long-term growth with increased margin expansion. We have the leadership team more and more in place that have the experience and capability to do it. So if you look at it, this is something that we will continue to build on over time, and that plays back into the gross margin expansion as well.

Speaker Change: We are operating in a very tough macro consumer backdrop in Europe proactively.

Speaker Change: Proactively taken the right steps there to set us up for long term.

Growth with increased margin expansion, we have the leadership team more and more in place that have the experience and capability to do it. So if you look at it.

Speaker Change: This is something that.

Speaker Change: Overtime, we will continue to build and that plays back into the gross margin expansion as well.

Stefan Larsson: And I think just from an SG&A perspective, to get to that specifically, a good first quarter, down almost $50 million compared to last year, with reductions across nearly all the spend categories as our work on driving efficiencies gains traction.

Speaker Change: And I think just from an SG&A perspective to hit to that specifically a good first quarter of down almost $50 million compared to last year with reductions across nearly all of the spend categories as our work driving efficiencies gains traction I think one special note inside of there from an end on the investment side marketing as Stefan mentioned remains.

Zachary James Coughlin: I think one special note inside of that, from an investment side, marketing, as Stefan mentioned, remains an important focus for us, and marketing as a percentage of sales is up again versus last year. So we want to make sure that we're continuing to prioritize it. And then looking forward, we're actively working on the next phase of PBH Plus Value Driver 5. We've identified a number of areas where new ways of working, better alignment to the PBH Plus plan, and benefits of global scale will deliver additional SG&A savings. And, as we discussed last quarter, that work is at the center of the operating model.

Speaker Change: An important focus for us and marketing as a percentage of sales up again versus last year. So we want to make sure that we're continuing to prioritize and then looking forward. We're actively working on the next phase of PVH plus value driver five we've identified a number of areas, where new ways of working better alignment to the PVH plus plan and benefits of <unk>.

Speaker Change: Mobile scale will deliver additional SG&A savings.

Speaker Change: As we discussed last quarter that work is at the center of the operating model. So we're working carefully.

Zachary James Coughlin: So we're working carefully and expect to see those benefits starting in 2025. But as Stefan mentioned, we do expect to grow, and with that, we'll bring leverage to drive profit margin improvement. But we also see significant opportunity in the rest of the P&L to contribute to that path to 15% that we've committed to. That's helpful.

Speaker Change: Great to see those benefits starting in 'twenty five, but as Stefan mentioned, we do expect to grow and with that we'll bring leverage to drive profit margin improvement, but we also see significant opportunity in the rest of the P&L to contribute to that path to 15% that we've committed to.

John David Kernan: Zach, just a quick follow-up. When you look at the SG&A and the CapEx, where do you see the most impactful and highest future returns on investments for Calvin and Tommy?

Speaker Change: That's helpful. Zach just a quick follow up when you look at the SG&A and the Capex, where do you see the most impactful.

Speaker Change: Highest future returns on investments for Calvin and Tommy.

Speaker Change: Uh huh.

Zachary James Coughlin: So I think overall, one, as Stefan said, we're working on each of the legs of the path that are shorter. So the shortest term is marketing, and that's where our focus has been. And I think, as Stefan's talked so much about consumer engagement here, we're seeing that begin to pay off. So we feel great that that investment and the return are coming. I think now, as we work further in, we'll start to see the longer-term items, things like working on the store network and expansion.

Stephane: So I think overall, one will as Stephane said, we're working on what each of the legs of the path that are shorter so in the shorter term as marketing and Thats, where our focus has been and I think that Stefan talk so much about consumer engagement here, we're seeing that begin to pay off so we feel great that that investment and the return. So I think now as we work further in.

Stephane: We will start to see or the longer lead items things like working on the store network and expansion and we expect that to be significant.

Zachary James Coughlin: We expect that to be a significant source of investment for us and an opportunity as well to continue to grow our physical presence. And then, behind that, the investment to support those drivers in both technology and in supply chain, also in support of both efficiencies as we operate more efficiently but also helping to pursue and drive growth. That's great.

Stephane: <unk> investment for us and an opportunity as well to continue to grow our physical presence and then behind that the investment to support those drivers in both technology.

Stephane: And in supply chain and also in support of both efficiencies as we operate more efficiently, but also helping to pursue and drive growth.

Speaker Change: That's great. Thanks, everybody.

John David Kernan: Thanks, everybody. We only have time for one final question for today. Thank you. Our last question will come from Ike Boruchow with Wells Fargo. Please go ahead. Hey, good morning, everyone. One for Stefan and one for Zach.

Speaker Change: We have time for one final question for today.

Speaker Change: Thank you our last question will come from Ike <unk> with Wells Fargo. Please go ahead.

Irwin Bernard Boruchow: Stefan, when you talked about the early spring reads on the books in Europe, I was just kind of curious, maybe I didn't understand, were you saying that you're just seeing sequential improvement, or do you think that there's potential for those books to end up positive when all is said and done? And then Zach, I just want to make sure I understood, the digital business for you guys has been growing very nicely, and I know it was down five percent in constant currency in Q1. I think you gave a reason for that. Can you just remind me, like, who was that driver?

Speaker Change: Hey, good morning, everyone.

One first of all in one for Zach to fund when you talked about the early spring reads on the books in Europe, just kind of curious, maybe maybe I didn't understand where you're seeing that.

Speaker Change: Youre, just seeing sequential improvement or do you think that there's potential for those books to end up positive when all of sudden done and then Zach I just want to make sure I understood. The digital business for you guys have been growing very nicely and I know it was down 5% in constant currency in Q1, I think you gave a reason for that.

Speaker Change: Just remind me what was the driver and then how should we expect digital <unk>.

Irwin Bernard Boruchow: And then how should we expect digital growth to kind of play out the rest of the year? Thank you. Thanks, Ike, and coming back to the positive indications in the European Wholesale Channel. So we just finished pre-spring, which is the smaller part of overall spring, the main season.

Speaker Change: Growth to kind of.

Speaker Change: Play out the rest of the year. Thank you.

Sai: Thanks, Sai and coming back to the.

Speaker Change: The positive indications in the European wholesale channel. So we just finished pre spring is the smaller part of overall spring demand season. The main see some we're kicking off next week with our product and marketing strength that we will bring to the market. So.

Stefan Larsson: The main season we're kicking off next week with product and marketing strength that we will bring to the market. So, What I refer to is the pre-spring, the beginning of spring; we see positive indications of trend change and sequential improvements versus fall 2024. And we'll fill you in later when we have sold through our main season for spring 25.

Speaker Change: What I referred to is the pre spring at the beginning of spring, we see positive indication of <unk>.

Speaker Change: Trend change and sequentially improvements for our fall 2024, and we'll fill you in later when we have sold through our main main season for spring 'twenty five and.

Zachary James Coughlin: And from a digital channel perspective, it remains important for us. We saw strong growth in North America this quarter for both brands, and that was profitable growth. As we continue to grow digital across Asia, that's been a cornerstone of that growth over time. So those are both growing.

Speaker Change: From a digital channel perspective remains important for US we saw strong growth in North America this quarter in both brands.

Speaker Change: And that was profitable growth continue to grow digital across Asia, that's been a corner cornerstone of that growth over time.

Speaker Change: So those are both growing and we're seeing that pullback is in Europe, and there's really two pieces to that one is some work that we're doing.

Zachary James Coughlin: What we're seeing is that pullback in Europe, and there are really two pieces to that. One is some work that we were doing around third-party platforms that we are choosing to pull back from as a part of the quality of sales initiative. And even on our own e-commerce platform, an orientation towards increasingly in-season full price versus driving sales through discounting. As Stefan talked about earlier, we're seeing that payoff for all of DTC in Europe, spring 24 being up double digits versus spring 23 last year.

Speaker Change: Around third party platforms that we are choosing to pull back from.

Speaker Change: As a part of the quality of sales initiatives and then even on our own e-commerce platform and orientation towards increasingly indices in full price versus driving sales through discounting I think stephane talked about earlier, we're seeing that pay off for all of DTC in Europe spring 'twenty four being up double digit for spring 'twenty three last year. So.

Zachary James Coughlin: So digital is incredibly important, and we're growing in the places that are a focus and important for us to grow in. Thank you. All right. Thank you, Ike. And with that, just want to wrap up to say that we're on this multi-year journey to build Calvin and Tommy into the most desirable lifestyle brands in the world. It's exciting to see, with consumer engagement, how we can already cut through among the top of the sector.

Speaker Change: Digital incredibly important and we're growing in the places that are a focus and an important for us to grow in scale.

Speaker Change: Got it alright.

Speaker Change: Thank you.

Speaker Change: And with that just want to wrap up to say that we are on this multi journey to build Calvin and Tommy to the most desirable lifestyle brands in the world, It's exciting to see with the consumer engagement. How we can already know chop through among the top of the sector. We have a lot of work still to do to build.

Zachary James Coughlin: We have a lot of work still to do to build out the brands and PVH to be a leading brand builder in our sector. In Q1, in a tough macro, we executed our plan, we delivered on our commitments, and we'll just have our heads down, relentlessly executing to do this quarter after quarter. And as I've shared before, the biggest reason to invest in us lies in the compounded effect of our consistency in direction, consistency in our PVH plan, and strong execution discipline.

Speaker Change: Without the brightest and PVH to leading brand builder in our sector.

Speaker Change: In Q1, and a tough macro we executed our plan we delivered on our commitments and we'll just have our heads down relentlessly execute to do this quarter after quarter and Doug what I've shared before the biggest reason to invest in our slides and the compounded effect of our consistency in dire.

Speaker Change: <unk> consistency and PVH plow and strong execution discipline. So looking forward to staying close on that journey wishing you all a great summer in the meantime, thank you.

Stefan Larsson: So, looking forward to staying close on that journey, and wishing you all a great summer in the meantime. Thank you. Thank you. This does conclude today's call. We thank you for your participation. You may disconnect at any time.

Thank you this does conclude.

Speaker Change: On today's call. We thank you for your participation you may disconnect at anytime.

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Speaker Change: Okay.

Speaker Change: [music] another robot.

Speaker Change: Oh.

Speaker Change:

Speaker Change: Uh huh.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: Sure.

Speaker Change: [music].

Speaker Change: Uh huh.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: [music].

Okay.

Speaker Change: [music].

Speaker Change: [music].

Speaker Change: [music].

Speaker Change: [music].