Q2 2024 PVH Corp Earnings Call

August 28, 2024

Operator: Good morning, everyone and welcome to today's PVH Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. 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 1 keys on your touch-tone phone. Please note this call may be recorded and I will 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.

Thanks for watching!

Episode 2

Speaker Change: Good morning everyone and welcome to today's pvh second quarter 2024 earnings conference call

Speaker Change: At this time, all participants are on a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session.

Speaker Change: You may register to ask a question at any time by pressing the star and one keys on your touchstone phone.

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

Speaker Change: 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: Thank you, operator. Good morning everyone and welcome to the PVH Corps 2nd Order 2024 earnings conference call. Meeting the call today will be Stefan Larsson, Chief Executive Officer and Zach Coughlin Chief Financial Officer.

Speaker Change: This work ethic obstacle is being reported on the House of P.V.H. and consists of copyright and material. It may not be recorded, re-broadcast for otherwise transmitted without P.V.H. is written permission.

Speaker Change: Your participation constitutes your consent to have the anything you say of your energy transcript or replay of the skull.

Speaker Change: The information to be discussed includes forward-looking statements that reflect PVH's view as August 27, 2024 of future events and financial performance.

Speaker Change: These statements are subject to risk and uncertainties, indicating the company's SEC filing and the same corporate statement included in the press release says the subject of this call.

Speaker Change: Please take a look at this.

Speaker Change: PVA is right to change its strategies, objectives, expectations and intentions.

Speaker Change: and the company's ability to realize anticipated benefits and savings from domestic research, restructuring from similar plans such as the planned cost-efficiency actions announced in August 2022 and completed in 2023, the 2021 sale of access to us and exit from its heritage brands men's were in retail businesses. And in November 2023 sale of the heritage brands women's in a business to focus on its calvin client and how many health services.

Sheryl Freeman: PVH does not undertake any obligation to update publicly any forward-looking statement, including without any 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. Reconciliation to GAAP amounts are included in PVH's second quarter 2024 earnings release, which can be found on www.pvh.com and in the company's current report on Form 8-K furnished to the SEC in connection with the release.

Speaker Change: PVA is to not undertake any obligation to update public life and explore the excitement, including without limitations, any estimates regarding revenue or earnings.

Speaker Change: Generally, the financial information and projections to be discussed will be on a non-gap date that's had to find under SEC rules.

Speaker Change: Reconciliation's to gaping down, included in PVH's 2nd Order 2024 earnings release, which can be found on www.pvh.com and the company's car report on form 8K, furnished to the SEC in connection with the release.

John Kernan: Good morning, everyone and welcome to today's PVH Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. 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 1 keys on your touch-tone phone. Please note this call may be recorded and I will 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. Thank you, operator. Thank you Cheryl and good morning everyone and thank you for joining our call today. Let me start by thanking our teams all around the world as we continue to deliver on our near-term commitments while steering through us our long-term vision to build Calving Line and Tommy Hilfiger into the most runs in the world and make PVH one of the leading brand groups in our sector.

Sheryl Freeman: At this time, I am pleased to turn the conference over to Stefan Larsson.

Speaker Change: At this time, I'm pleased to turn the conference over to Stefan Larsson.

Stefan Larsson: Thank you, Sheryl and good morning everyone and thank you for joining our call today.

Stefan Larsson: Let me start by thanking our teams all around the world, as we continue to deliver on our near-term commitments, while steering through us our long-term vision to be a telling sign and Tommy Hilfiger into the most of the brands in the world and make PVH one of the leading brand groups in our sector.

Stefan Larsson: Thank you, Sheryl and good morning, everyone. And thank you for joining our call today. Let me start by thanking our teams all around the world as we continue to deliver on our near-term commitments while steering towards our long-term vision to build Calvin Klein and Tommy Hilfiger into the most [inaudible] brands in the world and make PVH one of the leading brand groups in our sector. For the second quarter, we drove revenue in line with our guidance with stronger than expected profitability and EPS. We increased our EBIT margins, driven by significant cross margin expansion of 250 basis points and we continue to improve inventory productivity, with inventory down 12% year-over-year. The quarter had two distinctly different chapters to it. The first being the spring and summer full price focus selling parts on May and June and the second part in July being heavily impacted by the end-of-season summer clearance in the overall market.

Stefan Larsson: For the second quarter we draw revenue in line with our guidance with stronger than expected profitability and EPS.

Stefan Larsson: We increased our EBIT margins driven by significant cross margin expansion of 250 basis points and we continue to improve inventory productivity with inventory down 12% year over year.

Stefan Larsson: The quarter had two distinctly different chapters to it. The first being the spring and summer full price focused selling parts of May and June, and the second part in July being heavily impacted by the end of season's summer clearance in the overall market.

John Kernan: Our D2C trends were as expected in May and June and when we came into mid July as we saw the market shift to heavy end of season clearance and we had less end of season clearance inventory we decided not to follow the market down instead we saw less clearance and more newness and we draw cross margin rates up. With this approach we deliberately walked away from some of the low-quality clearance revenue in the peak clearance period from mid July to early August where our new season revenue didn't yet fully compensate on the total top line which resulted in our D2C revenue being down 3% on a constant currency basis for the quarter.

Stefan Larsson: Our D2C trends were as expected in May and June, and when we came into mid July, as we saw the market shift to heavy-end-of-season clearance, and we had less-end-of-season clearance inventory, we decided not to follow the market down.

Stefan Larsson: Instead, we saw less clearance and more known as, and we drove gross margin rates up.

Stefan Larsson: With this approach, we deliberately walked away from some of the low-quality clearance revenue in the peak clearance period from mid-July to early August.

Stefan Larsson: where our new CSR revenue didn't yet fully compensate on the total top line, which resulted in our D to C revenue being down 3% on a constant currency basis for the quarter.

John Kernan: Since then coming further into August we see that our overall D2C trends are coming back up driven by the new season inventory taking an increasingly bigger share of the total revenue. In wholesale for the quarter revenue declines slightly down 1% on a constant currency basis reflecting our proactive quality of sales actions and excluding the impact on the heritage brand sale. Looking ahead we are reaffirming our revenue non-gap EBIT margin and EPS guidance for the full year excluding a one-time tax benefit and we remain well positioned to deliver strong EPS growth for the full year.

Thank you, operator. Thank you Cheryl and good morning everyone and thank you for joining our call today. Let me start by thanking our teams all around the world as we continue to deliver on our near-term commitments while steering through us our long-term vision to build Calving Line and Tommy Hilfiger into the most runs in the world and make PVH one of the leading brand groups in our sector.

Sheryl Freeman: Thank you, operator. Good morning, everyone and welcome to the PVH Corp Second Quarter 2024 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer and Zac Coughlin, Chief Financial Officer. This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material. It may not be recorded, rebroadcast or otherwise transmitted without PVH's written permission. Your participation constitutes your consent to have anything you say appear in any transcript or replay of this call. The information to be discussed includes forward-looking statements that reflect PVH's view as of August 27, 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 call. These include: PVH's right to change its strategies, objectives, expectations and intention and the company's ability to realize anticipated benefits and savings from divestitures, restructuring and similar plans, such as the planned cost efficiency action, announced in August 2022 and completed in 2023, the 2021 sales

Sheryl Freeman: This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material. It may not be recorded, rebroadcast or otherwise transmitted without PVH's written permission. Your participation constitutes your consent to have anything you say appear in any transcript or replay of this call. The information to be discussed includes forward-looking statements that reflect PVH's view as of August 27, 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 call. These include: PVH's right to change its strategies, objectives, expectations and intention and the company's ability to realize anticipated benefits and savings from divestitures, restructuring and similar plans, such as the planned cost efficiency action, announced in August 2022 and completed in 2023, the 2021 sale of assets of and exit from its heritage brands' menswear and retail business and the November 2023 sale of the heritage brands' women's intimate apparel business to focus on its Calvin Klein and Tommy Hilfiger businesses. PVH does not undertake any obligation to update publicly any forward-looking statement, including without any 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. Reconciliation to GAAP amounts are included in PVH's second quarter 2024 earnings release, which can be found on www.pvh.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: These include PVH's right to change its strategies, objectives, expectations and intention and the company's ability to realize anticipated benefits and savings from divestitures, restructuring and similar plans, such as the planned cost efficiency action announced in August 2022 and completed in 2023, the 2021 sale of assets of and exit from its heritage brands' menswear and retail business and the November 2023 sale of the heritage brands' women's intimate apparel business to focus on its Calvin Klein and Tommy Hilfiger businesses. PVH does not undertake any obligation to update publicly any forward-looking statement, including without any 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. Reconciliation to GAAP amounts are included in PVH's second quarter 2024 earnings release, which can be found on www.pvh.com and in the company's current report on Form 8-K furnished to the SEC in connection with the release.

Sheryl Freeman: time, I am pleased to turn the conference over to Stefan Larsson.

Stefan Larsson: Since then, coming further in to August, we see that our overall D to C trends are coming back up, driven by the new season inventory, taking an increasingly bigger share of the total revenue.

Stefan Larsson: Thank you, Sheryl and good morning, everyone. And thank you for joining our call today. Let me start by thanking our teams all around the world as we continue to deliver on our near-term commitments while steering towards our long-term vision to build Calvin Klein and Tommy Hilfiger into the most [inaudible] brands in the world and make PVH one of the leading brand groups in our sector. For the second quarter we draw revenue in line with our guidance with stronger than expected profitability and EPS. We increased our EBIT margins driven by significant cross margin expansion of 250 basis points and we continue to improve inventory productivity with inventory down 12% year over year. The quarter had two distinctly different chapters to it. The first being the spring and summer full price focus selling parts on May and June and the second part in July being heavily impacted by the end of season summer clearance in the overall market.

Stefan Larsson: In wholesale for the corner, Revenue decline slightly down 1% on a constant currency basis.

Stefan Larsson: Reflecting our proactive quality of sales actions and excluding the impact of the heritage ground sale.

Stefan Larsson: Looking ahead, we are reaffirming our revenue, non-gap-eabit margin and EPS guidance for the full year, excluding a one-time tax benefit, and we remain well positioned to deliver strong EPS growth for the full year.

John Kernan: We continue to lean into the next level of PVH plus plan execution while remaining prudent given the increasingly challenging global macro headwinds. North America continues to be a strong proof point of our PVH plus execution and in Europe we are on plan with our targeted quality of sales actions and in APEC we drive strong consumer engagement and we win the big customer moments and as you will see quarter after quarter we will keep our clarity and consistency in direction staying relentlessly focused on building brand desirability while driving towards long-term sustainable growth.

Stefan Larsson: We continue to lean into the next level of PVH plus plan execution, while remaining prudent given the increasingly challenging global macro headwins.

Stefan Larsson: North America continues to be a strong proof point of our PVH-plus execution, and in Europe we are on plan with our targeted quality of sales actions.

Stefan Larsson: and in a pack we drive strong consumer engagement and we win the big consumer moments.

Stefan Larsson: And as you will see, quarter after quarter, we will keep our clarity and consistency in direction Staying relentlessly focused on building brandess our ability while driving towards long-term sustainable growth.

John Kernan: For the second quarter we draw revenue in line with our guidance with stronger than expected profitability and EPS. We increased our EBIT margins driven by significant cross margin expansion of 250 basis points and we continue to improve inventory productivity with inventory down 12% year over year. The quarter had two distinctly different chapters to it. The first being the spring and summer full price focus selling parts on May and June and the second part in July being heavily impacted by the end of season summer clearance in the overall market.

Stefan Larsson: We do this in a systematic and repeatable way through our discipline execution of all five growth drivers of our PVH class class.

Stefan Larsson: We increased our EBIT margins, driven by significant cross margin expansion of 250 basis points and we continue to improve inventory productivity, with inventory down 12% year-over-year. The quarter had two distinctly different chapters to it. The first being the spring and summer full price focus selling parts on May and June and the second part in July being heavily impacted by the end-of-season summer clearance in the overall market. Our D2C trends were as expected in May and June and when we came into mid-July, as we saw the market shift to heavy end-of-season clearance and we had less end-of-season clearance inventory, we decided not to follow the market down. Instead, we saw less clearance and more newness and we drove cross margin rates up. With this approach, we deliberately walked away from some of the low-quality clearance revenue in the peak clearance period from mid-July to early August, where our new season revenue didn't just fully compensate on the total topline, which resulted in our D2C revenue being down 3% on a constant currency basis for the quarter.

Stefan Larsson: For this fall in both Calvin and Tommy, we're taking another step up in consumer engagement.

John Kernan: We do this in a systematic and repeatable way through our discipline execution of all five growth drivers of our PVH plus plan. For this fall in both Calvin and Tommy we are taking another step up in consumer engagement with even stronger cut-through campaigns featuring globally and locally-relevant mega-talent. 424 is also the first product season where we have been able to fully influence product execution for both brands globally, leaning further into key growth categories, providing strong transitional products with innovation-fueled newness into our best-hero products.

Stefan Larsson: We'd even stronger capture campaigns featuring globally and locally relevant mega talent

Stefan Larsson: 424 is also the first product season, where we have been able to fully influence product execution for both rounds globally. Leaning further into tea growth categories, providing strong transitional products with innovation field known as intra-best hero products.

Stefan Larsson: All of this will be supported through continuing improvements in our data and demand remains supply chain, resulting in increased stock freshness, higher quality products and lower AUC.

Stefan Larsson: Instead, we saw less clearance and more newness and we drove cross margin rates up. With this approach, we deliberately walked away from some of the low-quality clearance revenue in the peak clearance period from mid-July to early August, where our new season revenue didn't just fully compensate on the total topline, which resulted in our D2C revenue being down 3% on a constant currency basis for the quarter. Since then, coming further into August, we see that our overall D2C trends are coming back up, driven by the new season inventory taking an increasingly bigger share of the total revenue. In wholesale, for the quarter, revenue declines slightly--down 1% on a constant currency basis, reflecting our proactive quality of sales actions and excluding the impact of the heritage brands' sale. Looking ahead, we are reaffirming our revenue, non-GAAP EBIT margin and EPS guidance for the full year, excluding a one-time tax benefit and we remain well-positioned to deliver strong EPS growth for the full year.

Stefan Larsson: Lastly, we remain focused on driving efficiencies to invest back into growth and we are making important progress to simplify how we work.

Stefan Larsson: Now, let me share some highlights from the second quarter on how we executed across our two iconic brands and three regions.

John Kernan: All of this will be supported through continued improvements in our data and demand-driven supply chain, resulting in increased stock freshness, higher quality products, and lower AUC. Lastly, we remain focused on driving efficiencies to invest back into growth and we are making important progress to simplify how we work.

Stefan Larsson: Starting with Calvin Klein.

Stefan Larsson: During the summer, the brand continued to build on the unprecedented momentum from the spring campaign.

Stefan Larsson: Showing up in some of the most culturally relevant moments around the world, ranging from Gerry Mallowides wearing custom carbon for the seasonal premiere of the hit TV series The Bear to Kpop group new jeans wearing the brand for an exclusive performance in Tokyo.

Stefan Larsson: In wholesale, for the quarter, revenue declines slightly--down 1% on a constant currency basis, reflecting our proactive quality of sales actions and excluding the impact of the heritage brands' sale. Looking ahead, we are reaffirming our revenue, non-GAAP EBIT margin and EPS guidance for the full year, excluding a one-time tax benefit and we remain well-positioned to deliver strong EPS growth for the full year. We continue to lean into the next level of PVH+ Plan execution while remaining prudent, given the increasingly challenging global macro headwinds. North America continues to be a strong proof point on our PVH+ execution and in Europe, we are on plan with our targeted quality of sales actions. And in APEC, we drive strong consumer engagement and we win the big customer moments. And as you will see, quarter after quarter, we will keep our clarity and consistency in direction, staying relentlessly focused on building brand desirability while driving towards long-term sustainable growth.

Speaker Change: Axler Greta Lee and K. Pop talent Mingyu, where part of the opening celebration of our newest global flagship store on the Shancel is St. Paris. The store captured Calvin's unique DNA in a way that elevates the brand and drives a strong commercial engine.

Stefan Larsson: Now, let me share some highlights from the second quarter on how we executed across our two iconic brands and three regions. Starting with Calvin Klein. During this summer, the brand continued to build on the unprecedented momentum from the spring campaign, showing up in some of the most culturally-relevant moments around the world, ranging from Jeremiah and White wearing custom Calvin for the seasonal premiere of the hit TV series The Bear to K-pop group Nougin, swearing the brand for an exclusive performance in Tokyo.

Speaker Change: Now coming into fall, Kalman is launching another global cuffs through campaign where Kendall Jenner returned to Calvin to tease the campaign

Speaker Change: and features Jeremy on a white in iconic fall essentials.

Speaker Change: Mingyu in the latest denim and Greta Lee makes her first campaign appearance, styled in iconic Calvin underwear

Speaker Change: Every week now, you will see new super relevant talent joining the campaign, wearing the most important products across all livestock categories. And when they do, the reactions from our consumers on the Instagram and TikTok go through the roof.

Stefan Larsson: And in APEC, we drive strong consumer engagement and we win the big customer moments. And as you will see, quarter after quarter, we will keep our clarity and consistency in direction, staying relentlessly focused on building brand desirability while driving towards long-term sustainable growth. We do this in a systematic and repeatable way through our disciplined execution of all five growth drivers of our PVH+ Plan. For this fall, in both Calvin and Tommy, we're taking another step up in consumer engagement with even stronger cut-through campaigns featuring globally and locally-relevant mega-talent. Fall '24 is also the first product season where we have been able to fully influence product execution for both brands globally, leaning further into key growth categories, providing strong transitional products with innovation-fueled newness into our best hero products.

Speaker Change: In addition, we're working hard already now to prepare for Calvin's return to the runway in February 2025, where we are looking forward to show the ultimate expression of the brand together with our most important talent and partners.

Stefan Larsson: Actor Greta Lee and K-pop talent Ming Yu, were part of the opening celebration of our newest global flagship store on the Chancelissé in Paris. The store captured Calvin's unique DNA in a way that elevates the brand and drives a strong commercial engine. Now coming into fall, Calvin is launching another global breakthrough campaign, where Kendall Jenner returned to Calvin to tease the campaign and features Jeremiah and White in iconic fall essentials. Ming Yu in the latest denim and Greta Lee makes her first campaign appearance styled in iconic Calvin underwear.

Speaker Change: Turning to Tommy.

Tommy: We brought the Tommy Summer to life this quarter through some of the most relevant summer events in iconic locations all around the world.

Tommy: from Mückenos and Tormina to La Pass in Mexico, combining the Tommy lifestyle with the best and most iconic Tommy summer products and cut through talent, driving the highest average engagement rate ever for the brand on Instagram.

Stefan Larsson: Fall '24 is also the first product season where we have been able to fully influence product execution for both brands globally, leaning further into key growth categories, providing strong transitional products with innovation-fueled newness into our best hero products. All of these will be supported through continued improvements in our data and demand-driven supply chain, resulting in increased stock freshness, higher quality products and lower AUC. Lastly, we remain focused on driving efficiencies to invest back into growth and we are making important progress to simplify how we work. Now, let me share some highlights from the second quarter on how we executed across our two iconic brands and three regions. Starting with Calvin Klein. During this summer, the brand continued to build on the unprecedented momentum from the spring campaign, showing up in some of the most culturally-relevant moments around the world, ranging from Jeremiah and White wearing custom Calvin for the seasonal premiere of the hit TV series The Bear to K-pop group Nougin, swearing the brand for an exclusive performance in Tokyo.

Stefan Larsson: '24 is also the first product season where we have been able to fully influence product execution for both brands globally, leaning further into key growth categories, providing strong transitional products with innovation-fueled newness into our best hero products. All of this will be supported through continued improvements in our data and demand-driven supply chain, resulting in increased stock freshness, higher quality products, and lower AUC. Lastly, we remain focused on driving efficiencies to invest back into growth and we are making important progress to simplify how we work.

Speaker Change: In parallel, Tommy continues to build relationships with the most relevant talent in culture and just coming off to Olympic some thrill that we have the Olympic goal medalist and repeat world record setter, toll-border and cultural sensation Monde du plan test as part of the Tommy family

Stefan Larsson: Every week now, you will see new super-relevant talent joining the campaign, wearing the most important products across all livestock categories. And when they do, the reactions from our consumers on Instagram and TikTok go through the roof. In addition, we are working hard already now to prepare for Calvin's return to the runway in February 2025, where we are looking forward to show the ultimate expression of the brand together with our most important talent and partners.

Speaker Change: Staying on the theme of sports, Tommy just this past week and dressed both Louis Hamilton and George Russell and other close friends of the brand at the Dutch Formula 1 Grand Prix.

Stefan Larsson: Now, let me share some highlights from the second quarter on how we executed across our two iconic brands in three regions--starting with Calvin Klein. During this summer, the brand continued to build on the unprecedented momentum from the spring campaign, showing up in some of the most culturally-relevant moments around the world--ranging from Jeremy Allen White wearing custom Calvin for the seasonal premiere of the hit TV series "The Bear" to K-pop group, New Jeans, wearing the brand for an exclusive performance in Tokyo. Actor Greta Lee and K-pop talent Ming Yu, were part of the opening celebration of our newest global flagship store on the Chancelissé in Paris. The store captured Calvin's unique DNA in a way that elevates the brand and drives a strong commercial engine. Now coming into fall, Calvin is launching another global breakthrough campaign, where Kendall Jenner returned to Calvin to tease the campaign and features Jeremiah and White in iconic fall essentials. Ming Yu in the latest denim and Greta Lee makes her first campaign appearance styled in iconic Calvin underwear.

Speaker Change: These kinds of sports partnerships connect straight into the Tommy Hilfiger brand DNA

Speaker Change: Tommy was 20 years ahead of most out of brands in recognizing the power of building his brand in collaboration with leaders in fashion, art, music and entertainment to sports, something that's even more relevant today and core to who the brand is.

Speaker Change: Coming into this fourth season, Tommy just launched another cut-through campaign with Mega K Pop-Bound Stratics.

Speaker Change: wearing the new Tommy Fall Collection set against a New York City Skyline. The campaign has set a very strong start with social posts receiving hundreds of thousands of likes.

Stefan Larsson: Actor Greta Lee and K-pop talent, Mingyu, were part of the opening celebration of our newest global flagship store on the Champs-Élysées in Paris. The store captured Calvin's unique DNA in a way that elevates the brand and drives a strong commercial engine. Now, coming into fall, Calvin is launching another global cut-through campaign, where Kendall Jenner return to Calvin to tease the campaign and features Jeremy Allen White in iconic fall essentials, Mingyu in the latest denim and Greta Lee makes her first campaign appearance styled in iconic Calvin underwear. Every week now, you will see new super-relevant talent joining the campaign, wearing the most important products across all livestock categories. And when they do, the reactions from our consumers on Instagram and TikTok go through the roof. In addition, we are working hard already now to prepare for Calvin's return to the runway in February 2025, where we are looking forward to show the ultimate expression of the brand together with our most important talent and partners.

Speaker Change: And we are now just a few weeks out from hosting the next Tomahil figure fashion show in New York

Speaker Change: showing our spring 25 men's and women's collections at the Nudr iconic New York City landmark. As a reminder, the fashion show we just did in spring became the biggest cut-through show of all of New York Fashion Week and made it to the top 10 shows of all fashion shows globally.

Stefan Larsson: And just coming off the Olympics, I'm thrilled that we have the Olympic gold medalist and repeat world record center, cold water and cultural sensation. Mondo du Plantis has part of the Tommy family. Stanley. Staying on the theme of sports, Tommy just this past week and dressed both Louis Hamilton and George Russell, and other close friends of the brand at the Dutch Formula One Grand Prix. These kind of sports partnerships connect straight into the Tommy Hilfiger brand DNA.

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

Stefan Larsson: underwear. Every week now, you will see new super-relevant talent joining the campaign, wearing the most important products across all livestock categories. And when they do, the reactions from our consumers on Instagram and TikTok go through the roof. In addition, we are working hard already now to prepare for Calvin's return to the runway in February 2025, where we are looking forward to show the ultimate expression of the brand together with our most important talent and partners.

Stefan Larsson: underwear.

Stefan Larsson: Every week now, you will see new super-relevant talent joining the campaign, wearing the most important products across all lifestyle categories. And when they do, the reactions from our consumers on Instagram and TikTok go through the roof. In addition, we are working hard already now to prepare for Calvin's return to the runway in February 2025, where we are looking forward to show the ultimate expression of the brand together with our most important talent and partners. Turning to Tommy. We brought the Tommy Summer to life this quarter through some of the most relevant summer events in iconic locations all around the world, from Muconos and Taormina to La Passe in Mexico, combining the Tommy lifestyle with the best and most iconic Tommy Summer products and cut through talent, driving the highest average engagement rate ever for the brand on Instagram. In parallel, Tommy continues to build relationships with the most relevant talent in culture.

Speaker Change: Despite a tougher macro, the region continues to be a great example of our PVH class plan execution.

Speaker Change: In the second quarter, our Calvin and Tommy Businesses together delivered an 11.7% debit margin. Their fourth consecutive quarter of a double digit non-gap evit margin.

Speaker Change: Up more than 400 basis points compared to last year, marking another quarter of significant margin expansion across both brands.

Stefan Larsson: Turning to Tommy. We brought the Tommy Summer to life this quarter through some of the most relevant summer events in iconic locations all around the world, from Mykonos and Taormina to La Paz in Mexico, combining the Tommy lifestyle with the best and most iconic Tommy Summer products and cut-through talent, driving the highest average engagement rate ever for the brand on Instagram. In parallel, Tommy continues to build relationships with the most relevant talent in culture. And just coming off the Olympics, I'm thrilled that we have the Olympic gold medalist and repeat world record setter, pole vaulter and cultural sensation, Mondo Duplantis, as part of the Tommy family. Staying on the theme of sports, Tommy, just this past weekend dressed both Louis Hamilton and George Russell and other close friends of the brand at the Dutch Formula One Grand Prix. These kind of sports partnerships connect straight into the Tommy Hilfiger brand DNA.

Speaker Change: Over the past year, you can really see the progress we have made as we double down on our pvh plus execution in the region.

Stefan Larsson: Tommy was 20 years ahead of most other brands in recognizing the power of building his brand in collaboration with leaders in fashion, art, music, entertainment, and sports, something that's even more relevant today and core to who the brand is. Coming into this fall season, Tommy just launched another cut-through campaign with mega K-pop band Stray Kids, wearing the new Tommy Fall collection set against the New York City skyline. The campaign has had a very strong start with social posts receiving hundreds of thousands of likes.

Speaker Change: Our teams delivered high quality revenue growth, so 1% for our Calvin and Tommy businesses combined While D2C revenue declined modestly given the July trends I spoke to earlier, this was offset by a low single digit increase in wholesale

Speaker Change: In D2C throughout the quarter across both brands we focus on advancing our product category office and bring it newness into our hero products driving increased cross margin.

Stefan Larsson: And just coming off the Olympics, I'm thrilled that we have the Olympic gold medalist and repeat world record setter, pole vaulter and cultural sensation, Mondo Duplantis, as part of the Tommy family. Staying on the theme of sports, Tommy, just this past weekend dressed both Louis Hamilton and George Russell and other close friends of the brand at the Dutch Formula One Grand Prix. These kind of sports partnerships connect straight into the Tommy Hilfiger brand DNA. Tommy was 20 years ahead of most other brands in recognizing the power of building his brand in collaboration with leaders in fashion, art, music, entertainment and sports--something that's even more relevant today and core to who the brand is. Coming into this fall season, Tommy just launched another cut-through campaign with mega K-pop band, Stray Kids, wearing the new Tommy Fall collection set against the New York City skyline. The campaign has had a very strong start with social posts receiving hundreds of thousands of likes.

Speaker Change: For wholesale, we're driving product strength as stronger shelters as we continue working very closely with our key partners to drive our strong product category offence and optimize the consumer shopping experience.

Stefan Larsson: And we are now just a few weeks out from hosting the next Tommy Hilfiger fashion show in New York, showing our spring 25 men's of women's collections at another iconic New York City landmark. As a reminder, the fashion show we just did in spring became the biggest cut-through show of all of New York fashion and made it to the top 10 shows of all fashion shows globally.

Speaker Change: Overall, across all channels in the North America region, we continue to see a strong consumer response to the improvement we make across product, marketing and marketplace execution.

Speaker Change: Turning to our international business.

Speaker Change: In Europe, we continue to successfully execute and are previously communicated quality of sales initiative.

Speaker Change: While our overall revenue was down 2% year over year in euros, it included a 3% impact from our quality of sales actions, and we deliver significantly higher gross margins.

Stefan Larsson: Coming into this fall season, Tommy just launched another cut-through campaign with mega K-pop band, Stray Kids, wearing the new Tommy Fall collection set against the New York City skyline. The campaign has had a very strong start with social posts receiving hundreds of thousands of likes. And we are now just a few weeks out from hosting the next Tommy Hilfiger fashion show in New York, showing our Spring '25 men's and women's collections at another iconic New York City landmark. As a reminder, the fashion show we just did in spring became the biggest cut-through show of all of New York Fashion Week and made it to the top 10 shows of all fashion shows globally. Now, let me turn to our regional performance, starting with North America. Despite the tougher macro, the region continues to be a great example of our PVH-class plan execution. In the second quarter, our Calvin and Tommy businesses together delivered an 11.7% EBIT margin, their fourth consecutive quarter of a double-digit non-GAP EBIT margin, up more than 400 basis points compared to last year, marking another quarter of significant margin expansion across both brands. Over the past year, you can really see the progress we have made as we double down on our PVH-plus execution in the region.

Stefan Larsson: Now, let me turn to our regional performance, starting with North America. Despite the tougher macro, the region continues to be a great example of our PVH-class plan execution. In the second quarter, our Calvin and Tommy businesses together delivered an 11.7% EBIT margin, their fourth consecutive quarter of a double-digit non-GAP EBIT margin, up more than 400 basis points compared to last year, marking another quarter of significant margin expansion across both brands. Over the past year, you can really see the progress we have made as we double down on our PVH-plus execution in the region.

Speaker Change: For the full year, as we position our business in Europe for profitable brand, a creative growth over the long term, we continue to expect the revenue impact from our quality of sales initiative to be approximately 5%.

David Samman: David Samman and our European team are laser focus on driving the next level pvh plus execution across all channels.

David Samman: In both Calvin and Tommy, we continue to build strengths in product, where the full season is off to an early strong start, and the inventory composition is much better than last year.

David Samman: We are driving improved buying and planning with a stronger product assortment for Fall 24 that drive growth in key growth categories and add newness.

Stefan Larsson: Now, let me turn to our regional performance, starting with North America. Despite the tougher macro, the region continues to be a great example of our PVH+ Plan execution. In the second quarter, our Calvin and Tommy businesses together delivered an 11.7% EBIT margin, their fourth consecutive quarter of a double-digit non-GAAP EBIT margin--up more than 400 basis points compared to last year, marking another quarter of significant margin expansion across both brands. Over the past year, you can really see the progress we have made as we double down on our PVH+ execution in the region. Our teams delivered high-quality revenue growth, so 1% for our Calvin and Tommy businesses combined, while D2C revenue declined modestly, given the July trends I spoke to earlier. This was offset by a low single-digit increase in wholesale. In D2C, throughout the quarter, across both brands, we focus on advancing our product categories and bringing newness into our hero products, driving increased cross margin. For wholesale, we're driving product strength and stronger sell-throughs as we continue working very closely with our key partners to drive our strong product category offence and optimize the consumer shopping experience. Overall, across all channels in the North America region, we continue to see a strong consumer response to the improvement we make across product, marketing, and marketplace execution.

Stefan Larsson: Our teams delivered high-quality revenue growth, so 1% for our Calvin and Tommy businesses combined, while D2C revenue declined modestly, given the July trends I spoke to earlier. This was offset by a low single-digit increase in wholesale. In D2C, throughout the quarter, across both brands, we focus on advancing our product categories and bringing newness into our hero products, driving increased cross margin. For wholesale, we're driving product strength and stronger sell-throughs as we continue working very closely with our key partners to drive our strong product category offence and optimize the consumer shopping experience. Overall, across all channels in the North America region, we continue to see a strong consumer response to the improvement we make across product, marketing, and marketplace execution.

David Samman: Indeed, to see for the first time we will have a fully aligned product supportment across the region.

David Samman: And in wholesale, we've improved stock levels of our core best sellers, enabling us to have more direct sales to our top wholesale partners.

David Samman: As we highlighted last quarter, our forward full-cell order book shows significant sequential improvement and the full spring 25 Cs and finalised down low single digits.

David Samman: We are working very closely with our key wholesale partners who continue to share a positive feedback about the improved product development across both brands.

Stefan Larsson: Our teams delivered high-quality revenue growth of 1% for our Calvin and Tommy businesses combined, while D2C revenue declined modestly, given the July trends I spoke to earlier. This was offset by a low single-digit increase in wholesale. In D2C, throughout the quarter, across both brands, we focused on advancing our product categories and bringing newness into our hero products, driving increased gross margin. For wholesale, we're driving product strength and stronger sell-throughs as we continue working very closely with our key partners to drive our strong product category offense and optimize the consumer shopping experience. Overall, across all channels in the North America region, we continue to see a strong consumer response to the improvement we make across product, marketing and marketplace execution.

Stefan Larsson: Our teams delivered high-quality revenue growth of 1% for our Calvin and Tommy businesses combined, while D2C revenue declined modestly, given the July trends I spoke to earlier.

David Samman: I'm also excited to share that we are very far in the search and close to announce our permanent CO for PVH Europe, a highly experienced leader with a very strong performance track record and we look forward to sharing more with you shortly.

Stefan Larsson: This was offset by a low single-digit increase in wholesale. In D2C, throughout the quarter, across both brands, we focused on advancing our product categories and bringing newness into our hero products, driving increased gross margin. For wholesale, we're driving product strength and stronger sell-throughs as we continue working very closely with our key partners to drive our strong product category offense and optimize the consumer shopping experience. Overall, across all channels in the North America region, we continue to see a strong consumer response to the improvement we make across product, marketing and marketplace execution. Turning to our international business. In Europe, we continue to successfully execute on our previously communicated quality of sales initiative. While our overall revenue was down 2% year-over-year in Europe, it included a 3% impact from our quality of sales actions, and we delivered significantly higher growth, for the full year as we position our business in Europe for profitable brand-acredive growth over the long term, we continue to expect the revenue impact from our quality of sales initiative to be approximately 5%.

David Samman: Moving on to Asia Pacific

David Samman: Just like we have heard from many others in the sector, mid-quarter we saw decline in the consumer backdrop, which resulted in a trajectory change, especially in China, which was down 1% in cost and currency.

David Samman: We also saw a slow down in Australia while other markets including Korea and Japan continue to see growth in the quarter.

David Samman: From its channel perspective, we continue to drive e-commerce growth in the region, although this was offset by declines, historic and wholesale traffic.

Stefan Larsson: Turning to our international business. In Europe, we continue to successfully execute on our previously communicated quality of sales initiative. While our overall revenue was down 2% year-over-year in euros, it included a 3% impact from our quality of sales actions and we delivered significantly higher gross margins. For the full year, as we position our business in Europe for profitable brand-accretive growth over the long-term, we continue to expect the revenue impact from our quality of sales initiative to be approximately 5%. David Savman and our European team are laser-focused on driving the next level PVH+ execution across all channels. In both Calvin and Tommy, we continue to build strength in product, where the fall season is off to an early strong start and the inventory composition is much better than last year. We are driving improved buying and planning with a stronger product assortment for Fall '24 that drive growth in key growth categories and add newness.

David Samman: This resulted in revenue for the region, declining 4% in constant currency, including a low single digit decline in DTC

David Samman: With the current consumer backdrop, our strong PVH-plus execution for both Calvin and Tommy, we continue to make a big difference.

David Samman: We continue to drive strong consumer engagements, fueling brand-heets for both brands, with regionally relevant mega-tellant, such as Jenny Kim and Stray Kids.

David Samman: We're also laser focused on winning the big consumer moments such as 618 this past quarter, where we deliver double-digit GMB growth versus last year.

Stefan Larsson: David Savman and our European team are laser-focused on driving the next level PVH+ execution across all channels. In both Calvin and Tommy, we continue to build strength in product, where the fall season is off to an early strong start and the inventory composition is much better than last year. We are driving improved buying and planning with a stronger product assortment for Fall '24 that drive growth in key growth categories and add newness. In D2C, for the first time, we will have a fully-aligned product assortment across the region and in wholesale, we've improved stock levels of our core best sellers enabling us to have more direct sales to our top wholesale partners. As we highlighted last quarter, our forward wholesale order book shows significant sequential improvement and the Fall/Spring '25 season finalized down low single-digits. We are working very closely with our key wholesale partners who continue to share positive feedback about the improved product assortment across both brands.

David Samman: And going forward, we continue to drive strong consumer engagement with cut-through brand activations around upcoming key holidays, including 11-11 the biggest consumer shopping event of the year.

Stefan Larsson: David Salman and our European team are laser focused on driving the next level PVH plus execution across all channels. In both Calvin and Tommy, we continue to build strength in product, where the fall season is off to an early strong start and the inventory composition is much better than last year. We are driving improved buying and planning with the stronger product assortment for fall 24 that drive growth in key growth categories and add newness.

David Samman: Overall, we're just in the beginning of tapping into our full-growth potential in Asia.

Speaker Change: Inclosing, for the second quarter we again delivered on our plan, we continue to show the strength of our PVH Class Execution for both Calvin and Tommy.

Stefan Larsson: In D2C, for the first time, we will have a fully-aligned product assortment across the region and in wholesale, we've improved stock levels of our core best sellers enabling us to have more direct sales to our top wholesale partners. As we highlighted last quarter, our forward wholesale order book shows significant sequential improvement and the Fall/Spring '25 season finalized down low single-digits. We are working very closely with our key wholesale partners who continue to share positive feedback about the improved product assortment across both brands. I'm also excited to share that we are very far in the search and close to announce a permanent CO for PVH Europe, a highly experienced leader with a very strong performance track record and we look forward to sharing more with you shortly.

Speaker Change: In the North American market with another quarter of high quality growth and significant margin expansion

Speaker Change: In Europe, we successfully delivered on our targeted quality of sales actions while driving big, sequential improvements in our forward-looking wholesale orders.

Stefan Larsson: Indeed to see for the first time we will have a fully aligned product assortment across the region and in wholesale we've improved stock levels of our core best sellers enabling us to have more direct sales to our top wholesale partners. As we highlighted last quarter, our forward wholesale order book shows significant sequential improvement and the full spring 25 season finalized down low single digits. We are working very closely with our key wholesale partners who continue to share positive feedback about the improved product assortment across both brands.

Stefan Larsson: As we highlighted last quarter, our forward wholesale order book shows significant sequential improvement and the Fall/Spring '25 season finalized down low single-digits. We are working very closely with our key wholesale partners who continue to share positive feedback about the improved product assortment across both brands. I'm also excited to share that we are very far in the search and close to announce our permanent CEO for PVH Europe, a highly experienced leader with a very strong performance track record and we look forward to sharing more with you shortly. Moving on to Asia Pacific, just like we have heard from many others in the sector, mid-quarter we saw a decline in the consumer backdrop which resulted in a trajectory change especially in China which was down 1% in cost and currency. We also saw a slowdown in Australia while other markets including Korea and Japan continue to see growth in the quarter. From a channel perspective we continue to drive e-commerce growth in the region although this was offset by declines in stores and wholesale traffic.

Speaker Change: In Asia, we continue to drive strong ground engagement and win the big consumer moments.

Speaker Change: and independent of the consumer backdrop.

Speaker Change: Through our discipline, pvh class plan execution

Speaker Change: We are step-by-step, building our two globally iconic beloved brands into the most desirable lifestyle brands in the world Positioning ourselves to drive sustainable, long-term, and increasingly profitable growth.

Stefan Larsson: I'm also excited to share that we are very far in the search and close to announce a permanent CO for PVH Europe, a highly experienced leader with a very strong performance track record and we look forward to sharing more with you shortly.

Speaker Change: I've said it many times before, it's our consistent direction, the strength of our brands, teams and partners, together with our ability to continuously learn and improve that will make us win.

Stefan Larsson: Moving on to Asia Pacific. Just like we have heard from many others in the sector, mid-quarter, we saw a decline in the consumer backdrop which resulted in a trajectory change--especially in China which was down 1% in constant currency. We also saw a slowdown in Australia while other markets, including Korea and Japan, continue to see growth in the quarter. From a channel perspective, we continue to drive e-commerce growth in the region, although this was offset by declines in stores and wholesale traffic. This resulted in revenue for the region declining 4% in constant currency, including a low single-digit decline in D2C. With the current consumer backdrop, our strong PVH+ execution for both Calvin and Tommy, we continue to make a big difference. We continue to drive strong consumer engagement, fueling brand heat for both brands with regionally relevant mega-talent such as Jennie Kim and Stray Kids. We're also laser-focused on winning the big consumer moments, such as 6/18 this past quarter, where we delivered double-digit GMV growth versus last year. And going forward, we continue to drive strong consumer engagement with cut-through brand activations around upcoming key holidays, including 11/11, the biggest consumer shopping event of the year. Overall, we're just in the beginning of tapping into our full growth potential in Asia.

Speaker Change: and we that I'll turn the call over to Zach to take us through the financials in more detail.

Zach: Thanks, Stefan, and good morning. My comments are based on non-gap results in a reconcile in our press release.

Zach: As Stefan discussed, our second quarter financial results delivered on expectations, driven by our iconic brands and discipline execution of the PVH Plus plan.

Stefan Larsson: Moving on to Asia Pacific, just like we have heard from many others in the sector, mid-quarter we saw a decline in the consumer backdrop which resulted in a trajectory change especially in China which was down 1% in cost and currency. We also saw a slowdown in Australia while other markets including Korea and Japan continue to see growth in the quarter. From a channel perspective we continue to drive e-commerce growth in the region although this was offset by declines in stores and wholesale traffic.

Zach: We successfully navigated the increasingly challenging consumer backdrop, leveraging our omnichannel execution to deliver a top-line guidance while exceeding our earnings for shared guidance largely due to the favorable settlement of a tax matter.

Zach: We delivered operating margin of 9.1% up 80 basis points versus last year to remind 250 basis points of gross margin expansion as we continue to be laser-focused on quality of sales all around the world. Operating margin was better than planned for the quarter as we continue to type the managed expenses.

Stefan Larsson: With the current consumer backdrop, our strong PVH+ execution for both Calvin and Tommy, we continue to make a big difference. We continue to drive strong consumer engagement, fueling brand heat for both brands with regionally relevant mega-talent such as Jennie Kim and Stray Kids. We're also laser-focused on winning the big consumer moments, such as 6/18 this past quarter, where we delivered double-digit GMV growth versus last year. And going forward, we continue to drive strong consumer engagement with cut-through brand activations around upcoming key holidays, including 11/11, the biggest consumer shopping event of the year. Overall, we're just in the beginning of tapping into our full growth potential in Asia. In closing, for the second quarter we again delivered on our plan. We continue to show the strength of our PVH plus execution for both Calvin and Tommy in the North American market with another quarter of high quality growth and significant margin expansion. In Europe we successfully delivered on our targeted quality of sales actions while driving big sequential improvements in our forward-looking wholesale orders. In Asia we continue to drive strong brand engagement and win the big consumer moments.

Zach: Follow your solid first half performance.

Zach: We are reaffirming our four-year revenue guidance in operating margin outlook and raising our EPS guidance to $11.55 to $11.80 per share from previously $11.25 to $11.25 to reflect the second quarter tax benefit I mentioned.

Zach: We remain on track to deliver our 2024 financial plan.

Stefan Larsson: This resulted in revenue for the region declining 4% in cost and currency including a low single digit decline in D2C. With the current consumer backdrop, our strong PVH plus execution for both Calvin and Tommy we continue to make a big difference. We continue to drive strong consumer engagement fueling brand fees for both brands with regionally relevant mega talent such as Jenny Kim and Stray Kids. We're also laser focused on winning the big consumer moments such as 618 this past quarter where we delivered double digit EMV growth versus last year and going forward we continue to drive strong consumer engagement with cut-through brand activations around upcoming key holidays including 11-11 the biggest consumer shopping event of the year. Overall we're just in the beginning of tapping into our full growth potential in Asia.

Zach: I will now discuss our second quarter results in more detail and then move on to our outlook.

Zach: Revenue for the second quarter was down 6% versus last year, including 1% negative impact from exchange and a 3% decline from the sale of the heritage intimate business and was in line with our guidance

Stefan Larsson: In closing, for the second quarter, we again delivered on our plan. We continue to show the strength of our PVH+ execution for both Calvin and Tommy in the North American market, with another quarter of high quality growth and significant margin expansion. In Europe, we successfully delivered on our targeted quality of sales actions while driving big sequential improvements in our forward-looking wholesale orders. And in Asia, we continue to drive strong brand engagement and win the big consumer moments. And independently of the consumer backdrop, through our disciplined PVH+ Plan execution, we're step by step, building our two globally iconic beloved brands into the most desirable lifestyle brands in the world--positioning ourselves to drive sustainable, long-term and increasingly profitable growth. I've said it many times before, it's our consistency in direction, the strength of our brands, teams and partners together with our ability to continuously learn and improve, that will make us win. And with that, I'll turn the call over to Zac to take us through the financials in more detail.

Zach: Starting from a regional perspective, second quarter revenue for our International Businesses was down 3% on a Con concurrency basis.

Zach: Sales and our European business were down 2% in euros, reflecting an expected sequential improvement.

Zach: as compared to the sales decline in quarter one, and better than planned due to a shift in timing of wholesale shipments.

Zach: from the third quarter into the second quarter this year, as supply chain delays were less impactful in the quarter than we had anticipated.

Stefan Larsson: And independently of the consumer backdrop, through our disciplined PVH+ Plan execution, we're step by step, building our two globally iconic beloved brands into the most desirable lifestyle brands in the world--positioning ourselves to drive sustainable, long-term and increasingly profitable growth. I've said it many times before, it's our consistency in direction, the strength of our brands, teams and partners together with our ability to continuously learn and improve, that will make us win.

Zach: Our strategic decision to focus on higher quality sales in the region through the overall decline versus last year, but also delivered higher gross margin in the region, which was up over 200 basis points versus last year.

Zach: Sales are Asia Pacific business were down 4% on a constant currency basis, as challenging macro conditions in the region, particularly in China and Australia, negatively impacted our business in those two countries.

Zach: Where economic conditions remain strong in Japan and Korea, we continue to deliver strong growth, sales for Asia Pacific were down 7% on a reported basis.

Stefan Larsson: In closing, for the second quarter we again delivered on our plan. We continue to show the strength of our PVH plus execution for both Calvin and Tommy in the North American market with another quarter of high quality growth and significant margin expansion. In Europe we successfully delivered on our targeted quality of sales actions while driving big sequential improvements in our forward-looking wholesale orders. In Asia we continue to drive strong brand engagement and win the big consumer moments.

Stefan Larsson: And with that, I'll turn the call over to Zac to take us through the financials in more detail.

And with that I'll turn the call over to Zach to take us through the financials in more detail.

Zach: In North America, revenue for our Tommy Hill figure and Calen Klein businesses combined increased 1% versus last year with modest growth in wholesale sales and a low single digit decline in DTC sales.

Zac Coughlin: Thanks, Stefan and good morning. My comments are based on non-GAAP results and are reconciled in our press release. As Stefan discussed, our second quarter financial results delivered on expectations driven by our iconic brands and disciplined execution of the PVH+ Plan. We successfully navigated the increasingly challenging consumer backdrop, leveraging our omnichannel execution to deliver our topline guidance while exceeding our earnings per share guidance, largely due to the favorable settlement of a tax matter. We delivered operating margin of 9.1% up 80 basis points versus last year, driven by 250 basis points of gross margin expansion as we continue to be laser focused on quality of sales all around the world. Operating margin was better than planned for the quarter as we continue to tightly manage expenses.

Zach: As Stefan mentioned, our DTC trends in North America were largely as expected in May and June, but negatively impacted in July by the end of season clearance period in our relatively inventory levels.

Stefan Larsson: with lower prior season inventory and more newness in our shortments, instead of chasing low quality clear in sales, we focus on capturing full price sales to drive higher gross margins.

Zac Coughlin: We delivered operating margin of 9.1%, up 80 basis points versus last year, driven by 250 basis points of gross margin expansion as we continue to be laser-focused on quality of sales all around the world. Operating margin was better than planned for the quarter as we continue to tightly manage expenses. Following our solid first half performance, we are reaffirming our four-year revenue guidance and operating margin outlook and raising our EPS guidance to $11.55 to $11.80 per share from previously, $11.00 to $11.25, to reflect the second quarter tax benefit I mentioned. We remain on track to deliver our 2024 financial plan. I will now discuss our second quarter results in more detail and then move on to our outlook. Revenue for the second quarter was down 6% versus last year, including a 1% negative impact from exchange and a 3% decline from the sale of the heritage intimate business and was in line with our guidance.

Speaker Change: And with this quality of sales focus, while our overall DTC revenue is down, gross margins in a region were up nearly 150 basis points in the quarter with significant improvement in both brands.

Speaker Change: From an overall PVH channel perspective, our direct-to-consumer revenue was impacted by Asia Pacific and the July clearance trends I mentioned previously.

Speaker Change: As a result, overall revenue in our DTC businesses was down 3% on a consequence basis, including a 3% decline in sales in our retail stores.

Stefan Larsson: And independently of the consumer backdrop through our disciplined PVH-plus plan execution, we're step-by-step building our two globally iconic beloved brands into the most desirable lifestyle brands in the world, positioning ourselves to drive sustainable, long-term and increasingly profitable growth. I've said it many times before, it's our consistency in direction, the strength of our brands, teams and partners together with our ability to continuously learn and improve that we'll make us win.

Speaker Change: In our own denoperated e-commerce business, revenue is down 5% on a constant currency basis.

Zac Coughlin: I will now discuss our second quarter results in more detail and then move on to our outlook. Revenue for the second quarter was down 6% versus last year, including a 1% negative impact from exchange and a 3% decline from the sale of the heritage intimate business and was in line with our guidance. Starting from regional perspective, second quarter revenue for our international businesses was down 3% on a constant currency basis. Sales in our European business were down 2% in euros, reflecting an expected sequential improvement as compared to the sales decline in quarter one and better than planned due to a shift in timing of wholesale shipments from the third quarter into the second quarter this year, as supply chain delays were less impactful in the quarter than we had anticipated. Our strategic decision to focus on higher quality sales in the region drove the overall decline versus last year but also, delivered higher gross margin in the region, which was up over 200 basis points versus last year. Sales in our Asia Pacific business were down 4% on a constant currency basis, as challenging macro conditions in the region--particularly, in China and Australia--negatively impacted our business in those two countries. Where economic conditions remained strong in Japan and Korea, we continued to deliver strong growth.

Speaker Change: primarily due to the planned reduction in Europe, as we continue to 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.

Speaker Change: Within wholesale, we remain focused on strong quality sales and winning with our key wholesale partners.

Speaker Change: Total wholesale revenue was down 8% versus last year, primarily due to a 7% decline from the sale of the heritage intimate business

Speaker Change: The remaining decline reflects the continued strategic reduction in revenue in Europe to drive overall higher quality of sales in the region.

Speaker Change: According to our global brands, Calvin Coughlin Reven is reflect to the prior year on a Consecurrency basis, and down 1% on a reported basis, with growth in North America, while the International Business was flat in Consecurrency.

Zachary Coughlin: And with that I'll turn the call over to Zach to take us through the financials in more detail. Thanks Stefan and good morning. My comments are based on non-gap results and are reconciled in our press release. As Stefan discussed, our second quarter financial results delivered on expectations driven by our iconic brands and disciplined execution of the PVH-plus plan. We successfully navigated the increasingly challenging consumer backdrop, leveraging our omnichannel execution to deliver our top line guidance while exceeding our earnings per share guidance largely due to the favorable settlement of a tax matter.

Zac Coughlin: Our strategic decision to focus on higher quality sales in the region drove the overall decline versus last year but also, delivered higher gross margin in the region, which was up over 200 basis points versus last year. Sales in our Asia Pacific business were down 4% on a constant currency basis, as challenging macro conditions in the region--particularly, in China and Australia--negatively impacted our business in those two countries. Where economic conditions remained strong in Japan and Korea, we continued to deliver strong growth. Sales for Asia-Pacific were down 7% on a reported basis. In North America, revenue for our Tommy Hill figure and Calvin Klein businesses combined increased 1% versus last year with modest growth in wholesale sales and a low single digit decline in DTC sales. As Stefan mentioned, our DTC trends in North America were largely as expected in May and June, but negatively impacted in July by the end of season clearance period and are relatively lean in inventory levels.

Speaker Change: Tommy Hilfiger revenues were down 3% on a constant currency basis and down 4% on a reported basis

Speaker Change: 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 in Europe weigh much more heavily on the Tommy business.

Speaker Change: In 2Q, we delivered another quarter of significant gross margin improvement, with gross margins of 60.1% up 250 basis points compared to last year.

Zac Coughlin: Sales for Asia-Pacific were down 7% on a reported basis. In North America, revenue for our Tommy Hilfiger and Calvin Klein businesses combined increased 1% versus last year, with modest growth in wholesale sales and a low single-digit decline in DTC sales. As Stefan mentioned, our DTC trends in North America were largely as expected in May and June but negatively impacted in July by the end-of-season clearance period and our relatively lean inventory levels. With lower prior season inventory and more newness in our assortment, instead of chasing low-quality clearance sales, we focused on capturing full-price sales to drive higher gross margins. And with this quality of sales focus, while our overall DTC revenue is down, gross margins in the region were up nearly 150 basis points in the quarter, with significant improvement in both brands. From an overall PVH channel perspective, our direct-to-consumer revenue was impacted by Asia Pacific and the July clearance trends I mentioned previously.

Speaker Change: Approximately half of the increase was due to higher DTC mix, and our focus on driving higher quality sales, and half was due to lower product costs as we leverage our scale with globally aligned product disormance.

Speaker Change: Our inventory, quarter-end was down 12% compared to last year, doing part to lower end of season stock levels.

Zachary Coughlin: We delivered operating margin of 9.1% up 80 basis points versus last year, driven by 250 basis points of gross margin expansion as we continue to be laser focused on quality of sales all around the world. Operating margin was better than planned for the quarter as we continue to tightly manage expenses.

Speaker Change: As you move through the remainder of the year, an inventory level is normalized compared to the leaner levels in the second half of last year. We expect modest growth in inventory to support our plans for the second half of 24 and into 25.

Speaker Change: S.H.E.N. expanse as a percent of revenue was 50.9% in increase of 160 basis points versus last year and lower than plan as we actively work to drive efficiencies.

Zac Coughlin: And with this quality of sales focus, while our overall DTC revenue is down, gross margins in the region were up nearly 150 basis points in the quarter, with significant improvement in both brands. From an overall PVH channel perspective, our direct-to-consumer revenue was impacted by Asia Pacific and the July clearance trends I mentioned previously. As a result, overall revenue in our DTC businesses was down 3% on a constant currency basis, including a 3% decline in sales in our retail stores. In our owned and operated e-commerce business, revenue is down 5% on a constant currency basis, primarily due to the planned reduction in Europe, as we continue to 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.

Speaker Change: The increase versus last year's comprised of approximately 150 basis points through the higher DTC mix and 150 basis points from the de-laborating of expenses on lower revenues.

Zachary Coughlin: Following our solid first half performance, we are reaffirming our four-year revenue guidance and operating margin outlook and raising our EPS guidance to $11.55 to $11.80 per share from previously $11.00 to $11.25 to reflect the second quarter tax benefit I mentioned. We remain on track to deliver our 2024 financial plan. I will now discuss our second quarter results in more detail and then move on to our outlook. Revenue for the second quarter was down 6% versus last year, including a 1% negative impact from exchange and a 3% decline from the sale of the heritage intimate business and was in line with our guidance.

Speaker Change: partially offset by an approximately 150 basis point improvement due to cost efficiencies realized from actions we have taken to reduce people cost and prudently manage expenses.

Zac Coughlin: In our owned and operated e-commerce business, revenue is down 5% on a constant currency basis, primarily due to the planned reduction in Europe, as we continue to 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. Within wholesale, we remained focused on strong quality of sales and winning with our key wholesale partners. Total wholesale revenue was down 8% versus last year, primarily due to a 7% decline from the sale of the heritage intimate business. The remaining decline reflects the continued strategic reduction in revenue in Europe to drive overall higher quality of sales in the region. Turning to our global brands, Calvin Klein revenues were flat to the prior year on a constant currency basis and down 1% on a reported basis, with growth in North America, while the international business was flat in constant currency.

Speaker Change: Additionally, as I discussed in previous quarters, work is underway on the next phase of Grow Driver 5 of the PVH Plus Plan to simplify our operating model and improve our ways of working across the company.

Speaker Change: which we expected to deliver an incremental two to three-interbasis points of operating margin improvement once completed. We are making early progress that will become increasingly impactful through 2025.

Speaker Change: As an example of types of initiatives we are undertaking, we have recently completed the transition of Tommy Hilfiger North America e-commerce distribution.

Speaker Change: from outsourced to in-house leveraging open capacity, allowing us to vote deliver efficiencies and increase service levels to our e-commerce consumers.

Zac Coughlin: Turning to our global brands, Calvin Klein revenues were flat to the prior year on a constant currency basis and down 1% on a reported basis, with growth in North America, while the international business was flat in constant currency. Tommy Hilfiger revenues were down 3% on a constant currency basis and down 4% 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 in Europe weighed much more heavily on the Tommy business. In 2Q, we delivered another quarter of significant gross margin improvement, with gross margins of 60.1%, up 250 basis points compared to last year.

Speaker Change: In total, even for the quarter was $189 million, compared to $182 million in the prior year, as the strong gross margin improvement more than offset the impact of the revenue decline.

Speaker Change: Operating margin expanded 80 basis points versus last year to 9.1% and marked the fourth straight quarter with a double digit non-gap operating margin in our North America business for Tommy Hill figure and Calvin Klein combined.

Zachary Coughlin: Starting from regional perspective, second quarter revenue for our international businesses was down 3% on a constant currency basis. Sales in our European business were down 2% in euros, reflecting an expected sequential improvement as compared to the sales decline in quarter one, and better than planned due to a shift in timing of wholesale shipments from the third quarter into the second quarter this year as supply chain delays were less impactful in the quarter than we had anticipated.

Speaker Change: Ernest for Sheryl is $3.01, and included the benefit of approximately 55 cents related to the favorable settlements of a multi-year international tax audit I referenced earlier, which drove our tax rate to 0% to the quarter.

Zac Coughlin: In 2Q, we delivered another quarter of significant gross margin improvement, with gross margins of 60.1%, up 250 basis points compared to last year. Approximately half of the increase was due to higher DTC mix and our focus on driving higher quality of sales and half was due to lower product costs as we leveraged our scale with globally-aligned product assortments. Our inventory at quarter end was down 12% compared to last year, due in part to lower end-of-season stock levels. As we move through the remainder of the year and inventory levels normalized compared to the leaner levels in the second half of last year, we expect modest growth in inventory to support our plans for the second half of '24 and into '25. The basis points due to the higher DTC mix and 150 basis points from the de-leveraging of expenses on lower revenues, partially offset by an approximately 150 basis point improvements due to cost efficiencies realized from actions we have taken to reduce people cost and prudently manage expenses. Additionally, as I discussed in previous quarters, workers underway on the next phase of growth driver 5 of the PVH plus plan to simplify our operating model and improve our ways of working across the company, which we expect to deliver an incremental 2-3-inter basis points of operating margin improvement once completed.

Speaker Change: Excluding this 55-cent tax benefit, EPS increased 24% versus last year and exceeded our earnings guidance driven by a modest business improvement compared to expectations.

Speaker Change: and now moving on to our outlook, starting with the third quarter.

Speaker Change: We are projecting third-quarter revenue to decline 67% as reported and 78% on a Conconconcurrency basis compared to the prior year, including a 2% decline due to the sale of the Heritage Intimates Business.

Speaker Change: We are projecting DTC revenue nearly flat in Concerncy compared to last year, as the recent trends were expected to continue into 3Q.

Zachary Coughlin: Our strategic decision to focus on higher quality sales in the region drove the overall decline versus last year but also delivered higher gross margin in the region which was up over 200 basis points versus last year, this year. Sales in our Asia-Pacific business were down 4% on a constant currency basis, as challenging macro conditions in the region, particularly in China and Australia, negatively impacted our business in those two countries. Where economic conditions remained strong in Japan and Korea, we continued to deliver strong growth.

Speaker Change: In our whole business, we are projecting a high single-digit revenue decline in the quarter, including a 5% decline from the sale of the Heritage Intimates business.

Speaker Change: The remaining decline as largely due to the continued quality of sales focused in Europe and previously communicated lower fall order books in Europe.

Zac Coughlin: SG&A expense as a percent of revenue was 50.9%, an increase of 160 basis points versus last year and lower than planned as we actively work to drive efficiencies. The increase versus last year is comprised of approximately 150 basis points due to the higher DTC mix and 150 basis points from the de-leveraging of expenses on lower revenues, partially offset by an approximately 150 basis point improvement due to cost efficiencies realized from actions we have taken to reduce people cost and prudently manage expenses. Additionally, as I discussed in previous quarters, work is underway on the next phase of Growth Driver 5 of the PVH+ Plan--to simplify our operating model and improve our ways of working across the company, which we expect to deliver an incremental 200 to 300 basis points of operating margin improvement once completed.

Speaker Change: Our third quarter operating margin is projected to be relatively in line with two cue and down versus last year with higher gross margins more than I'll set by the loss of leverage due to the decline in revenue.

Speaker Change: As a reminder, we start to anniversary the improvements in raw material costs and the benefit from cost savings actions that we realized, especially in North America, beginning in the second half of last year.

Zac Coughlin: Additionally, as I discussed in previous quarters, work is underway on the next phase of Growth Driver 5 of the PVH+ Plan--to simplify our operating model and improve our ways of working across the company, which we expect to deliver an incremental 200 to 300 basis points of operating margin improvement once completed. We are making early progress that will become increasingly impactful through 2025. As an example of types of initiatives we are undertaking, we have recently completed the transition of Tommy Hilfiger North America e-commerce distribution from outsourced to in-house; leveraging open capacity, allowing us to both deliver efficiencies and increase service levels to our e-commerce consumers. In total, EBIT for the quarter was $189 million compared to $182 million in the prior year, as the strong gross margin improvement more than offset the impact of the revenue decline.

Ernie: Ernie's first share is projected to be approximately 250 cents compared to 2,90 cents in a prior year, primarily due to decline in revenue.

Ernie: Our tax rate for the third quarter is estimated at approximately 23% and interest expense is projected to be approximately $17 million.

Ernie: And now moving on to the full year. We remain on track to deliver the overall business outlook we shared at the start of the year. As such, we are reaffirming our full year revenue and operating margin guidance.

Zachary Coughlin: Sales for Asia-Pacific were down 7% on a reported basis. In North America, revenue for our Tommy Hill figure and Calvin Klein businesses combined increased 1% versus last year with modest growth in wholesale sales and a low single digit decline in DTC sales. As Stefan mentioned, our DTC trends in North America were largely as expected in May and June, but negatively impacted in July by the end of season clearance period and are relatively lean in inventory levels.

Ernie: We continue to project overall revenue to decrease by 6 to 7% on both a reported and Consequently Basis compared to last year, including a 2% decline due to the sale of the Heritage Intimate Business, and a 1% decline due to the 53rd week in 2023.

Zac Coughlin: In total, EBIT for the quarter was $189 million compared to $182 million in the prior year, as the strong gross margin improvement more than offset the impact of the revenue decline. Operating margin expanded 80 basis points versus last year to 9.1% and marked the fourth straight quarter with a double-digit non-GAAP operating margin in our North America business for Tommy Hilfiger and Calvin Klein combined. Earnings per share was $3.01 and included the benefit of approximately $0.55 related to the favorable settlements of a multi-year international tax audit I referenced earlier, which drove our tax rate to 0% for the quarter. Excluding this $0.55 tax benefit, EPS increased 24% versus last year and exceeded our earnings guidance, driven by a modest business improvement compared to expectations. In now moving on to our outlook, starting with the third quarter, we are projecting third quarter revenue to decline 6 to 7% as reported and 78% on a constant currency basis compared to the prior year, including a 2% decline due to the sale of the heritage intimate business. We are projecting DTC revenue nearly flat in constant currency compared to last year as the recent trends are expected to continue into 3Q. In our wholesale business, we are projecting a high single digit revenue decline in the quarter, including a 5% decline from the sale of the heritage intimate business.

Ernie: Within that, our outlook for Europe has unchanged, planned down high single digits in euros with DTC planned down low single digits.

Ernie: In Asia Pacific, we are now planning four-year sales up most single digits in constant currency compared to previously up high single digits.

Ernie: And for the North America Calvin Klein and Tommy Hilfiger businesses combined, we are now planning sales to be relatively flat versus last year compared to previously up low single digits.

Zachary Coughlin: With lower prior season inventory and more newness in our assortment, instead of chasing low-quality clearance sales, we focused on capturing full-price sales to drive higher gross margins. And with this quality of sales focus, while our overall DTC revenue is down, gross margins in the region were up nearly 150 basis points in the quarter with significant improvement in both brands. From an overall PVH channel perspective, our direct-to-consumer revenue was impacted by Asia-Pacific and the July clearance trends I mentioned previously.

Ernie: These updates reflect their assumption that current market conditions continue through the rest of the year.

Ernie: We are also reaffirming our projected operating margin for the year will be approximately flat to 10.1% in 2023.

Zac Coughlin: And now, moving on to our outlook, starting with the third quarter. We are projecting third quarter revenue to decline 6% to 7% as reported and 78% on a constant currency basis compared to the prior year, including a 2% decline due to the sale of the heritage intimates business. We are projecting DTC revenue nearly flat in constant currency compared to last year, as the recent trends are expected to continue into 3Q. In our wholesale business, we are projecting a high single-digit revenue decline in the quarter, including a 5% decline from the sale of the heritage intimates business. The remaining decline is largely due to the continued quality of sales focus in Europe and previously communicated lower fall order books in Europe. Our third quarter operating margin is projected to be relatively in line with 2Q and down versus last year with higher gross margins more than offset by the loss of leverage due to the decline in revenue. As a reminder, we start to anniversary the improvements in raw material costs and the benefit from cost savings actions that we realized, especially in North America beginning in the second half of last year.

Ernie: However, we have updated our gross margin projection to reflect the lower benefit of favorable mix due to our revised revenue expectations for our higher margin DTC business this year, primarily in Asia Pacific, as well as a slightly more promotional environment.

Ernie: As such, we are now expecting our four-year gross margin rate to increase approximately 150 basis points compared to 2023, still reaching an all-time high for us.

Ernie: We continue to proactively manage costs and expect to change in our gross margin projection will be fully offset.

Ernie: by an improvement in SGNA, which has a percentage of revenue is now planned to increase approximately 150 basis points versus our previous expectation of an increase of 200 basis points.

Zachary Coughlin: As a result, overall revenue in our DTC businesses was down 3% on a constant currency basis, including a 3% decline in sales in our retail stores. In our own and operated e-commerce business, revenue is down 5% on a constant currency basis, primarily due to the planned reduction in Europe, as we continue to 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.

Zac Coughlin: The remaining decline is largely due to the continued quality of sales focus in Europe and previously communicated lower fall order books in Europe. Our third quarter operating margin is projected to be relatively in line with 2Q and down versus last year, with higher gross margins more than offset by the loss of leverage due to the decline in revenue. As a reminder, we start to anniversary the improvements in raw material costs and the benefit from cost savings actions that we realized, especially in North America, beginning in the second half of last year. And now moving on to the full year, we remain on track to deliver the overall business outlook we shared at the start of the year, as such we are reaffirming our full year revenue and operating margin guidance. We continue to project overall revenue to decrease by 6-7% on both a reported and constant currency basis compared to last year, including a 2% decline due to the sale of the heritage intimate business, and a 1% decline due to the 53rd week in 2020.

Zac Coughlin: The remaining decline is largely due to the continued quality of sales focus in Europe and previously communicated lower fall order books in Europe. Our third quarter operating margin is projected to be relatively in line with 2Q and down versus last year, with higher gross margins more than offset by the loss of leverage due to the decline in revenue. As a reminder, we start to anniversary the improvements in raw material costs and the benefit from cost savings actions that we realized, especially in North America, beginning in the second half of last year. Earnings per share is projected to be approximately $2.50 compared to $2.90 in the prior year, primarily due to the decline in revenue. Our tax rate for the third quarter is estimated at approximately 23% and interest expense is projected to be approximately $17 million.

Zac Coughlin: The remaining decline is largely due to the continued quality of sales focus in Europe and previously communicated lower fall order books in Europe.

Ernie: We continue to plan SG&A expense dollars down for the 4-year 2024 as compared to 2023, with the expected increase in SG&A as a percentage revenue more than explained by DTC Mix and the impact of lower revenue.

Zac Coughlin: Our third quarter operating margin is projected to be relatively in line with 2Q and down versus last year, with higher gross margins more than offset by the loss of leverage due to the decline in revenue. As a reminder, we start to anniversary the improvements in raw material costs and the benefit from cost savings actions that we realized, especially in North America, beginning in the second half of last year. Earnings per share is projected to be approximately $2.50 compared to $2.90 in the prior year, primarily due to the decline in revenue. Our tax rate for the third quarter is estimated at approximately 23% and interest expense is projected to be approximately $17 million.

Ernie: Interest Expans is now projected to be approximately $70 million, versus approximately $75 million previously.

Ernie: And we now expect our tax rate will be approximately 16%, versus approximately 20% previously, with the change fully explained by the favorable tax settlement in two cue that I mentioned earlier.

Speaker Change: Given entirely by the Improvement Attacks, we are raising our non-gap EPS guidance by 55 cents to arrange to $11.55 to $11.11.25 previously.

Zachary Coughlin: Within wholesale, we remained focused on strong quality of sales and winning with our key wholesale partners. Total wholesale revenue was down 8% versus last year, primarily due to a 7% decline from the sale of the heritage intimate business. The remaining decline reflects the continued strategic reduction in revenue in Europe to drive overall higher quality of sales in the region. Turning to our global brands, Calvin Klein revenues were flat to the prior year on a constant currency basis, and down 1% on a reported basis, with growth in North America, while the international business was flat in constant currency.

Zac Coughlin: And now, moving on to the full year. We remain on track to deliver the overall business outlook we shared at the start of the year. As such we are reaffirming our full year revenue and operating margin guidance. We continue to project overall 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 53rd week in 2023. Within that, our outlook for Europe has unchanged, planned down high single-digits in euros with DTC planned down low single-digits. In Asia Pacific, we are now planning four-year sales up low single-digits in constant currency compared to previously up high single-digits. And for the North America Calvin Klein and Tommy Hilfiger businesses combined, we are now planning sales to be relatively flat versus last year, compared to previously up low single-digits.

Zac Coughlin: And now, moving on to the full year. We remain on track to deliver the overall business outlook we shared at the start of the year. As such, we are reaffirming our full year revenue and operating margin guidance. We continue to project overall 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 53rd week in 2023. Within that, our outlook for Europe has unchanged, planned down high single-digits in euros with DTC planned down low single-digits.

Speaker Change: Additionally, we remain committed to $400 million of total share of buybacks for the year.

Speaker Change: Before we open up for questions, I want to reiterate that we continue to work relentlessly to drive results and deliver our four-year financial commitments, even in the increasingly challenging macro environment.

Speaker Change: We remain laser-focused on executing the five key growth drivers that PVH Plus plan, bringing together the consumer-facing value drivers of product, consumer engagement, and marketplace, with our underlying operating engines deliver sustainable long-term profitable growth.

Zac Coughlin: In Asia Pacific, we are now planning four-year sales up low single-digits in constant currency compared to previously up high single-digits. And for the North America Calvin Klein and Tommy Hilfiger businesses combined, we are now planning sales to be relatively flat versus last year, compared to previously up low single-digits. These updates reflect our assumption that current market conditions continue through the rest of the year. We are also reaffirming our projected operating margin for the year will be approximately flat to 10.1% in 2023. However, we have updated our gross margin projection to reflect a lower benefit of favorable mix due to our revised revenue expectations for our higher margin DTC business this year, primarily in Asia Pacific, as well as a slightly more promotional environment.

Zac Coughlin: In Asia Pacific, we are now planning full year sales up low single-digits in constant currency compared to previously up high single-digits. And for the North America Calvin Klein and Tommy Hilfiger businesses combined, we are now planning sales to be relatively flat versus last year, compared to previously up low single-digits. These updates reflect our assumption that current market conditions continue through the rest of the year. We are also reaffirming our projected operating margin for the year will be approximately flat to 10.1% in 2023.

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

Speaker Change: Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. If at any point your question is answered, you may remove yourself by pressing star 2.

Zachary Coughlin: Tommy Hill figure revenues were down 3% on a constant currency basis, and down 4% 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 in Europe weighed much more heavily on the Tommy business. In 2Q, we delivered another quarter of significant growth margin improvement, with growth margins of 60.1% up 250 basis points compared to last year.

Speaker Change: Once again, to ask a question, please press star one at this time.

Speaker Change: Our first question will come from Matthew Boss, Jake with JP Morgan. Please go ahead.

Matthew Boss: So, Stefan, maybe if you could elaborate on the current health of your brand and speak to recent demand trends

Zac Coughlin: However, we have updated our gross margin projection to reflect a lower benefit of favorable mix due to our revised revenue expectations for our higher margin DTC business this year, primarily in Asia Pacific, as well as a slightly more promotional environment. As such, we are now expecting our full year gross margin rate to increase approximately 150 basis points compared to 2023, still reaching an all time high for us. We continue to proactively manage costs and expect a change in our gross margin projection will be fully offset by an improvement in SG&A, which as a percentage of revenue is now planned to increase approximately 150 basis points versus our previous expectation of an increase of 200 basis points. We continue to plan SG&A expense dollars down for the full year 2024 as compared to 2023, with the expected increase in SG&A as a percentage revenue more than explained by DTC mix and the impact of lower revenue. Interest expense is now projected to be approximately $70 million versus approximately $75 million previously and we now expect our tax rate will be approximately 16% versus approximately 20% previously, with the change fully explained by the favorable tax settlement 2Q that I mentioned earlier.

Speaker Change: that you've seen across fall assortments relative to how you planned back half the man in North America in Europe. I think that would be great.

Zach: and then Zach, just on the control levels, could you elaborate on cost efficiencies that support operating margin expansion, regardless of macro, or just is there any change to the mid-teens operating margin target that you cited over the next couple years?

Zachary Coughlin: Approximately half of the increase was due to higher DTC mix, and our focus on driving higher quality of sales, and half was due to lower product costs as we leveraged our scale with globally aligned product assortments. Our inventory a quarter end was down 12% compared to last year, due in part to lower end of season stock, as we move through the remainder of the year and inventory levels normalized compared to the leaner levels in the second half of last year, we expect modest growth in inventory to support our plans for the second half of 24 and into 25.

Matt: A good morning math, and I'm tank your pre-request starting with the health of the branch, so we're coming into this form.

Speaker Change: with all-time high-consumer engagement from Spring in both Calvin and Tommy and we continue to strengthen that. So I don't know if you saw that yesterday we launched Calvin's Fall campaign and the second chapter of Jeremy on the White.

Zac Coughlin: We continue to plan SG&A expense dollars down for the full year 2024 as compared to 2023, with the expected increase in SG&A as a percentage revenue more than explained by DTC mix and the impact of lower revenue. Interest expense is now projected to be approximately $70 million versus approximately $75 million previously and we now expect our tax rate will be approximately 16% versus approximately 20% previously, with the change fully explained by the favorable tax settlement 2Q that I mentioned earlier. Driven entirely by the improvement in tax, we are raising our non-GAAP EPS guidance by $0.55 to a range of $11.55 cents to $11.80, compared to $11 dollars to $11.25 previously. Additionally, we remain committed to $400 million of total share buybacks for the year. Before we open up for questions, I want to reiterate that we continue to work relentlessly to drive results and deliver our full year financial commitments, even in the increasingly challenging macro environment. We remain laser-focused on executing the five key growth drivers of the PVH+ 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. Thank you. At this time, if you would like to ask a question, please press star one on your telephone keypad. If at any point your question is answered, you may remove yourself by pressing star two. Once again, to ask a question, please press star one at this time.

Zachary Coughlin: The basis points due to the higher DTC mix and 150 basis points from the de-leveraging of expenses on lower revenues, partially offset by an approximately 150 basis point improvements due to cost efficiencies realized from actions we have taken to reduce people cost and prudently manage expenses. Additionally, as I discussed in previous quarters, workers underway on the next phase of growth driver 5 of the PVH plus plan to simplify our operating model and improve our ways of working across the company, which we expect to deliver an incremental 2-3-inter basis points of operating margin improvement once completed.

Speaker Change: very strong consumer response already. And one thing that strikes me and...

Speaker Change: is when Kosumas really take time for their visit day. We all have visited and right into the common field.

Speaker Change: and hundreds of them tells us of them saying things like, where it should be cancelled today. I'm screaming, stopping the world again. So very powerful start of the four campaign building on the all-time high growth in consumer engagement.

Zac Coughlin: Driven entirely by the improvement in tax, we are raising our non-GAAP EPS guidance by $0.55 to a range of $11.55 cents to $11.80, compared to $11 dollars to $11.25 previously. Additionally, we remain committed to $400 million of total share buybacks for the year. Before we open up for questions, I want to reiterate that we continue to work relentlessly to drive results and deliver our full year financial commitments, even in the increasingly challenging macro environment. We remain laser-focused on executing the five key growth drivers of the PVH+ 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.

Speaker Change: Spring

Speaker Change: Every week now you'll see New Talon

Speaker Change: the campaign, you will see Kendall Jenner, Mingyu, Greta Lee, you will see the K-pop banned new genes and we'll have more talent coming in. And they will all be wearing the best iconic calming time products across all livestock categories.

Zac Coughlin: Before we open up for questions, I want to reiterate that we continue to work relentlessly to drive results and deliver our full year financial commitments, even in the increasingly challenging macro environment. We remain laser-focused on executing the five key growth drivers of the PVH+ 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.

Zachary Coughlin: We are making early progress that will become increasingly impactful through 2025. As an example of types of initiatives we are undertaking, we have recently completed the transition of Tommy Hilfiger North America e-commerce distribution from outsourced to in-house leveraging open capacity, allowing us to both deliver efficiencies and increase service levels to our e-commerce consumers. In total, even for the quarter was $189 million compared to $182 million in the prior year as the strong growth margin improvement more than offset the impact of the revenue decline.

Speaker Change: Tommy, also just released his 4 campaign, a Coughlin campaign with the K-pop band Stray Kids.

Speaker Change: and equal positive comments on social from our consumers.

Speaker Change: Seeing things like Stray Kids and Tommy's Life

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

Speaker Change: I love Tommy, please keep posting, so very strong customer response to both fall campaigns, the start of both fall campaigns when it comes to Tommy, also what I mentioned that in just a few weeks.

Operator: Thank you. At this time, if you would like to ask a question, please press star-1 on your telephone keypad. If at any point your question is answered, you may remove yourself by pressing star-2. Once again, to ask a question, please press star-1 at this time. Our first question will come from Matthew Voss with J.P. Morgan. Please go ahead.

Speaker Change: We are back in New York Fashion Week with a Tommy Fashion Show and just as a reminder this past

Zachary Coughlin: Operating margin expanded 80 basis points versus last year to 9.1% and marked the fourth straight quarter with a double digit non-gap operating margin in our North America business for Tommy Hilfiger and Calvin Klein combined. Earnings for share was $3.01 and included the benefit of approximately 55 cents related to the favorable settlements of a multi-year international tax audit I referenced earlier, which drove our tax rate to 0% for the quarter. Excluding this 55 cents tax benefit, EPS increased 24% versus last year and exceeded our earnings guidance driven by a modest business improvement compared to expectations.

Speaker Change: when Tommy came back in February we had the biggest cut-through show in New York Fashion Week and the top 10 globally. So feeling really good about a consumer engagement, then that consumer engagement drives...

Operator: Our first question will come from Matthew Boss with J.P. Morgan. Please go ahead.

Speaker Change: An interest in the product, 424 was the first product we were able to fully impact product globally for carbon and tummy. So, the improvements you will see during the performance, we have been able to lean in further into key growth categories in both crowds.

And then Zach, just on the controllables, could you elaborate on cost efficiencies that support operating margin expansion regardless of macro or just is there any change to the mid-teens operating margin target that you cited over the next couple of years.

Speaker Change: We will have driven more innovation, more newness in the hero products.

Speaker Change: and then you combine that with having batterymen to a level of batterymen to a composition and it's still only days for fall but the product, the fall season, the fall product season is off to a strong start versus fall product season last year.

Stefan Larsson: Good morning, Matt. And thank you for your question. Starting with the health of the brand. So, we're coming into this fall with all-time high consumer engagement from spring in both Calvin and Tommy and we continue to strengthen that. So, I don't know if you saw that yesterday, we launched Calvin's fall campaign and the second chapter of Jeremy Allen White--very strong consumer response already. And one thing that strikes me and it's when consumers really take time from their busy day--we all have busy days--and write into the comments field, hundreds of them, thousands of them saying things like, "work should be cancelled today" "I'm screaming" "stopping the world again". So, very powerful start of the fall campaign, building on the all-time high growth in customer engagement from spring. Every week now, you'll see new talent in the campaign. You will see Kendall Jenner, Mingyu, Greta Lee; you will see the K-pop band, NewJeans and we'll have more talent coming in. So--and they will all be wearing the best iconic Calvin Klein products across all lifestyle categories.

Zachary Coughlin: In now moving on to our outlook, starting with the third quarter, we are projecting third quarter revenue to decline 6 to 7% as reported and 78% on a constant currency basis compared to the prior year, including a 2% decline due to the sale of the heritage intimate business. We are projecting DTC revenue nearly flat in constant currency compared to last year as the recent trends are expected to continue into 3Q. In our wholesale business, we are projecting a high single digit revenue decline in the quarter, including a 5% decline from the sale of the heritage intimate business.

Speaker Change: Another area you can see, they increased forward-looking products strength already now is in the forward-looking order books for Europe.

Speaker Change: for Spring 2025. So last time we caught up.

Speaker Change: Like this, we were still selling in Spring 25 and now we have the full Spring 25 landed and we have driven significant sequentially improvements. So if you recall, Fall 24, we were down.

Stefan Larsson: And one thing that strikes me and it's when consumers really take time from their busy day--we all have busy days--and write into the comments field, hundreds of them, thousands of them saying things like, "work should be cancelled today" "I'm screaming" "stopping the world again". So, very powerful start of the fall campaign, building on the all-time high growth in customer engagement from spring. Every week now, you'll see new talent in the campaign. You will see Kendall Jenner, Mingyu, Greta Lee; you will see the K-pop band, NewJeans and we'll have more talent coming in. So--and they will all be wearing the best iconic Calvin Klein products across all lifestyle categories.

Speaker Change: High single digit in Salen and for Spring 25 we are down only low single digit.

Stefan Larsson: So, very powerful start of the fall campaign, building on the all-time high growth in customer engagement from spring. Every week now, you'll see new talent in the campaign. You will see Kendall Jenner, Mingyu, Greta Lee; you will see the K-pop band, NewJeans and we'll have more talent coming in. So--and they will all be wearing the best iconic Calvin Klein products across all lifestyle categories. Tommy also just released its fall campaign, a cut-through campaign with the K-pop band, Stray Kids. And equal positive comments on social from our customers, saying things like, "Stray Kids and Tommy is life" "I love Tommy" "Please keep posting". So, very strong consumer response to both fall campaigns--the start of both fall campaigns. When it comes to Tommy, also want to mention that in just a few weeks, we are back in New York Fashion Week with a Tommy fashion show. And just as a reminder, this past season when Tommy came back in February, we had the biggest cup through show in New York Fashion Week and the top 10 globally. So, feeling really good about the customer engagement. Then that consumer engagement drives, and an interest in the product.

Speaker Change: and he reflects the belief.

Speaker Change: and the recognition from our partners to see the work of the product improvement. So overall, stronger consumer engagement coming into full, better product source but more full price selling less clearance, better inventory composition.

Zachary Coughlin: The remaining decline is largely due to the continued quality of sales focus in Europe and previously communicated lower fall order books in Europe. Our third quarter operating margin is projected to be relatively in line with 2Q and down versus last year with higher gross margins more than offset by the loss of leverage due to the decline in revenue. As a reminder, we start to anniversary the improvements in raw material costs and the benefit from cost savings actions that we realized, especially in North America beginning in the second half of last year.

Speaker Change: Of course, in the setting with a tougher macro, but based on what we can influence, we feel very good about how we are stepping into four.

Speaker Change: and High Maths. I think on the control of the most controllable element of our business.

Speaker Change: is really how we go by investing those SGN8 dollars and I think we're happy with the costs work with the accomplisher of the last couple of years.

Speaker Change: Looking forward, we expect to follow the same path with two important pillars, first as I suppose we would call performance management, that's really the hundreds of small actions we take continuously to match spending to current trends.

Stefan Larsson: When it comes to Tommy, also want to mention that in just a few weeks, we are back in New York Fashion Week with a Tommy fashion show. And just as a reminder, this past season, when Tommy came back in February, we had the biggest cut-through show in New York Fashion Week and the top 10 globally. So, feeling really good about the customer engagement. Then, that consumer engagement drives an interest in the product. Fall '24 was the first product season where we were able to fully impact product globally for Calvin and Tommy. So, the improvements you will see during the fall is--we have been able to lean in further into key growth categories in both rounds. We will have driven more innovation, more newness in the hero products. And then, you combine that with having better inventory levels, better inventory composition. And it's still early days for fall but the product--the fall season--the fall product season is off to a strong start versus fall product season last year.

Speaker Change: That's the work we've leaned into in the last couple of months, as the Metzumacrosist, Stefan, has talked about and started to change, and it's helped us to continue to hold our profit commitments in the year, and spite of that tougher backdrop.

Zachary Coughlin: And now moving on to the full year, we remain on track to deliver the overall business outlook we shared at the start of the year, as such we are reaffirming our full year revenue and operating margin guidance. We continue to project overall revenue to decrease by 6-7% on both a reported and constant currency basis compared to last year, including a 2% decline due to the sale of the heritage intimate business, and a 1% decline due to the 53rd week in 2020.

Speaker Change: and I think second of the larger changes we're working on to really greatly simplify our ways of working all around the world. This will deliver the incremental two to three at a basis point, so best you need savings.

Speaker Change: with really allows us to make that step change in profitability, hoping us to deliver the 15% profit commitment we've made and importantly I think create capacity to continue investing growth as well.

Stefan Larsson: So, the improvements you will see during the fall is--we have been able to lean in further into key growth categories in both rounds. We will have driven more innovation, more newness in the hero products. And then, you combine that with having better inventory levels, better inventory composition. And it's still early days for fall but the product--the fall season--the fall product season is off to a strong start versus fall product season last year. Another area you can see the increased forward-looking product strength already now is in the forward-looking order books for Europe for Spring 2025. So, last time we caught up like this, we were still selling in Spring '25 and now, we have the full Spring '25 landed and we have driven significant sequential improvements. So, if you recall Fall '24, we were down high single-digit in selling and for Spring '25, we are down only low single-digits. And it reflects the belief and the recognition from our partners to see the work of the product improvement. So, overall, stronger consumer engagement coming into fall, better product assortment, more full price selling, less clearance, better inventory composition. Of course, in the setting with a tougher macro but based on what we can influence, we feel very good about how we are stepping into fall.

Speaker Change: Episode 2

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

Michael Benetti: Thanks for taking our questions here, so Stefan, I know you went through a little bit of this, but you did mention some positive indicators in North America as you moved out past the end of season clearance.

Speaker Change: Maybe there's some, you know, actual

Speaker Change: Just unpack that a little bit on the actual business, what's resonating better with the consumer, and Zach maybe help us connect that a little more near-term to what's embedded for the guidance in North America

Zachary Coughlin: Within that, our outlook for Europe has unchanged, planned down high single digits in euros, with DTC planned down low single digits. In Asia Pacific, we are now planning four year sales up low single digits in constant currency compared to previously up high single digits. And for the North America Calvin Klein and Tommy Hill figure businesses combined, we are now planning sales to be relatively flat versus last year compared to previously up low single digits.

Speaker Change: D to C in third quarter relative to few. I think it sounded like North America comps load and July. The edge of rate was a little compressor below the quarter of the average. As a business return to the run rate that you were seeing before the July low.

Stefan Larsson: So, last time we caught up like this, we were still selling in Spring '25 and now, we have the full Spring '25 landed and we have driven significant sequential improvements. So, if you recall Fall '24, we were down high single-digit in selling and for Spring '25, we are down only low single-digits. And it reflects the belief and the recognition from our partners to see the work of the product improvement. So, overall, stronger consumer engagement coming into fall, better product assortment, more full price selling, less clearance, better inventory composition. Of course, in the setting with a tougher macro but based on what we can influence, we feel very good about how we are stepping into fall.

Speaker Change: Yeah, thank you Michael, so let me start there. So, yes, let's start with unpacking what we saw playing out in the second quarter. So, we were on plan for deed to see in the company Crossbowl's branch for May and June, and those are the more full prize focused months.

Speaker Change: Then when we came in to mid your life

Zachary Coughlin: These updates reflect our assumption that current market conditions continue through the rest of the year. We are also reaffirming our projected operating margin for the year will be approximately flat to 10.1% in 2023. However, we have updated our gross margin projection to reflect a lower benefit of favorable mix due to our revised revenue expectations for our higher margin DTC business this year, primarily in Asia Pacific, as well as a slightly more promotional environment.

Speaker Change: with Pete Summer Clearance.

Speaker Change: We came in with less clearance inventory than last year and more newsy some products, but the market took a turn to be more aggressive with clearance. We decided to proactively not to follow that.

Speaker Change: during the peat.

Speaker Change: Clearance Period, or July, therefore the new season didn't fully match up on the total revenue, but when we go further into August, we see that the new season, the benefit of having less clearance, more new season is resonating with the crossover. And what drives is...

Zac Coughlin: Yes. Hi, Matt. I think on the controllables--the most controllable element of our business is really how we go about investing those SG&A dollars. And I think we're happy with the cost work we've accomplished over the last couple of years. Looking forward, we expect to follow the same path with two important pillars. First is, I suppose we would call performance management--that's really the hundreds of small actions we take continue to match spending to current trends. That's the work we've leaned into over the last couple of months, as the macros that Stefan has talked about have started to change and it's helped us to continue to hold our profit commitment in the year in spite of that tougher backdrop. And I think second are the larger changes we're working on to, really, greatly simplify our ways of working all around the world. This will deliver the incremental 200 to 300 basis points of SG&A savings which really allows us to make that step change in profitability, helping us to deliver the 15% profit commitment we've made. And importantly, I think create capacity to continue to invest in growth as well.

Speaker Change: The continued focus we have on the key growth categories on leaning in to Calvin, as an example in underwear, denim, transitional underwear, and having less clearance and more clearance.

Zachary Coughlin: As such, we are now expecting our four year gross margin rate to increase approximately 150 basis points compared to 2023, still reaching an all time high for us. We continue to proactively manage costs and expect to change in our gross margin projection will be fully offset by an improvement in SGNA, which has a percentage of revenue is now planned to increase approximately 150 basis points versus our previous expectation of an increase of 200 basis points.

Speaker Change: More innovation in that, and we see that resonating. Same with Tommy when he comes to Polo Scherz. She knows Danne and transition around where. So, a big improvement, this start of the fall season versus last year is that we are much...

Zac Coughlin: That's the work we've leaned into over the last couple of months, as the macros that Stefan has talked about have started to change and it's helped us to continue to hold our profit commitment in the year in spite of that tougher backdrop. And I think second are the larger changes we're working on to, really, greatly simplify our ways of working all around the world. This will deliver the incremental 200 to 300 basis points of SG&A savings which really allows us to make that step change in profitability, helping us to deliver the 15% profit commitment we've made. And importantly, I think create capacity to continue to invest in growth as well.

Speaker Change: Much more transitional in our offering versus last year when we went too fast from summer all the way to fall.

Speaker Change: My thanks to the question, we've been really consistent over the last couple of years that we don't guess ahead of macro-so-market conditions and that holds absolutely true for this outlook.

Zachary Coughlin: We continue to plan SGNA expense dollars down for the four year 2024 as compared to 2023 with the expected increase in SGNA as a percentage revenue more than explained by DTC mix and the impact of lower revenue. Interest expense is now projected to be approximately 70 million dollars versus approximately 75 million previously and we now expect our tax rate will be approximately 16% versus approximately 20% previously with the change fully explained by the favorable tax settlement into Q that I mentioned earlier.

Speaker Change: for North America, DTC and really for that matter, Asia and Europe as well, our current outlooks that we provided match the recent trends that we've been experiencing. So that's true for three few and actually true for four few as well as we carry that DTC outlook for the rest of the year.

Matthew R. Boss: Thank you.

Operator: Our next question will come from Michael Binetti with Evercore ISI. Please go ahead.

Michael Binetti: Thanks for taking our questions here. So, Stefan, I know you went through a little bit of this but you did mention some positive indicators in North America as you moved past the end-of-season clearance. Maybe just some actual--just unpack that a little bit on the actual business. What's resonating better with the consumer? And Zac, maybe you can help us connect that a little more near-term to what's embedded for the guidance in North America, D2C and third quarter relative to Q2. I think it sounded like North America comp slowed in July so the exit rate was a little compressed or below the quarter of the average. Has the business returned to the run rate that you were seeing before the July lull?

Speaker Change: Thanks for watching!

Speaker Change: Thank you our next question. We'll come from J. Saul with UBS. Please go ahead.

J. Saul: Great, thank you so much. Stefan, wondering if you can just talk a little bit more about Europe and how you're feeling about the region as you've been executing the quality of sales initiatives.

Stefan Larsson: Yeah, thanks Jay, absolutely, so we feel really good about

Zachary Coughlin: Given entirely by the improvement in tax, we are raising our non-GAP EPS guidance by 55 cents to a range of 11 dollars with 55 cents to 1180 compared to 11 dollars to 1125 previously. Additionally, we remain committed to 400 million dollars of total share buybacks for the year.

Stefan Larsson: How we're executing the quality of, say, of the initiative and how that's resonating in the market.

I think it sounded like North America cops slowed and July's. The SG-8 was a little compressed or below the quarter of the average, isn't it? There's a business return to the run rate that you were seeing before the July low.

Stefan Larsson: So, we see it in the here and now in how we drive the business and how we came into the end of season with last clearance and more newness and how that newness is selling more the last year. We see it also as I referenced in the forward-looking order books.

Stefan Larsson: Thank you, Michael. So, let me start there. So, yes, let's start with unpacking what we saw playing out in the second quarter. So, we were on plan for D2C in the company across both brands for May and June and those are the more full price-focused months. Then, when we came in to mid-July with peak summer clearance, we came in with less clearance inventory than last year and more new season products. But the market took a turn to be more aggressive with clearance--we decided proactively not to follow that. During the peak clearance period of July, therefore, the new season didn't fully match up on the total revenue but when we go further into August, we see that the new season--the benefit of having less clearance, more new season is resonating with the consumer. And what drives is the continued focus we have on the key growth categories, on leaning into Calvin--as an example--in underwear, denim, transitional outerwear and having less clearance and more newness, more innovation in that. And we see that resonating. Same with Tommy, when it comes to polo shirts, chinos, denim, transitional outerwear. So, a big improvement this start of the fall season versus last year is that we are much, much more transitional in our offering versus last year when we went too fast from summer all the way to fall.

Operator: That operator, we would like to open it up to questions. Thank you. At this time, if you would like to ask a question, please press star one on your telephone keypad. If at any point your question is answered, you may remove yourself by pressing star two. Once again, to ask a question, please press star one at this time.

Stefan Larsson: leader with highly relevant experience, so coming up shortly, but overall feeling good about how we execute on the quality of sales and how it plays out in the market.

Stefan Larsson: During the peak clearance period of July, therefore, the new season didn't fully match up on the total revenue but when we go further into August, we see that the new season--the benefit of having less clearance, more new season is resonating with the consumer. And what drives is the continued focus we have on the key growth categories, on leaning into Calvin--as an example--in underwear, denim, transitional outerwear and having less clearance and more newness, more innovation in that. And we see that resonating. Same with Tommy, when it comes to polo shirts, chinos, denim, transitional outerwear. So, a big improvement this start of the fall season versus last year is that we are much, much more transitional in our offering versus last year when we went too fast from summer all the way to fall.

Stefan Larsson: Thank you so much.

Matthew Boss: Our first question will come from Matthew Boss with JP Morgan. Please go ahead.

Stefan Larsson: Thank you, our next question. We'll come from Bob Durbel with Duganheim. Please go ahead.

Matthew R. Boss: So, Stefan, maybe if you could elaborate on current health of your brand and speak to recent demand trends that you've seen across all assortments, relative to how you planned back-half demand in North America and Europe, I think that would be great. And then Zac, just on the controllables, could you elaborate on cost efficiencies that support operating margin expansion regardless of macro or just--is there any change to the mid-teens operating margin target that you cited over the next couple of years?

Bob Durbel: Hi, good morning. Just wanted to circle back on North America.

Bob Durbel: Can you talk about where you feel you are with the progress that you're making and specifically with the profitability targets that you've talked about within the North American market? How do you think that's going? Thanks.

Stefan Larsson: And then Zach, just on the controllables, could you elaborate on cost efficiencies that support operating margin expansion regardless of macro or just is there any change to the mid-teens operating margin target that you cited over the next couple of years. Good morning, Matt. And thank you for your question. Starting with the health of the brand. So, we're coming into this fall with all time high consumer engagement from spring in both Calvin and Tommy.

Speaker Change: Absolutely. Thank you Bob. So, for North America, it continues to be a great proof point on the PVH Plus Execution. So, if you look at the business,

Stefan Larsson: Same with Tommy, when it comes to polo shirts, chinos, denim, transitional outerwear. So, a big improvement this start of the fall season versus last year is that we are much, much more transitional in our offering versus last year when we went too fast from summer all the way to fall.

Speaker Change: in the second quarter we deliver at high quality growth.

Speaker Change: 1% combined for Calvin and Tommy at an 11.7% debit mark. So it's another quarter of it, 400 basis point.

Speaker Change: Operating margin improvements and driven by a combination of gross margin improvement and FGNA improvements. But most importantly, what drives the business.

Stefan Larsson: We continue to strengthen that. So, I don't know if you saw that yesterday we launched Calvin's fall campaign in the second chapter of Jeremiah and White. Very strong consumer response already. And one thing that strikes me and it's when consumers really take time from their busy day, we all had busy days and and right into the common field. Hundreds of them, thousands of them saying things like, work should be cancelled today.

Speaker Change: in North America is our focus on executing pvh plus meaning and improved product at a growl sense and we see how that drives growth. We drive newness into the hero products and we continue to build them out and they work.

Speaker Change: and we see the Marketplace Execution in e-commerce, the wars.

Michael Binetti: Thanks, guys.

Thank you. Our next question will come from Jay Sole with UBS. Please go ahead. Great. Thank you so much.

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

Speaker Change: Park, nursing, pruning.

Great, thank you so much. Stefan, I'm wondering if you can just talk a little bit more about Europe and how you're feeling about the region as you've been executing the quality of sales initiatives. Thank you. Yeah, thanks Jay. Absolutely. So we feel really good about how we are executing the quality of sales initiative and how that's resonating in the market. So we see it in the here and now in how we drive the business and how we came into the end of season with less clearance and more newness and how that newness is selling more than last year. We see it also as I referenced in the forward-looking audiobooks. So feeling really good about that. In addition, I fly in my prepared remarks.

Jay Sole: Great, thank you so much. Stefan, I'm wondering if you can just talk a little bit more about Europe and how you're feeling about the region as you've been executing the quality of sales initiatives. Thank you.

Speaker Change: very close partnership with our whole cell with our key wholesale partners, where we continue to make the rounds come to life stronger, product, presentation, inventory.

Stefan Larsson: I'm screaming, stopping the world again. So, very powerful start of the fall campaign. Building on the all time high growth in customer engagement from spring. Every week now, you'll see new talent in the campaign. You will see Kendall Jenner. Mean you, Greta Lee, you will see the K-pop band new jeans and we'll have more talent coming in. So, and they will all be wearing the best iconic Calvin Klein products across all lifestyle categories.

Stefan Larsson: Yeah. Thanks, Jay. Absolutely. So, we feel really good about how we are executing the quality of sales initiative and how that's resonating in the market. So, we see it in the here and now in how we drive the business and how we came into the end-of-season with less clearance and more newness and how that newness is selling more than last year. We see it also, as I referenced, in the forward-looking order books. So, feeling really good about that. And in addition, I flagged in my prepared remarks, we are very close to announce a permanent CEO for Europe--a high performance leader with highly relevant experience. So, coming up shortly. But overall, feeling good about--very good about how we execute on the quality of sales and how it plays out in the market. Got it. Thank you so much. Thank you.

Speaker Change: Keep at it in North America, but could also to our teams there doing a very good job.

Speaker Change: And then I think, you know, while I think North America is the amazing, for example, of the financial power of the PVH plus fine as well, I think it's worth

Speaker Change: reminding ourselves that our operating march is now improved by hundreds of basis points in North America.

Speaker Change: for 4 straight quarters. And I think what's exciting for us is that it comes from both hundreds of bases points across margin improvement.

Speaker Change: and hundreds of basis points of SGNA improvement over that time period. In a backdrop that I think we would all describe as sort of a logo of external environment. And so I think as we apply the main pillars that you guys post-blendist stuff on set. I think it's a great example as well of...

Stefan Larsson: Tommy also just released his fall campaign, a cup through campaign with the K-pop band Stray Kids. Equal positive comments on social from our customers saying things like Stray Kids and Tommy's life. I love Tommy. Please keep posting. So, very strong consumer response to both fall campaigns, the start of both fall campaigns.

Speaker Change: Thank you, guys.

Speaker Change: Thanks for watching!

Speaker Change: Thank you, our next question. We'll come from Ike Borchau with Wells Fargo. Please go ahead.

Stefan Larsson: Got it. Thank you so much. Thank you.

Jay Sole: Got it. Thank you so much.

Operator: Thank you. Our next question will come from Bob Drbul with Guggenheim. Please go ahead.

Ike Borchau: Hey, I think it's a big night question. It's a bottom up right. I was wondering if you can talk a little bit more on your G3 licensing agreement, if there's any update to that, because it doesn't know if G3 is going to get down. So are you able to, you know, get a sense of how much we capture on that yet?

Our next question will come from Bob Drubel with Guggenheim. Please go ahead.

Robert Drbul: Hi, good morning. Just wanted to circle back on North America. Can you talk about where you feel you are with the progress that you're making and specifically, with the profitability targets that you've talked about within the North America market, how do you think that's going? Thanks.

Speaker Change: Yes, so thanks, I so we continue to be on a good path to take our business back over a multi-year period.

Speaker Change: really good partnerships with our key wholesale accounts.

Speaker Change: and we now have the sourcing engine, the product engine to start to build out and deliver according to our multi-year plan, coming flying sportswear coming in first, spring 25.

Stefan Larsson: 424 was the first product we were able to fully impact product globally for Kearney and Tommy. So the improvements you will see during the four days, we have been able to lean in further into key growth categories in both rounds. We will have driven more innovation, more newness in the hero products. And then you combine that with having better inventory levels, better inventory composition. And it's still early days for fall, but the product, the fall season, the fall product season is off to a strong start versus fall product season last year.

Speaker Change: Thank you.

Speaker Change: [inaudible]

Speaker Change: Thank you, our next question. We'll come from Chris Nardon with Bank of America. Please go ahead.

Stefan Larsson: But most importantly, what drives the business in North America is our focus on executing PVH+, meaning an improved product category offense and we see how that drives growth. We drive newness into the hero products and we continue to build them out and they work. And we see the marketplace execution in e-commerce stores, partners improving--very close partnership with our wholesale, with our key wholesale partners, where we continue to make the brands come to life stronger: product, presentation, inventory. So, we just keep at it in North America but kudos to our teams that are doing a very good job.

Speaker Change: Chris, thanks for coming to the morning.

Chris Nardon: I was waiting for the total PVH business. Can you walk us through the drivers by reaching that are contributing to the sequential improvement embedded in your implied 4Q guidance compared to 3Q?

Chris Nardon: to both sales and operating margins. And then just as a quick follow-up on the increased promotions and embedded in your full-year margin guidance, can you just tie that into your comments that you pulled back from promos in North America and July versus your peer set? Thanks.

Stefan Larsson: Another area you can see the increased forward looking product strength already now is in the forward looking order books for Europe for spring 2025. So last time we caught up like this, we were still selling in spring 25. And now we have the full spring 25 landed. And we have driven significant sequential improvements. So if you recalled fall 24, we were down high single digit in selling. And for spring 25, we are down only low single digit.

Speaker Change: Let me just start from an overall business perspective. If we look at the business region earlier and from an outdoor perspective, we see North America continue to be a great group point.

Speaker Change: on the PVH class execution.

Speaker Change: with a tougher consumer backdrop. In Europe, we see the backdrop as of now. We see it holding. We see continue to deliver on ourselves, quality of sales initiatives and you also saw the forward-looking improvements in wholesale order books.

And so I think as we apply the main pillars that the PVH plus plan and stuff on set, I think it's a great example as well of the financial benefit that comes out from that.

Robert Drbul: Thank you, guys.

Operator: Thank you. Our next question will come from Ike Boruchow with Wells Fargo. Please go ahead.

Speaker Change: In a nation where we saw this quarter, the biggest trajectory change, we continue to drive strong consumer engagement and we continue to be very focused on winning the big consumer moments.

Stefan Larsson: And it reflects the belief and the recognition from our partners to see the work of the product improvement. So overall, stronger consumer engagement coming into fall, better product assortment, more full price selling, less clearance, better inventory composition. Of course, in the setting with a tougher macro, but based on what we can influence, we feel very good about how we are stepping into fall. And hi, Matt.

Speaker Change: Yeah, thanks very much. I think we feel really good about our 4Q plans and maybe I'll go to them in pieces to explain

Speaker Change: for revenue, you know, our fortune outlook actually assumes the same carry through of the DTC trends that we've talked about, you know, over the last hour or so here in both North America and Asia Pacific. So no improvements planned as we really stay true to that.

Hey, thanks for picking our question. This is Bobby, on for Ike. I was wondering if you can talk a little bit more on your G3 licensing agreement, if there's any update to that? Because as you know, G3 is going to be scaling it down. So, are you able to give us a sense of how much you're going to recapture on that yet? So thanks, Ike. So we continue to be on a good path to take our business back over a multi-year period. Really good partnerships with our key wholesale accounts. And we now have the sourcing engine, the product engine to start to build out and deliver according to our multi-year plan.

Unknown: Hey, thanks for picking our question. This is Bobby, on for Ike. I was wondering if you can talk a little bit more on your G3 licensing agreement, if there's any update to that? Because as you know, G3 is going to be scaling it down. So, are you able to give us a sense of how much you're going to recapture on that yet?

Speaker Change: Strategy of featuring off of current conditions.

Speaker Change: You know there's always a little bit of noise around, full cell timing, and so any sort of numerical change just really comes down to that.

Speaker Change: On Gross Margin, you know, we see that, you know, the quarter playing out, very consistent, forks you playing, very consistent till last year. Other than, as you said, a little bit more a modestly more promotional environments that we think is reflective of some of the tougher macros that we've talked about as well here.

Stefan Larsson: Yes. So, thanks, Ike. So, we continue to be on a good path to take our business back over a multi-year period. Really good partnerships with our key wholesale accounts and we now have the sourcing engine, the product engine to start to build out and deliver according to our multi-year plan. Calvin Klein sportswear coming in first, spring '25.

Speaker Change: Well, we do have some changes in forks you and our outlook is in SG&A.

Speaker Change: So, once we saw the DTC backdrop getting tougher in 2Q, we turned towards really managing the rest of the P&L.

Speaker Change: So that's resulted in some incremental SG&A efficiencies that we've identified. We'll see a little bit of that at 3Q, but more really in 4Q as some of those take some time to implement. So I would say in general from a revenue and gross margin perspective we see...

Operator: Thank you. Our next question will come from Chris Nardone with Bank of America. Please go ahead.

Speaker Change: 3Q4Q being pretty similar and it really comes down to work on SGN and the ideas that we've already had to fight.

Chris Nardone: Great. Thanks, guys. Good morning. Zac, I was wondering for the total PVH business--can you walk us through the drivers by region that are contributing to the sequential improvement embedded in your implied 4Q guidance compared to 3Q, for both sales and operating margins? And then, just as a quick follow-up on the increased promotions embedded in your full year margin guidance, can you just tie that into your comments that you pulled back from promos in North America in July versus your peer set? Thanks.

Speaker Change: Thanks for watching!

Speaker Change: Thank you, our next question. We'll come from John Kernan with TD Cowan. Please go ahead.

Zachary Coughlin: That's the work we've leaned into the last couple of months as the macros that Step One has talked about are started to change. And it's helped us to continue to hold our profit commitment in the year in spite of that tougher backdrop. And I think second or the larger changes we're working on to really greatly simplify our ways of working all around the world. This will deliver the incremental two to three to three basis points of SG-8 savings. Which really allows us to make that step change in profitability, helping us to deliver the 15% profit commitment we've made. And importantly, I think create capacity to continue to invest in growth as well. Thank you.

John Kernan: Good morning, thanks guys.

John Kernan: When you think about the long-term targets, how does the whole cell DTC split?

John Kernan: Play into that, you know, the wholesale business now, around $4 billion on a reported basis. How do we think about that business long-term and your plans for managing the DTC on software?

Speaker Change: So let me start John by giving you the overall just connecting back to what we have set out to do overall. So we have set out to build.

Speaker Change: Calvin and Tommy into their full potential, Tommy and Calvin, two of the most iconic globally-belonged brands, and through the systematic approach we take through pvh plus.

Speaker Change: We build them into their full potential from a whole set of D2C's blade.

Michael Bonetti: Our next question will come from Michael Bonetti with Efforcore ISI. Please go ahead. Thanks for taking our questions here. So, Stephan, I know you went through a little bit of this, but you did mention some positive indicators in North America as you moved at past the end of season clearance. Maybe just some, you know, actually just unpack that a little bit on the actual business. What's resonating better with the consumer. And Zach, maybe you help us connect that a little more near term to what's embedded for the guidance in North America, D to C and third quarter relative to QQ.

Speaker Change: and we're going to follow the consumer on the highest level.

Speaker Change: and we feel really good about how closely we work with our wholesale partners too.

Speaker Change: grown the business increasingly profitable there together with them and we feel very good about

Speaker Change: the D2C approach we have and the connection between

Speaker Change: But because that's how the consumer shops. So, that's from an overall perspective, and Zach, I don't know if you want to add. No, I think it's important to make their commitment to the 15% even margin over time.

Zach: is independent of channel mix as that goes. I think we do best financially when Stefan just said we saw this father consumer in wherever channel that they're choosing to go to.

Michael Bonetti: I think it sounded like North America cops slowed and July's. The SG-8 was a little compressed or below the quarter of the average, isn't it? There's a business return to the run rate that you were seeing before the July low. Thank you, Michael.

Zac Coughlin: On gross margin, we see the quarter playing out very consistent--4Q playing very consistent to last year. Other than, as you said, a little bit more--a modestly more promotional environment that we think is reflective of some of the tougher macros that we've talked about as well here. Where we do have some changes in 4Q in our outlook is in our SG&A. So, once we saw the DTC backdrop getting tougher in 2Q, we turned towards really managing the rest of the P&L. So, that's resulted in some incremental SG&A efficiencies that we've identified. We'll see a little bit of that at 3Q but more, really, in 4Q as some of those take some time to implement. So I would say, in general, from a revenue and gross margin perspective, we see 3Q, 4Q being pretty similar and it really comes down to work on our SG&A and those ideas that we've already identified.

Speaker Change: That ultimately is the most successful route for us. And I think what that does mean for us is that we need to build an omni-channel marketplace that delivers.

Speaker Change: is a successful level of financial outcomes.

Speaker Change: across the channels as they go and I think as we've seen of a lot of couple of years there's been, you know, a good amount of movement across the channels that we would expect that to continue and we've been able to continue to push forward our improvements and profitability in spite of that I think is a sign of that the progress that we're doing across all of our channels to make them profitable.

Zac Coughlin: So, once we saw the DTC backdrop getting tougher in 2Q, we turned towards really managing the rest of the P&L. So, that's resulted in some incremental SG&A efficiencies that we've identified. We'll see a little bit of that at 3Q but more, really, in 4Q as some of those take some time to implement. So I would say, in general, from a revenue and gross margin perspective, we see 3Q, 4Q being pretty similar and it really comes down to work on our SG&A and those ideas that we've already identified.

Stefan Larsson: So let me start there. So yes, let's start with unpacking what we saw playing out in the second quarter. So we were on plan for D to see in the company cross both round for May and June. And those are the most full price focused months. Then when we came in to mid July with Pete Summer clearance, we came in with less clearance inventory than last year and more new season products.

Speaker Change: got it. Maybe it's just a quick follow-up to AX prior question on the T3 Transition. Is there anything in the next 12 months from a financial model perspective that would be material that we should think about in terms of licenses coming over and revenue is being transferring from royalty to reported revenues.

Speaker Change: No, I mean, you know, as you said at the end, there will be some P&L competition perspective as you change, but what's most important is that we have laid out the plans and tools.

Thanks. Good luck. Thank you.

Chris Nardone: Thanks. Good luck.

Stefan Larsson: But the market took a turn to be more aggressive with clearance. We decided proactively not to follow that during the Pete clearance period of July, therefore the new season didn't fully match up on the total revenue. But when we go further into August, we see that the new season, the benefit of having less clearance, more new season is resonating with the costumer. And what drives is the continued focus we have on the key growth categories on leaning into Calvin, as an example, in underwear, denim, transition allow where and having less clearance and more newness, more innovation in that.

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

Our next question will come from John Kernen with TD Cowan. Please go ahead.

Speaker Change: returned the license as back, faced in over a long period of time. That gives us the time period to be able to adapt, to build out, to keep abilities of Stefan talked about earlier, but also to manage the full community and impact behind there. So we wouldn't expect to be calling in anything significant across that particular change because of that, that factor.

John Kernan: Good morning. Thanks, guys. So, Zac, when you think about the long-term targets, how does the wholesale DTC split play into that? The wholesale business now, around $4 billion on a reported basis--how do we think about that business long-term and your plans for managing the DTC wholesale split?

Speaker Change: That's great. Thank you.

Speaker Change: Thank you, we have time for one more question that will come from Brooke Roach with Goldman Sachs. Please go ahead.

Brooke Roach: Hi, good morning and thank you for taking our question.

Speaker Change: is a few invest in product enforcement cut through marketing campaigns and full price selling.

Brooke Roach: I'm hoping you can share your latest thoughts on brand pricing strategy.

Speaker Change: Are you seeing any signs of increased price sensitivity of your customer and can you elaborate on your expectations for PVH specific promotions versus what you're seeing in the broader macro backdrop? Perhaps for Zach you could give a little color on the size of the promotional headwind that you're embedding into your guidance in the back half. Thank you.

Stefan Larsson: And we see that resonating. Same with Tommy, when he comes to polo shirts, chinos, denim, transition allow to wear. So a big improvement, this starts of the fall season versus last year is that we are much, much more transitional in our offering versus last year when we went too fast from summer all the way to fall.

Speaker Change: Thank you for working good morning and going into your question about promotions and pricing, both Calvin and Tommy are really well positioned from a pricing perspective to the consumer relative to our best and biggest competitors.

So, that's from an overall perspective. I don't know if you want to add.

Zac Coughlin: Michael, thanks for the question. We've been really consistent over the last couple of years that we don't guess ahead of macros or market conditions and that holds absolutely true for this outlook. So, for North America DTC and really, for that matter, Asia and Europe as well, our current outlooks that we provided match the recent trends that we've been experiencing. So, that's true for 3Q and actually true for 4Q as well as we carry that DTC outlook for the rest of the year.

No, I think it's important to make there are commitment to the 15% even margin over time is independent of channel mixes that goes. I think we do best financially when, as Stefan just said, we satisfy the consumer in wherever channel that they're choosing to go to. That ultimately is the most successful route for us. And I think what that does mean for us is that we need to build an omnichannel marketplace that delivers successful levels of financial outcomes across the channels as they go. And I think as we've seen it all last couple of years, there's been a good amount of movement across the channels that we would expect that to continue. And we've been able to continue to push forward our improvements and profitability in spite of that. I think it's a sign of that the progress that we're doing across all of our channels to make them profitable. Got it.

Zac Coughlin: No. I think it's important to make our commitment to the 15% EBIT margin over time as independent of channel mixes that goes. I think we do best financially when, as Stefan just said, we satisfy the consumer in wherever channel that they're choosing to go to. That ultimately is the most successful route for us. And I think what that does mean for us is that we need to build an omnichannel marketplace that delivers successful levels of financial outcomes across the channels as they go. And I think as we've seen over the last couple of years, there's been a good amount of movement across the channels that we would expect that to continue. And we've been able to continue to push forward our improvements and profitability in spite of that. I think it's a sign of that--the progress that we're doing across all of our channels to make them profitable.

Zach: So the biggest opportunity we have from a pricing, improving AULR, decreasing discount rate, is very much tying back to how we build the shortment to start with.

Zach: in terms of leaning into the key growth categories, planning, closing in, close planning inventory by closing closer into demand.

Zac Coughlin: And I think as we've seen over the last couple of years, there's been a good amount of movement across the channels that we would expect that to continue. And we've been able to continue to push forward our improvements and profitability in spite of that. I think it's a sign of that--the progress that we're doing across all of our channels to make them profitable.

Zach: Demand versus when we historically were buying very much up from. So it's the combination with...

Operator: Thanks, guys. Please go ahead. Great. Thank you so much.

Zach: strengthening the product development through the key growth categories, the innovation in the hero products.

Jay Sole: I'm wondering if you can just talk a little bit more about Europe and how you're feeling about the region as you've been executing the quality of sales initiatives. Thank you. Yeah, thanks Jay. Absolutely. So we feel really good about how we are executing the quality of sales initiative and how that's resonating in the market. So we see it in the here and now in how we drive the business and how we came into the end of season with less clearance and more newness and how that newness is selling more than last year. We see it also as I referenced in the forward-looking audiobooks. So feeling really good about that. In addition, I fly in my prepared remarks.

Zach: the right level of new enough.

Speaker Change: the better and better composition for a sieve's on transition between

Got it. Maybe just a quick follow up to a prior question on the T3 transition. Is there anything in the next 12 months from a financial model perspective that would be material that we should think about in terms of licenses coming over and revenues being transferring from royalty to reported revenues? No, I mean, you know, as you said at the end, there'll be some P&L composition perspective as you change. What's most important is that we have laid out the plans to return the licenses back, face and over a long period of time.

John Kernan: Got it. Maybe just a quick follow up to Ike's prior question on the G3 transition. Is there anything in the next 12 months, from a financial model perspective, that would be material that we should think about in terms of licenses coming over and revenues being transferring from royalty to reported revenues?

Speaker Change: I was going in Montori and Nunes. We see that we have opportunity to steal there. So it's that work connecting to...

Speaker Change: the build-out of the demand and data-driven supply chain and we've seen improvements already there in less inventory, better composition, lower AUC. So, but tying it all the way back to...

Zac Coughlin: No. I mean, as you said there at the end, there'll be some P&L composition perspective as you change. But what's most important is that we have laid out the plans to return the licenses back, phased in over a long period of time. That gives us the time period to be able to adapt, to build out the capabilities--as Stefan talked about earlier--but also, to manage the full P&L impacts behind there. So, we wouldn't expect to be calling in anything significant across that particular change because of that factor.

Speaker Change: The consumer's perspective on that, more relevance in product and a great product value offering for the consumer and relative to the competition. So I feel very good about it.

Speaker Change: And I think from the quantification that the market is moving around a bit and so we're not looking to quantify that impact. We've said modest increase.

Speaker Change: which I think takes up the general magnitude of what we're looking for. I think what's important for us is...

Stefan Larsson: We are very close to announce a permanent CEO for Europe, a high performance leader with highly relevant experience. So coming up shortly but overall feeling good about how we execute on the quality of sales and how it plays out in the market. Thank you so much. Thank you.

Speaker Change: Our inventory is in good shape, and so we're going to be able to make the choices of when...

Operator: Thank you. We have time for one more question, that will come from Brooke Roach with Goldman Sachs. Please go ahead.

Speaker Change: It works for us and our consumers on when to be more promotional and when it does in versus having to worry about that combined with inventory pressures. I think that we feel we're well positioned as we head into the second after the year.

Brooke Roach: Hi, good morning and thank you for taking our question. Stefan, as you invest in product assortment, cut-through marketing campaigns and full price selling--I'm hoping you can share your latest thoughts on brand pricing strategy. Are you seeing any signs of increased price sensitivity of your customer and can you elaborate on your expectations for PVH-specific promotions versus what you're seeing in the broader macro backdrop? Perhaps for Zac, you could give a little color on the size of the promotional headwind that you're embedding into your guidance in the back half. Thank you.

Speaker Change: [inaudible]

Speaker Change: All right, so we've that, we just want to close by saying thank you for following along on the journey. We're in the business of building Calvin and Tommy into their full potential. It's a multi-year journey where we stay independent, Phil Macro has now getting tougher, say, laser focus on executing to deliver here and now and make sure that everything we do now connects to the longer term vision and that's where the real value creation will come from.

Bob Drbul: Our next question will come from Bob Drubel with Guggenheim. Please go ahead. Hi. Good morning. Just wanted to circle back on North America. Can you talk about where you feel you are with the progress that you're making and specifically with the profitability targets that you've talked about within the North America market? How do you think that's going? Thanks.

Speaker Change: So, thank you very much and looking forward to coming back shortly.

Speaker Change: Thank you, this does conclude today's PVA 2nd quarter 2020-24 earnings conference call. You may disconnect at this time and have a wonderful day.

Stefan Larsson: Absolutely. Thank you, Bob. So, for North America, it continues to be a great proof point on the PVH+ execution. So if you look at the business, in the second quarter, we delivered a high quality growth--1% combined for Calvin and Tommy at an 11.7% EBIT margin. So, it's another quarter with 400 basis point operating margin improvement and driven by a combination of gross margin improvement and SG&A improvement. But most importantly, what drives the business in North America is our focus on executing PVH+, meaning an improved product category offense and we see how that drives growth. We drive newness into the hero products and we continue to build them out and they work. And we see the marketplace execution in e-commerce stores, partners improving--very close partnership with our wholesale, with our key wholesale partners, where we continue to make the brands come to life stronger: product, presentation, inventory. So, we just keep at it in North America but kudos to our teams that are doing a very good job.

Speaker Change: 3rd episode of The World War II 3rd episode of The World War II

Stefan Larsson: So, it's the combination with strengthening the product assortment through the key growth categories, the innovation in the hero products, the right level of newness, the better and better composition for seasonal transition between outgoing inventory and newness. We see that we have opportunity still there. So, it's that work connecting to the build out of the demand and data-driven supply chain. And we see improvements already there in less inventory, better composition, lower AUC. So--but tying it all the way back to the consumer's perspective on that, more relevancy in product and a great product value offering for the consumer and relative to the competition. So, I feel very good about it. And I think from the quantification that the market's moving around, you know, a bit. And so we're not looking to quantify fully quantify that impact, we said modest increase, which I think picks up the general magnitude of what we're looking for.

Speaker Change: The

Stefan Larsson: We drive newness into the hero products and we continue to build them out and they work and we see the market play execution in e-commerce stores partners improving very close partnership with our wholesale with our key wholesale partners where we continue to make the brands come to life stronger product presentation inventory. So we just keep at it in North America, but kudos to our teams that are doing a very good job.

Speaker Change: and Zephyr, Zephyr, Zephyr

Speaker Change: Music

Zac Coughlin: And I think from the quantification that the market's moving around a bit and so, we're not looking to quantify--fully quantify that impact. We said modest increase, which I think picks up the general magnitude of what we're looking for. I think what's important for us is our inventory is in good shape. And so, we're going to be able to make the choices on when it works for us and our consumers, on when to be more promotional and when it doesn't versus having to worry about that combined with inventory pressures. So, I think that we feel we're well-positioned as we head into the second half of the year.

Speaker Change: and his son, Zachary Coughlin, Stefan Larsson, Stefan Larsson, Stefan Larsson, Stefan

Speaker Change: [inaudible]

Zac Coughlin: And then, I think--Bob, I think North America is an amazing example of the financial power of the PVH+ Plan as well. I think it's worth reminding ourselves that our operating margin is now improved by hundreds of basis points in North America for four straight quarters. And I think what's exciting for us is that it comes from both hundreds of basis points of gross margin improvement and hundreds of basis points of SG&A improvement over that time period--in a backdrop that I think we would all describe as sort of a low growth external environment. And so, I think as we apply the main pillars that the PVH+ Plan--as Stefan said--I think it's a great example as well of the financial benefit that comes out from there.

Speaker Change: and his son, Zachary Coughlin, Stefan Larsson, Stefan Larsson, Stefan Larsson, Stefan Larsson, Stefan Larsson, Stefan Larsson, Stefan Larsson,

Stefan Larsson: And so I think as we apply the main pillars that the PVH plus plan and stuff on set, I think it's a great example as well of the financial benefit that comes out from that. Thank you guys.

Operator: Thank you. Our next question will come from Ike Borechow with Wells Fargo. Please go ahead. Everything's picking our question. There's a bottom up right.

Ike Boruchow: Our next question will come from Ike Borechow with Wells Fargo. Please go ahead. Everything's picking our question. There's a bottom up right.

Stefan Larsson: I was wondering if you can talk a little bit more on your G3 licensing agreement. I have presented the update to that, because you know, G3 is going to scale it down. So are you able to, you know, give us how much we capture on that yet. So thanks, Ike. So we continue to be on a good path to take our business back over a multi-year period. Really good partnerships with our key wholesale accounts. And we now have the sourcing engine, the product engine to start to build out and deliver according to our multi-year plan.

Unknown: Thank you.

Christopher Nardone: Our next question will come from Chris Nardone with Bank of America. Please go ahead. Great. Thanks, guys. Good morning. Zach, I was wondering for the total PVH business.

Zachary Coughlin: Can you walk us through the drivers by reaching that are contributing to the sequential improvement embedded in your implied 4Q guidance compared to 3Q for both sales and operating margins?

Zachary Coughlin: And then just as a quick follow-up on the increased promotions embedded in your full year margin guidance, can you just tie that into your comments that you pull back from promos in North America in July versus your pure set? Thanks.

Speaker Change: [inaudible]

Stefan Larsson: Let me just start from an overall business perspective. If we look at the business regionally and from an outlook perspective, we see North America continue to be a great proof point of the PVH+ execution within a tougher consumer backdrop. In Europe, we see the backdrop--as of now, we see it holding. We see--continue to deliver on our sales, quality of sales initiatives. And you also saw the forward-looking improvements in wholesale order books. And in Asia, where we saw this quarter, the biggest trajectory change--we continue to drive strong consumer engagement and we continue to be very focused on winning the big consumer moments.

Zac Coughlin: Thanks, Chris. I think we feel really good about our 4Q plans and maybe I'll go to them in pieces to explain. For revenue, our 4Q outlook actually assumes the same carry-through of the DTC trends that we've talked about over the last hour or so here--in both North America and Asia Pacific. So, no improvements planned as we really stay true to that strategy of featuring off of current conditions. There's always a little bit of noise around wholesale timing and so, any sort of numerical changes really comes down to that.

Zachary Coughlin: On gross margin, we see the quarter playing out very consistent 4Q playing very consistent to last year. Other than, as you said, a little bit more, a modestly more promotional environment that we think is reflective of some of the tougher macros that we've talked about as well here. What we do have some changes in 4Q in our outlook is an S-GNA. So once we saw the DTC backdrop getting tougher into Q, we turn towards really managing the rest of the P&L. So that's resulted in some incremental S-GNA efficiencies that we've identified. We'll see a little bit of that at 3Q, but more really in 4Q as some of those take some time to implement. So I would say in general, from a revenue and gross margin perspective, we see 3Q, 4Q being pretty similar, but it really comes down to work on S-GNA and those ideas that we've already identified. Thanks. Good luck. Thank you.

Speaker Change: Thanks for watching!

Zachary Coughlin: So that's resulted in some incremental S-GNA efficiencies that we've identified. We'll see a little bit of that at 3Q, but more really in 4Q as some of those take some time to implement. So I would say in general, from a revenue and gross margin perspective, we see 3Q, 4Q being pretty similar, but it really comes down to work on S-GNA and those ideas that we've already identified. Thanks. Good luck. Thank you.

John Kernan: Our next question will come from John Kernen with TD Cowan. Please go ahead. Morning. Thanks, guys. So, when you think about the long-term targets, how does the wholesale DTC split play into that? The wholesale business now, around $4 billion on a reported basis, how do we think about that business long-term and your plans for managing the DTC wholesale split?

Stefan Larsson: So, let me start, John, by giving you the overall--just connecting back to what we have set out to do overall. So, we have set out to build Calvin and Tommy into their full potential. Tommy and Calvin, two of the most iconic, globally beloved brands. And through the systematic approach we take through PVH+, we build them into their full potential. From a wholesale D2C split, we're going to follow the consumer on the highest level. And we feel really good about how closely we work with our wholesale partners to grow the business increasingly profitable there, together with them. And we feel very good about the D2C approach we have and the connection between both because that's how the consumer shops. So, that's from an overall perspective. And Zac, I don't know if you want to add--

Stefan Larsson: On the highest level. And we feel really good about how closely we work with our wholesale partners to grow the business increasingly profitable there together with them. And we feel very good about the D to C approach we have and the connection between both because that's how the consumer shops.

Zachary Coughlin: So, that's from an overall perspective. I don't know if you want to add. No, I think it's important to make there are commitment to the 15% even margin over time is independent of channel mixes that goes. I think we do best financially when, as Stefan just said, we satisfy the consumer in wherever channel that they're choosing to go to. That ultimately is the most successful route for us. And I think what that does mean for us is that we need to build an omnichannel marketplace that delivers successful levels of financial outcomes across the channels as they go.

Zachary Coughlin: And I think as we've seen it all last couple of years, there's been a good amount of movement across the channels that we would expect that to continue. And we've been able to continue to push forward our improvements and profitability in spite of that. I think it's a sign of that the progress that we're doing across all of our channels to make them profitable. Got it.

Stefan Larsson: Maybe just a quick follow up to a prior question on the T3 transition. Is there anything in the next 12 months from a financial model perspective that would be material that we should think about in terms of licenses coming over and revenues being transferring from royalty to reported revenues? No, I mean, you know, as you said at the end, there'll be some P&L composition perspective as you change. What's most important is that we have laid out the plans to return the licenses back, face and over a long period of time.

Stefan Larsson: That gives us the time period to be able to adapt to build out the capabilities of Stefan talked about earlier, but also to manage the full panel impacts behind there. So we wouldn't expect to be calling anything significant across that particular change because of that factor.

John Kernan: That's great. Thank you.

Brooke Roach: Thank you. We have time for one more question, that will come from Brooke Roach with Goldman Sachs. Please go ahead. Hi, good morning, and thank you for taking our question. Stefan, if you invest in product disortment cut through marketing campaigns and full price selling, I'm hoping you can share your latest thoughts on brand pricing strategy. Are you seeing any signs of increased price sensitivity of your customer, and can you elaborate on your expectations for PVH specific promotions versus what you're seeing in the broader macro backdrop? Perhaps for Zach, you could give a little color on the size of the promotional headwind that you're embedding into your guidance in the backhouse. Thank you.

Stefan Larsson: Thank you, Brooke and good morning. And going into your question about promotions and pricing, both Calvin and Tommy are really well-positioned--from a pricing perspective--to the consumer, relative to our best and biggest competitors. So, the biggest opportunity we have from pricing improving AUR, decreasing discount rate is very much tying back to how we build the assortment to start with, in terms of leaning into the key growth categories: planning, closing in--planning inventory buys closer into demand, how we replenish, how we react to the demand versus when we historically were buying very much upfront. So, it's the combination with strengthening the product assortment through the key growth categories, the innovation in the hero products, the right level of newness, the better and better composition for seasonal transition between outgoing inventory and newness. We see that we have opportunity still there. So, it's that work connecting to the build out of the demand and data-driven supply chain. And we see improvements already there in less inventory, better composition, lower AUC.

Stefan Larsson: So it's the combination with strengthening the product disortment through the key growth categories, the innovation in the hero products, the right level of newness, the better and better composition for seasonal transition between outgoing inventory and newness. We see that we have opportunity to steal there. So it's that work connecting to the build out of the demand and data driven supply chain and we see improvements already there in less inventory, better composition, lower AUC.

Stefan Larsson: So but tying it all the way back to the consumer's perspective on that more relevancy and product and and a great product value offering for the consumer and relative to the competition. So I feel very good about it. And I think from the quantification that the market's moving around, you know, a bit. And so we're not looking to quantify fully quantify that impact, we said modest increase, which I think picks up the general magnitude of what we're looking for.

Stefan Larsson: I think what's important for us is our inventory is in good shape. And so we're going to be able to make the choices of when it works for us and our consumers on when to be more promotional, and when it doesn't versus having to worry about that combined with inventory pressures. So I think that we feel we're well positioned so we head into the second out, for the year.

Stefan Larsson: All right. So, with that, we just want to close by saying thank you for following along on the journey. We're in the business of building Calvin and Tommy into their full potential. It's a multi-year journey where we stay independently of macros now getting tougher, stay laser-focused on executing to deliver here and now and making sure that everything we do now connects to the longer-term vision. And that's where the real value creation would come from. So, thank you very much and looking forward to connect shortly.

Operator: Thank you. This does conclude today's PVH Second Quarter 2024 Earnings Conference Call. You may disconnect at this time and have a wonderful day.

Operator: This does conclude today's PV8 second quarter, 2024 earnings conference call. You may disconnect at this time and have a wonderful day.

John Kernan: [inaudible] you, thank you, thank you, thank you,[inaudible][inaudible] John Kernan, John Kernan, John Kernan John Kernan, John Kernan[inaudible] I love you, I love you, I love you, I love you[inaudible]

Speaker Change: [inaudible]

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