Q1 2025 PVH Corp Earnings Call

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Please standby we're about to begin.

Good morning, everyone and welcome to todays PVH first quarter 2025 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 registered to ask a question at any time by pressing the star and <unk> on your Touchtone phone.

Speaker Change: Please note. This call may be recorded and then I will be standing by should you require any assistance. It is now my pleasure to turn today's program over to Cheryl Freeman Senior Vice President of Investor Relations. Please go ahead ma'am.

Cheryl Freeman: Thank you operator, good morning, everyone and welcome to the PVH Corp, first quarter 2025 earnings conference call, leading the call today will be Stefan Larsson, Chief Executive Officer, and Zach Coughlin Chief Financial Officer.

Cheryl Freeman: This webcast and conference call is being recorded on behalf of PVH and consist of copyrighted material. It may not be recorded rebroadcast or otherwise transmitted without pvh's written permission. Your participation constitutes your consent to having anything you say appear on any transcript or replay of this call.

Cheryl Freeman: The information to be discussed includes forward looking statements that reflect pvh's view as of June 4th 2025 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 <unk>.

Cheryl Freeman: Food Pvh's right to change its strategies objectives expectations and intentions and the companys ability to realize anticipated benefits and savings from divestitures restructuring and similar plans such as the head count cost reduction initiative announced in August 2022 the 2021 sale of assets up in eggs.

Cheryl Freeman: From its heritage brands menswear and retail businesses. The November 2023 sale of the heritage brands Womens intimate apparel business to focus on is Calvin Klein and Tommy Hilfiger businesses and its current multi year initiative to simplify its operating model.

Cheryl Freeman: PVH does not undertake any obligation to update publicly any forward looking statement, including without limitation any estimates regarding revenue or earnings generally the financial information and projections to be discussed will be on a non-GAAP basis as defined under SEC rules reconciliations to GAAP amounts are included in PTH is fair.

Cheryl Freeman: First quarter 2025 earnings release, which can be found on www dot PVH dotcom 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.

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

Cheryl Freeman: Want to start by thanking our Calvin Tommy and PVH teams around the world for their hard work this quarter as we delivered on our plan.

Cheryl Freeman: Driven by our disciplined execution of the PVH class plan, we grew revenue, 2% above our guidance and we delivered stronger than expected non-GAAP EPS also above our guidance and we remain on track to drive revenue growth for the full year in line with guidance.

Cheryl Freeman: Total direct to consumer revenue was down approximately 3% with E Commerce up 3%. We grew our wholesale revenue mid single digits and benefited from earlier shipments as well as the intake and relaunch of the Calvin Klein Womens sportswear and jeans business in North America.

Cheryl Freeman: Joe.

Cheryl Freeman: Since we last spoke we have seen an increasingly tough macro environment, while we have to recognize this evolved backdrop. All our focus is on what's within our control to strengthen and expand the impact of our own PVH class actions and in moments like this when the external.

Cheryl Freeman: Factors gets worse is the time to sharpen our focus get even closer to the consumers and expand our execution.

Cheryl Freeman: Based on this all directly go into sharing their concrete examples of where the actions. We took that drove our performance in Q1, and then briefly cover our outlook.

Cheryl Freeman: Then finish with covering the specific actions, we will drive in the back half that are fully in our control and are geared to move the needle.

Cheryl Freeman: For Q1 drivers I'll start with Calvin Klein the world of underwear and jeans, it's a significant portion of Calvin's global revenues and when we spoke last we had just launched our most innovative product franchise. So far the icon cultural stretch underwear for men with a viral cut.

Cheryl Freeman: Through campaign, featuring bad Bonnie.

Cheryl Freeman: Built on our unique product innovation rooted in our biggest product category and was complemented by very strong product marketing activations that drove traffic to stores and boosted conversion. This full funnel approach drove a 25% increase in combined sales of icon.

Cheryl Freeman: Ill stretch and Qatar stretch stance globally.

Cheryl Freeman: It's one very powerful examples of where we are leaning into our core strengths aligning all the pieces of the PVH plus flat from brand product and marketing all the way through marketplace execution than we really cut through.

Cheryl Freeman: Another key product category for Calvin extending in Q1, we put a lot of innovation into our iconic fashion denim offering expanding fits washes and designs to be hyper relevant and through these actions. We grew that part of the assortment 14% in the quarter.

Cheryl Freeman: Today, we see a big difference in performance between wherever we have strategically leaned into innovate and where we have yet to do so and in the back half of this year, we will accelerate the impacts of these kind of initiatives to cover a bigger part of the total assortment.

Cheryl Freeman: In addition to the strategic growth initiatives in the main lines, we kicked off the year with Calvin Klein's returned to runway, which dominated the New York fashion week conversations and plays an important role in creating a strong halo for the brand.

Cheryl Freeman: Top tier talent, including duo Lipa, Alex underscores score than Pedrick, Pisco, where style and collection looks a cultural defining moments in the season like most recently at the Cannes Film Festival.

Cheryl Freeman: Turning to tell me similar to Calvin what we see and told me from a product perspective is thats, where we innovate and put fashion into our iconic styles, whether it's garment dyed linen shirts or an evolution of our mono branded T shirts, but when we add the seasonal relevance to our cable knit sweater for men's.

Cheryl Freeman: In womens we drive much stronger performance.

Cheryl Freeman: We've built our most recent summer lifestyle campaign Hilfiger resorts on this learning where the product is iconic told me made tolerant through an infusion of seasonal relevance amplified by some of our best performing talent, including Patrick's worth Snagger and modeling side.

Cheryl Freeman: Earlier this spring Tommy also launched two new collections Women's collection with Sofia Richie range and the Hilfiger sailing collection as part of our partnership with cell GP, both collections for showcase across all key platforms and channels.

Cheryl Freeman: And going forward you will continue to see these kind of seasonal collections and new takes on Thomas iconic style always playing back to our biggest business system biggest categories and activated in our key wholesale doors and stores globally.

Cheryl Freeman: Finally on the brand side told me delivered breakthrough fashion Tainment at the met Gala accurate <unk> drove up to the met steps in the race car from the highly anticipated film F walk wearing a custom Tommy Hilfiger Ray suite before dramatically revealing a red.

Cheryl Freeman: <unk> exceeded to walk the red carpet.

Cheryl Freeman: One of the most talked about the entrances both in global headlines any social media and a tax should tell me this iconic style and cultural relevance.

Cheryl Freeman: Now, let me turn to our regional performance, starting with Europe, we kept strengthening our strong brand position in the region with overall revenue increasing mid single digits in line with our plan and driven by growth in both DTC and wholesale importantly.

Cheryl Freeman: As planned total D to C turned to growth in the quarter, increasing low single digits, and we delivered our third consecutive quarter of store growth. Despite the continued muted consumer backdrop, we drove better conversion across the region with particular strength in the big consumer momentum.

Cheryl Freeman: Yes.

Cheryl Freeman: At wholesale we delivered mid single digit growth driven by the sequential improvements in order books for the spring 'twenty five season compared to full 24, we also benefited from earlier spring and summer product shipments compared to the same quarter last year.

Cheryl Freeman: And thus we shared previously our fall order book in Europe finalized up low single digits versus the prior year, reflecting the strong execution from our teams to improve the overall assortment and the successful quality of sales initiatives, we took last year.

Cheryl Freeman: In the Americas, our team continue to lean into the next level of execution of the PVH plus plan as we work to unlock the full growth potential of both sprouts and once again delivered a double digit EBIT margin. This is a big improvement from when we first launched the PVH plus plan.

Cheryl Freeman: Overall revenue increased high single digits above our plan driven by earlier wholesale shipments and supported by the relaunch of the women's sportswear and jeans business at U S. Wholesale following the take back of this license.

Cheryl Freeman: D to C store revenue in the quarter declined on lower traffic, although conversion continued to improve and we grew e-commerce mid teens.

Cheryl Freeman: We delivered strong spring fashion newness, we drove strong growth, which for told me was flagged by new nursing sweaters, Leyland fabrications and fashion Tees and Calvin the men's new icon courthouse stretch underwear in fashion denim across both brands, we continue to dry.

Cheryl Freeman: Strong performance in e-commerce, with higher traffic and higher average order value.

Cheryl Freeman: Within wholesale we launched Calvin Klein womens sportswear, and Macy's and over 150 doors supported by a special marketing campaign, and we invested in building out a new shopping experience.

Cheryl Freeman: Moving on to Asia Pacific revenues declined low teens on a reported basis and low double digits in constant currency due to weaker consumer confidence and the earlier timing shift of lunar new year into the last quarter.

Cheryl Freeman: While we delivered e-commerce growth in constant currency overall performance was more than offset by declines in stores in wholesales as.

Cheryl Freeman: We shared last quarter starting in February we began to face incrementally tougher headwinds in China, which have since continued while we're optimistic about the opportunities to grow our brands in the regions. We are realistic about the continued headwinds from a challenging backdrop, particularly in China in this backdrop.

Cheryl Freeman: We continue to drive product innovation across outerwear sweaters polo's in denim.

Cheryl Freeman: Our strong brand ambassadors, including menu Jesu stray kids demonstrated our continued ability to amplify with global talent to excite consumers and remained strong in key consumer shopping moments.

Cheryl Freeman: Turning to inventory and the build out of our demand driven supply chain for the start of the year, we've built up and evolved our never out of stock program of core Essentials. We did this as a deliberate effort after multiple ceases or being too low in these products and often missing.

Cheryl Freeman: At the same time Q1 started with lower than expected demand for basics and essentials. This has led to us, leaving the first quarter, we had higher levels of inventory.

Cheryl Freeman: Part of our demand driven supply chain, we have adjusted future buys which will align inventory levels to current demand trends in the back half of the year. This.

Cheryl Freeman: This is high quality fresh inventory of core essentials that we will keep adjusting over time based on demand.

Cheryl Freeman: On the licensing front as we discussed last quarter, we have a large and diversified global licensing business, which is a key competitive advantage for us our licensing partners helped bring our vision to life across multiple complementary categories, but they are experts from watches some freight.

Cheryl Freeman: Grounds to eyewear and they are critically important to how we drive sustainable profitable growth through the PVH plus plan.

Cheryl Freeman: In the first quarter for Womens North America wholesale as planned we took back the Calvin Klein sportswear and jeans licenses, which are key to our lifestyle expression and for spring 'twenty six we will take back our Tommy sportswear license.

Cheryl Freeman: Included in the licenses for taking back a specialized wholesale category businesses like outerwear, which are presented outside of our brand specific lifestyle pads often on a dedicated section of the store.

Cheryl Freeman: And this week for one of these specialized categories, we've entered into a new licensing agreement for mens and womens outerwear with an expected launches spring 'twenty six as I am.

Cheryl Freeman: Mentioned any new licensing part that will complement our assortments with their specific expertise and be fully aligned with our brand directions.

Cheryl Freeman: As a reminder, the overall contribution to our total global licensing business from the G. III license Takeback is only 20% of our expected licensing revenues for 2025 and 80% of our licensing revenues are from long term brand building partnerships.

Cheryl Freeman: That we are growing together.

Cheryl Freeman: Now, let me switch gears and talk about our overall outlook.

Cheryl Freeman: Across the industry as I mentioned earlier, we are navigating a very uncertain consumer and macro environment that has become increasingly challenged over the past three months.

Cheryl Freeman: Software retail trends, we saw in February continued with consumer sentiment further weakening to some of its lowest recorded levels. Since the 19 fifties. This has translated into traffic trends coming down in the U S and around the world and this backdrop has led to increased promotional levels.

Cheryl Freeman: We're also navigating the impact of tariffs based on our latest assessment, we estimate that the unmitigated impact of tariffs creates a headwind of approximately $65 million to our full year EBIT weighted predominantly in the second half of the year, we're taking a variety of steps to mitigate this impact.

Cheryl Freeman: Which <unk> will discuss in more detail.

Cheryl Freeman: Our business in China also continues to face a dynamic situation. While we remain on March comps unreliable entity list, we continue to engage directly with MOFCOM as we work towards a positive resolution we remain fully committed to serving our Chinese consumers as we have for the past two.

Cheryl Freeman: Three years, and we are investing in our growth in China for the long term.

Cheryl Freeman: As we navigate these external factors and as we shared last quarter. We're also working through the Calvin Klein Global brand operational challenges that we experienced as we for the first season built up the global product creation capability for Calvin Klein in New York.

Cheryl Freeman: This work was a significant undertaking and absolutely critical to unlock the brand's full potential with the first globally created products six and now in the markets with spring 'twenty five we now have our arms around the full impact of these challenges and they all come from the same route calls in.

Cheryl Freeman: Is that the team has to spend too much effort getting the new go to market process stood up which constrained product development timelines for sourcing delays combined this led to a margin headwind predominantly weighted to the first half with some carryover into the second half of this year.

Cheryl Freeman: We have been laser focused on addressing these transitory operational challenges last month, we announced new leadership with the appointment of David Salman Global brand precedent for Calvin Klein.

Cheryl Freeman: David has already fully in with the team, bringing his deep experience driving PVH plus performance across operations regions, and all brands and I'm encouraged by the level of clarity and rigor at which he and the team are working to resolve these challenges and get our execution to wear.

Cheryl Freeman: It needs to be.

Cheryl Freeman: As we shared last quarter, we are seeing sequential improvements already for the full 25 season, which will further strengthen for spring 'twenty six and we'll be able to start creating the full 26 product see some from a very strong place.

Cheryl Freeman: Through our PVH plus execution, we are quarter by quarter building the capabilities, we need to build these brands for the long term. This is a process. It takes time, we will continuously learn and improve to become stronger and stronger over time.

Cheryl Freeman: From a financial perspective, as we look ahead to 2025, although we are reaffirming our revenue guidance of flat to up slightly we're not yet in a place to fully compensate for the effects of the strong macro forces and Thats why we have to adjust our full year non-GAAP guidance.

Cheryl Freeman: <unk> for both the EBIT margin and EPS.

Cheryl Freeman: Important to know this stuff, we're targeting to exit the year in a stronger margin position with Sac will share more details about this will be supported by the business driving actions I just outlined to drive the back half of the year, our delivery of 200 basis points of cost savings from our.

Cheryl Freeman: <unk> announced initiative and by having resolved most of Calvin operational challenges and.

Cheryl Freeman: And with spring 2026 product seasons in both brands on time and with strong gross margins that positions us for a strong profit start of 2026.

Cheryl Freeman: Let me just say that this guidance is not what we set out to deliver when we started the year and as a leadership team, we're leaning into where we have the strength and the PVH plus execution and we will expand its impact already for the back half of this year.

Cheryl Freeman: Globally for Calvin Klein. This means that we will continue to build our iconic helped through campaigns.

Cheryl Freeman: <unk>, our core strength in the world of underwear and the world of genes building on the successful launch of our icon cotton stretch, where this fall launching the equivalent and womens underwear, which is our icon Cottonwood Dol program, you will see us activate again with a full funnel how through approach.

Speaker Change: During one of the most current global Superstars in music next.

Speaker Change: Next to this we will also continue to build out our men's iconic underwear campaigns similar to the Jeremy Allen White and bad Bonnie format that became viral global sensations and every time, we add product newness and innovation. This time supported by superstars from the world of sports.

Speaker Change: Music, and including K pop, where Calvin has so much strength.

Speaker Change: Along with this underwear anchored campaigns, we will lean in and expand the impacts of other big growth categories for the brand like fashion denim and outerwear.

Speaker Change: Finally for Calvin we will also direct more of our media investments to highly targeted traffic driving media to further amplify these campaigns and further strengthen the wholesale and the in store impact.

Speaker Change: And told me you will see us launch a new cut through for livestock campaign, but we will amplify the strength of the fall assortment with a 20% increase in media investment versus last year to drive high quality traffic and we will build out the top middle and bottom parts of the consumer funnel.

Speaker Change: For maximum impact in.

Speaker Change: In connection to this you'll also see the new nursing Tommy's full product assortment with improvement across fabric function and fit. This is the product strengths that drove the European order books to growth in the fall.

Speaker Change: And across our Iqos in key product categories, we are designing into strong newness.

Speaker Change: We're also doubling down on our F. One program as the sports experience and relevance in the U S and globally you might have already seen that we just announced a new partnership with Cadillac Another American icon with Tommy will be the first lifestyle sponsor of the chatter like Formula one team.

Speaker Change: Reinforcing Thomas 40 year legacy of fusing fashion sport and entertainment.

Speaker Change: Later this month Tommy's featured in the highly anticipated F. One movie with Dunson address some Brian pit, which will be the biggest movie launch this summer globally.

Speaker Change: We're already seeing the impact of the film's strong media campaign, which features Tommy Hilfiger on the Mega screen and Piccadilly Circus, and we are starting to see incredible engagement on social media.

Speaker Change: Across the regions are Brian lesser entering full 25 with a stronger product assortment across both key category offense and strong newness and innovation in hero product with a commercial plan that tightly aligns our execution across product marketing and the marketplace.

Speaker Change: And we will in both Calvin and Tommy have very strong fall and holiday cut through campaigns with regionally relevant talent amplification.

Speaker Change: In markets around the world, you'll see us in calving furthering night the world. So the underwear in denim and in Tommy will connect iconic Tommy lifestyle to culture anchored in our strong men's focus and we'll do it in close collaboration with our partners around the world.

Speaker Change: To further support our back half execution as I've mentioned for Calvin and also for Tommy we're increasing our investment across the marketing funnel to drive high quality traffic.

Speaker Change: In closing for the first quarter, we delivered on our plan driven by our disciplined PVH class execution, and we have our sleeves rolled up focusing 100% on what's within our control to improve the back half for the year by broadening and scaling our successful.

Speaker Change: PVH plus plan initiatives in both Calvin and Tommy across all three regions.

Speaker Change: We are on a multi year journey to unlock the full potential of Calvin Tommy and PVH, where it's all about tapping into the global consumer now for both Calvin Klein and Tommy Hilfiger, two of the most iconic brands in the market and step by step building them into the most desirable lifestyle brands in the world.

Speaker Change: We're staying relentlessly focused learning and improving continuously to build the product strength consumer engagement and marketplace execution that over time will tap into the full potential of these incredible brands and make us when repeatedly with the consumer and as a result.

Chuck: The most shareholder value over time, and with that I'll turn the call over to Chuck.

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

Chuck: As Stefan discussed we were able to deliver our first quarter results within the backdrop of a highly dynamic and uncertain macro environment driven by the strength of our two iconic global brands and disciplined execution of the PVH plus plan for.

Chuck: For the first quarter, we delivered revenue above our guidance largely due to the timing of wholesale shipments in Americas with operating margin of eight 1% within our guidance range as we navigate an increasingly promotional environment.

Chuck: EPS came in slightly ahead of guidance driven by lower tax and interest expense.

Chuck: Additionally, we returned over $550 million to shareholders during the quarter with the repurchase of five 4 million shares of our common stock through a previously announced accelerated share repurchase agreements and open market purchases.

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

Chuck: As a reminder, as I mentioned during our Q4 2024 earnings call. Beginning this quarter, we have evolved our reportable segments to be one EMEA to America's three Asia Pacific and for a new Standalone licensing segment, we filed an 8-K yesterday with the recast quarter.

Chuck: Lee and annual segment data for 2023 and 2024.

Chuck: Revenue for the first quarter was up 2% on both a reported and constant currency basis.

Chuck: Starting from a regional perspective, our EMEA business returned to growth during the quarter with revenue up 4% in constant currency, including mid single digit growth in the wholesale business and a low single digit increase in the direct to consumer business.

Chuck: Wholesale growth for the quarter was impacted by a shift in timing of shipments with Q2 revenue for our European business was up 5% on a reported basis.

Chuck: In our Americas business revenue was up 7% driven by high teens growth in the wholesale business, including the impact of Calvin Klein Womens sportswear and jeans wholesale transition in house and a shift in timing of shipments from the second half into the first half of the year.

Chuck: This year wholesale shipments are planned to reflect a more balanced first half second half weighting versus last year when shipments were more heavily weighted to the back half.

Chuck: In direct to consumer mid teens growth in our owned and operated digital Commerce business was more than offset by a mid single digit decline in our retail stores due to the challenging consumer environment.

Chuck: That trend ended the quarter lower than planned leading to a more promotional environment.

Chuck: Aligned with our outlook revenue in our Asia Pacific business was down 11% on a constant currency basis, which included a 3% decrease due to the earlier timing of the lunar new year shopping period that I discussed last quarter the.

Chuck: The decrease also reflects the challenging consumer environment in the region, particularly in China.

Chuck: Revenue for our Asia Pacific business was down 13% on a reported basis.

Chuck: Licensing revenue was down 2% versus last year with the decrease more than explained by the previously mentioned transition of Calvin Klein Womens sportswear and jeans in house during the quarter.

Chuck: And our global brands, Tommy Hilfiger revenues were up 3% on both a reported and a constant currency basis, driven by growth in EMEA and Americas, Calvin Klein revenues were flat.

Chuck: From an overall PVH channel perspective, our direct to consumer revenue was down 3% both reported and in constant currency sales.

Chuck: Sales in our retail stores were down 5% as low single digit growth in EMEA was offset by the declines I mentioned in Americas and APAC sales in our owned and operated E. Commerce business were up 3% with strong growth in the Americas.

Chuck: Total wholesale revenue was up 7% on a constant currency basis, and 6% on a reported basis driven by increases in EMEA and Americas due in part to the shifts in timing that I mentioned earlier.

Chuck: In the first quarter, our gross margin was 58, 6% a decrease of 280 basis points compared to a record high in Q1 last year.

Chuck: As we've discussed previously approximately 50 basis points of the decrease was the impact of our North American license transitions. The remaining 230 basis point decrease was a result of three main factors in the quarter first a higher mix of wholesale revenue in the first quarter than last year and a change in the mix of.

Chuck: Within the wholesale channel, which has a negative impact on gross margin, but not on our overall profitability.

Chuck: The impact of weakening consumer sentiment and lower retail traffic, which led to higher promotions.

Chuck: And third incremental freight costs and customer discounts to address the impact of the Calvin Klein product shipment delays.

Chuck: SG&A as a percent of revenue was 55% a 90 basis point improvement versus last year, reflecting our growth driver five cost savings actions, we are making progress and we expect the benefit of these actions to grow and impact as we progress through the year.

Chuck: EBIT for the quarter was $160 million and operating margin was eight 1%, earning.

Chuck: Earnings per share was $2 30.

Chuck: Interest expense was $17 million and our tax rate for the quarter was approximately 17%.

Chuck: On a GAAP basis, we also took a non cash goodwill and other intangible asset impairment charge of $480 million, which was primarily due to an increase in discount rates.

Speaker Change: Inventory at quarter end was up 19% compared to Q1 last year. The increase was primarily due to one as Stefan mentioned, a purposeful investment in best selling core product categories to increase to support our projected sales growth in the second quarter and three earlier receipts of summer season Prana.

Chuck: To improve in season stock availability.

Chuck: Accordingly, the vast majority of our inventory is core and current season as.

Chuck: As we progress through the year, we expect inventory will be impacted by tariffs, but otherwise begin to largely aligned with projected sales growth by the end of Q3.

Chuck: And now moving on to our outlook.

Speaker Change: I'd like to start by reiterating what Stefan mentioned earlier, we are operating in a highly dynamic and fluid consumer and macroeconomic environment globally.

Speaker Change: Significant uncertainty around global trade policies and the impact on the broader macroeconomic environment and consumer spending behavior.

Speaker Change: As such our outlook is based on our best assessment of current conditions and assumes no material worsening.

Speaker Change: Overall, we are reaffirming our full year revenue outlook, but we are updating our earnings outlook to reflect our revised expectations for the remainder of the year with three main changes versus our prior guidance.

Speaker Change: The first is the impact of the recently announced tariffs on goods coming into the U S. We expect the tariffs currently in place will have an overall net negative impact on our earnings in 2025, including an approximately $65 million unmitigated impact EBIT or.

Speaker Change: For approximately $1 <unk> per share some of which we will be able to mitigate through strategic actions in the second half of the year and some we will need to absorb.

Speaker Change: The net impact of the tariffs and these actions are embedded within our guidance.

Speaker Change: We believe we are relatively well positioned to face tariff headwinds, we have a strong globally diversified revenue base with U S revenues accounting for approximately 30% of our total revenue.

Speaker Change: And we have a strong and established network of global sourcing partners across more than 30 countries and are leveraging these deep longstanding relationships to identify ways. We can further optimize our sourcing and production costs sharing the impact with our partners wherever possible.

Speaker Change: We will evaluate strategic discount reductions to mitigate the potential tariff impact and while we are focused on delivering price value for the consumer. We are also ready to say calibrated targeted pricing actions, where we have pricing power as normal course of business, we continually assess our prices based on a number of factors.

Speaker Change: In addition to the newly enacted tariffs the existing macro pressures have created an increasingly challenging consumer environment, particularly in the U S. The tougher retail trends that emerge beginning in early February have continued as such we are already experiencing a more promotional environment across the market we have had to.

Speaker Change: Increase our promotional levels across both brands. We are now forecasting a more promotional environment to continue for the remainder of the year.

Stefan Larsson: Similarly, our business in China continues to face a challenging consumer environment, which is driving more promotional activity there as well and as Stefan mentioned, we remain on MOFCOM unreliable entity list.

Speaker Change: And finally as Stefan discussed with the first globally created product season for Calvin Klein now in the markets. The full extent of the transitory operational challenges that we discussed last quarter are now appearing further contributing to our margin headwinds this year.

Speaker Change: The outcome of these factors are leading us to the following financial outlook.

Speaker Change: We are reaffirming our overall full year revenue guidance of flat to a slight increase on both a reported and constant currency basis.

Speaker Change: Exchange has improved since we last spoke and is driving some favorability to our top line as such we now expect our reported revenue is more likely to land at the higher end of that range.

Speaker Change: Our revenue outlook for EMEA and Americas remains unchanged with planned growth in both regions in 2025.

Speaker Change: In Asia Pacific our outlook for the region. Overall also remains unchanged with revenue planned down mid single digits in constant currency.

Speaker Change: Gross margin is now expected to decrease approximately 250 basis points versus last year. Our previous guidance was a decrease of approximately 100 basis points of which approximately half is due to the impact of the G. III transition in North America from license to wholesale and the rest largely explain.

Speaker Change: And by the transitory impacts from centralizing, the Calvin Klein global product kitchen.

Speaker Change: The incremental 150 basis points decline is attributable to higher discounts as a result of the significantly more promotional environment the impact of the incremental Calvin Klein operational issues and the net negative impact related to tariffs.

Speaker Change: This includes an unmitigated impact of approximately 80 basis points, partially offset by the impact of planned mitigation actions, which will primarily take effect in the second half.

Speaker Change: While we expect the promotional environment to continue all year within that backdrop, we are planning improvement in the second half related to what is within our control specifically, we continue to expect the transitory Calvin Klein issues to have a greater impact of first half gross margins with the impact lessening in the second half.

Speaker Change: On SG&A, we expect expenses to be lower in constant currency in 2025 compared to 2024 as we previously saw macro headwinds gathering or SG&A plans for 2025 already included a decrease of approximately 100 basis points as a percentage of revenue.

Speaker Change: As I discussed last quarter, we expect to drive significant cost savings connected to our growth driver five actions with savings showing up more powerfully as we progress through the year. These.

Speaker Change: These actions will simplify our operating model to drive more efficient ways of working focus on our global technology stack, our global distribution network, our operating model in Europe, and our support functions.

Speaker Change: We expect these actions to deliver 200 to 300 basis points of operating margin expansion over time and expect to exit 2025, with approximately 200 basis points of this savings realized.

Speaker Change: As a result of the increased gross margin pressures our full year operating margin is now projected to be approximately eight 5% and EPS is projected to be in the range of $10 75 to $11.

Speaker Change: While operating margins are lower than last year, we expect to exit 2025 back at double digit operating margins with both gross margin and SG&A actions contributing to improvement compared to the first half.

Speaker Change: Our expectations for interest expense and our tax rate are unchanged from our prior guidance.

Speaker Change: Turning to the second quarter, we are projecting revenue to be up low single digits on a reported basis and flat to up slightly on a constant currency basis compared to 2024.

Speaker Change: In EMEA, we expect continued growth in DTC to be offset by a low single digit decline in wholesale reflecting the timing shifts with Q1 I mentioned earlier.

Speaker Change: In Americas, we are planning revenue up high single digits and relatively in line with Q1, driven by an increase in wholesale revenue, partially offset by lower DTC sales.

Speaker Change: And in Asia Pacific, We expect revenue to decline by mid single digits with the improvement versus Q1, primarily due to the timing of the lunar new year shopping period that negatively impacted Q1.

Speaker Change: We are expecting our second quarter gross margin to decline approximately 300 basis points with the Q1 trends largely continuing into Q2 and an approximately 60 basis point impact of tariffs we.

Speaker Change: We don't expect our mitigation strategies to have any substantial impact into the second half of the year.

Speaker Change: For SG&A growth driver five savings will continue to deliver efficiencies and as such our SG&A expense as a percentage of revenue is expected to decrease approximately 100 basis points compared to last year.

Speaker Change: Overall, we're expecting our second quarter operating margin to be approximately six 5% to 7% down approximately 200 to 250 basis points compared to last year.

Speaker Change: Earnings per share is expected to be in a range of $1 85 to $2 our tax rate for the second quarter is estimated at approximately 20% and interest expense is projected to be approximately $25 million.

Speaker Change: Before we open up for questions I, just wanted to conclude by saying, we're navigating a highly dynamic and uncertain macroeconomic environment. We are facing increased pressures from the significantly more promotional environment tariffs in the U S. The challenging consumer environment in China, and transitory operational challenges in Calvin Klein.

Speaker Change: While operating margins are lower than last year and our previous expectations.

Speaker Change: As Stefan mentioned, our focus is on taking proactive measures on what is in our control, including specific actions focus on supercharging our trajectory in the second half with this focus we expect to exit 2025 back at double digit operating margins and we are setting up for a stronger spring 2026.

Speaker Change: With higher on time deliveries increased product go and margins and stronger commercial plans amplified by increased marketing investments all building momentum into 2026 to deliver sustainable and increasingly profitable growth.

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

Speaker Change: Certainly thank you Mr Coghlan, ladies and gentlemen at this time, if you do you have any questions or comments. Please press star. One you can always remove yourself from the queue. If your question has been addressed by pressing star two Additionally to get to as many questions as time permits we do ask that you. Please limit yourself to one question. We will go first this morning too Jay sole of UBS.

Speaker Change: Jay Please go ahead.

Jay Sole: Great. Thank you so much.

Speaker Change: You mentioned that you're seeing decreased traffic.

Speaker Change: Across many regions in the world and increased promotional levels.

Speaker Change: Also mentioned that your brands have strong product assortments and exciting commercial plans, but what gives you confidence that both brands, both Calvin and Tommy still have good momentum with consumers that they haven't lost much in that part of what maybe is explaining the change in the guide isn't something of that nature.

Speaker Change: Yes, Thanks, Jay and good morning.

Speaker Change: What is.

Speaker Change: It's so clear to us and especially when the consumer backdrop and the macro gets worse.

Speaker Change: Everywhere, where we lean in and tap into the consumer love for Calvin Klein and Tommy Hilfiger, and then we line up through the PVH plus focus.

Speaker Change: The increase newness and innovation in product cut through marketing stronger wholesale and in store execution.

Speaker Change: We really win and we win a big despite tough macro so.

Speaker Change: Make it bigger.

Speaker Change: Our biggest product innovation in Q1, and Calvin Klein one of the most promising proof points.

Speaker Change: New product innovation and underwear. So if you look at what we did there is we leaned into the biggest category in Calvin Klein men's underwear, we leaned into one of the biggest product franchises and then we've put unprecedented newness and innovation into an innovation that's not existing in the market.

Speaker Change: One.

Speaker Change: And then we amplify that with one of the most streamed artist on Spotify that Bonnie and yes, it becomes viral but what's really interesting is in this backdrop drove 25% growth within that space franchise. So in one move.

Speaker Change: We moved one of the top three product franchises for the biggest category and drove 25% growth then what might what might be missed by some but not by the consumers. We also increasingly start to introduce denim next to underwear, because that's a really big iconic Cal.

Speaker Change: <unk> <unk>.

Speaker Change: <unk>, China, as well and the improved and innovated fashion denim in Q1 drove growth, 14%. So what you see in the back half what you see us doing what Pete what our focus is 100%.

Speaker Change: Is expanding as scaling this across bigger and bigger parts of the business. We're moving from this investor call too and all house call with our 20000 associates.

Speaker Change: My focus there is about not yet we are not yet in a position to fully mitigate the macro headwinds.

Speaker Change: Look at where we lean in and execute 25% growth biggest franchise, 14% growth on the fashion denim and then you will see in the fall. How these actions continue with more product innovation and product franchise introduction formats than we do exactly the same.

Speaker Change: For women's so one of the biggest underway our franchises for womens for fall is completely reinvent backed up with one again once again one of the biggest artists in the World and then we continue biggest artist in the where our biggest sports K pop and then we continue to build on that for Tommy.

Speaker Change: Right.

Speaker Change: We see the same thing in Tommy so when we lean into the iconic strength of the Tommy lifestyle that both categories and then we infuse newness into those we win big So it's all about going back to the iconic DNA, making at current and then for Tom.

Speaker Change: The lifestyle settings, so what's really exciting if the formula one partnerships.

Speaker Change: Some of you might have.

Speaker Change: So the launch of that yesterday, so we are coming back big into Formula one at Formula One.

Speaker Change: One of the biggest if not the biggest growing sport from a viewership in the world also with especially with the young consumer and there. We're combining two American I cause Cadillac first U S team coming back on the grid.

Speaker Change: Another American icon, Tommy Hilfiger, who was.

Speaker Change: 20 years earlier than most other lifestyle brands in Formula one so.

Speaker Change: We have the proof points is 100% correlated to where we lean in and execute and coming back to the town Hall right. After this.

Speaker Change: Talking about the actual the sharpening actions and the scale that we grow with us for the back half.

Speaker Change: Got it thank you so much.

Speaker Change: Thank you the next now to Michael Binetti of Evercore.

Michael Binetti: Hey, guys. Thanks for taking our questions here nice job with the relaunch of the Formula One business. This week.

Speaker Change: Just I was wondering is that can you just reorient us a little bit around the buckets and the cost out efforts that we talked about last quarter.

Speaker Change: I think that the size of them if any timing has moved around and just remind us I think I think many of those stretch beyond 2025% in 2026 to help us calibrate. The models here and then just backing up but are there any concerns as you look at some of the.

Speaker Change: Unevenness in the operations around Calvin Klein here recently that some of these cost saves are cutting into the muscle or contributing to operating volatility in the past few quarters.

Speaker Change: So let's start highlight good morning, so let's start.

Speaker Change: Sign operational challenge that we experienced from bringing the Calvin Klein global product capabilities, together, which is an absolutely critical need and move to unlock the full value of the brand going forward and win with this kind of product newness and innovation we just.

Speaker Change: Talked about.

Speaker Change: What's exciting to see is that the team has worked through it in a way.

Speaker Change: <unk>.

Speaker Change: The biggest effect is soon behind US we are improving.

Speaker Change: For fall 'twenty five already in the back half of this year, which starts now basically we are improving it significantly for spring another really big step up and then.

Speaker Change: Very soon we start the product seats up from scratch.

Speaker Change: For a full 26 and then we start from strength so.

Speaker Change: And the way we see that we are making this progress that we see that for spring 'twenty six.

Speaker Change: We see that we are on time on both fronts, we see that the go win margin.

Speaker Change: It's improved our assessed last year significantly so we see the kpis, we see that yes, they have to take too much time in the FERC to sort out the go to market process, let's now I'm very much by also amplified by David coming in.

Speaker Change: <unk> deep operational and brand experience to connect both.

Speaker Change: Creative strengths that we already have to scale that but also secure.

Speaker Change: Systematic repeatable operating model.

Speaker Change: Good morning, Michael I think maybe on the cost piece, maybe I'll try to put that into the context of the bigger financial picture for so in the first half as we take a look at the the financial outlook. As we said, it's really a gross margin story and I say that because in the first half we are growing revenue, which is a big commitment for us this year and we're seeing SG&A.

Speaker Change: <unk> revenue coming down so that's a good strong foundation. So I described in the prepared remarks, what's happening around gross margins, we have that picture in the second quarter is largely going to be consistent with that so that sets up the baseline.

Speaker Change: For us and this is where the cost actions come in and what's important is the bridge to the double digit operating margins in <unk>, and that's actually pretty simple and very much in our control. The first and most obvious is the general seasonality of our business. So due to holiday sales last year for example, <unk> revenue 14%.

Speaker Change: <unk> and <unk>, so with that we get really powerful leverage.

Speaker Change: Beyond that though it comes through the value driver five of our cost actions that we've been talking about for a couple of quarters. Now. So we've made very good progress no slides on timing and I think to remind everybody of the pillars.

Speaker Change: A couple of them that are directly in our control and are already seeing significant progress on so a decentralized technology mapping into a single global Tech stack taken advantage of both our scale getting cost out and coming out with significantly better outcomes and also around the global logistics network with a big focus on increasing.

Speaker Change: The utilization in the U S.

Speaker Change: So we're already seeing some progress on those in the first half and that is why youre seeing the SG&A deleverage even in the first half as we move into the back end of the year. The totality of all of the actions we're still on track to deliver between 200 300 basis points of <unk>.

Speaker Change: SG&A leverage reductions out of that and 200 basis points of that delivered by the fourth quarter of this year compared to the fourth quarter of last year. So the combination of those two leaves us feeling very good about the work we're doing around cost and.

Speaker Change: Where that points us to from a trajectory.

Speaker Change: For the second half and let leaving the year with double digit operating margin again.

Speaker Change: Okay. Thanks for the detail guys I appreciate it.

Speaker Change: Thank you.

Speaker Change: Thank you we'll go next to Dana Telsey of Telsey group.

Dana Telsey: Hi, Good morning, everyone I wanted to dial in on tariffs and how you're thinking about tariff impact as we go through the year on the mitigation.

Speaker Change: <unk> strategies that believes in that $65 million and mitigated how you're thinking about it and what are you seeing in terms of price increases for each brand in the U S.

Speaker Change: Impact on margins. Thank you.

Speaker Change: Thank you Dana and good morning.

Speaker Change: Let me start by creating some context around what the tariff situation means for PVH. So it's important to just note that 30% of our business is in the U S. 70% of our business is international so we have a much higher international share than most of our competitors.

Speaker Change: And as <unk> mentioned, we have identified $6 5 million, an unmitigated tariff effects for the rest of the year and just like everyone else. We are working through our mitigation actions in this fluid environment. So.

Speaker Change: We have the strength of having Calvin and Tommy which is two of the strongest and most beloved brands. So.

Stefan Larsson: That is strength when it comes to all of the different parts of the value chain. The partnership with our all the way from the partnership with our sourcing to the partnership with our retail partners are softer do you mind, giving a little bit more detail on what that Stefan mentioned, our two biggest mitigation advantages are that globally diversified.

Stefan Larsson: A new base and our strong global supply base, but beyond that we are working through several other specific initiatives. So first we're leveraging those deep longstanding supply chain relationships to identify ways. We can further optimize sourcing and production cost sharing that the impact of tariffs with partners where possible.

Stefan Larsson: And then beyond that Stefan mentioned, we remain laser focused on perceived value for consumers. So we will evaluate strategic discount reductions to mitigate potential tariff impact.

Stefan Larsson: And lastly, consistent with our normal course of business. We're also ready to take calibrated and targeted pricing actions, where we have particular pricing power.

Stefan Larsson: Okay.

Speaker Change: Thank you Sandra.

Speaker Change: Thank you. We'll go next now to Brooke Roach of Goldman Sachs.

Brooke Roach: Good morning, and thank you for taking our question Stefan you've talked about acceleration of some of the innovative and creative product into the back half.

Speaker Change: And also the opportunity to take some strategic pricing reductions.

Speaker Change: Pricing increases, whether that's a reduction of discounting or otherwise can you help us square that with the outsized levels of promotions that you're expecting in the near term what do you have to do to make the brand more resilient from a pricing perspective as macro impacts start to weigh on the consumer. Thank you.

Brooke Roach: Thanks Brook.

Stefan Larsson: It comes back to doing more in scaling the impact all of them.

Stefan Larsson: The PVH plus execution and how we build strength in the product in the key growth categories in putting innovation into the hero products and it's.

Stefan Larsson: If you look at Tommy and Calvin example, before which is quite powerful with our biggest product introduction in a decade with plus 25%. That's a great example, plus a 14% increase in denim doing strategically sharpening our focus to do more and more.

Stefan Larsson: Of that that has a bigger and bigger impact on the total business, but also for told me we see it in.

Stefan Larsson: Key categories like sweaters, where we lean into our iconic cable nets, and we expand that and we put new.

Stefan Larsson: Better fabrication, we innovate in colors, we connect them to the lifestyle of Tommy and.

Stefan Larsson: Formula one.

Stefan Larsson: If.

Stefan Larsson: Great.

Stefan Larsson: Great lifestyle.

Stefan Larsson: A great anchoring point for the lifestyle. Because then we would take that Tommy love for the brand and we connected to those innovations in key product categories, and then we connected to the support of.

Stefan Larsson: Formula One and then.

Stefan Larsson: Follow up and Thats, something Thats worth, saying as well for the back half, we're putting more marketing spend in a more focused way to drive drive traffic to to do what you just.

Stefan Larsson: Brokerages to to mitigate more and more of those tougher headwinds because it's the way we operate the business is that it's 100% almost fully in our control and expanding that impact.

Stefan Larsson: Thanks, so much.

Speaker Change: Thank you we'll go next now to Matthew boss of Jpmorgan.

Matthew Boss: Great and thanks for all the color.

Stefan Larsson: So Stefan maybe to break down the step down in top line trends that I know you cited to start the year and then the leg lower.

Matthew Boss: You cited here in May and in the Americas or the need for additional promotional activity.

Stefan Larsson: The trend line I guess, how much of this do you attribute to the macro backdrop relative to execution, what's the pace of improvement that you see as is reasonable and then Sac could you just walk through the progression or maybe dig deeper.

Stefan Larsson: Deeper into the embedded gross margin for the second quarter versus the back half of the year and just drivers of gross margin recapture if we think about next year.

Stefan Larsson: Yes, Thank you Matt.

Stefan Larsson: What we have seen over the past three months as we mentioned this.

Stefan Larsson: A tougher call Sumer and macro backdrop, especially in North America. So we see the consumer sentiment coming down translating in tougher traffic trends to the sector and that impacting us and impacting our same store traffic more than e-commerce. So.

Stefan Larsson: What we also see that the.

Stefan Larsson: China backdrop from a consumer sentiment perspective.

Stefan Larsson: <unk> is continuing to be tough and coming down.

Stefan Larsson: And even though that we are able to execute with strength in the big cultural moments.

Stefan Larsson: Yes.

Stefan Larsson: But when we look at today, how much the North America consumer sentiment and the tariff effect plus the China, we are not yet in a place where we can fully offset that.

Stefan Larsson: <unk> not yet is because one the actions we're taking in the back half is stronger and it's expanding that PVH plus.

Stefan Larsson: Pack.

Stefan Larsson: It also connects to La <unk> said that in the back half we will have most of the 200 basis points of cost savings from the cost initiatives that we have been on now for quite some time, but it's really kicking in in the back half and we have good.

Stefan Larsson: Good visibility to seeing that that is coming into place and then we also see that we are resolving calvin operational challenges.

Stefan Larsson: Significantly improved in the back half and then when I look at 2026 product season, both price our on time both brand hub.

Stefan Larsson: Positive gross margin going Mark just starting 'twenty six so that that's how we see that we are able to keep the revenue growth. Because we said we were going to drive back to growth. This year, we're able to.

Stefan Larsson: Keep the revenue growth going for this year, we're taking a margin hit that we are in the beginning of this not able to fully compensate and then coming out of the year, we are backed out.

Stefan Larsson: Alright, and thank you Matt to the second part of your question and then maybe I'll answer it looking at our gross margin percent for the full year. So original plan for the full year gross margins down around 100 basis points half of that was tied to the G. III business model transition and about half of that original decrease was tied to the transitory Calvin Klein issues we've talked.

Stefan Larsson: About here now as we look to the full year being approximately 250 basis points down that extra 150 basis points is two main drivers.

Stefan Larsson: 50 basis points is due to the mitigated impact of tariffs and the other 100 basis points as the as an increase in promotion Ality that we were just talking about so just to put that in context that 100 basis points.

Stefan Larsson: <unk> all three of those components Stefan mentioned here. So there is an increase tied to the U S.

Speaker Change: Declining macro consumer sentiment and lower traffic there is tougher consumer backdrop in Asia, and our particular situation in China, and then third is sort of a bigger impact than we are planning initially around the CK operational challenges so.

Stefan Larsson: I think that as we take a look there in the second half of the progression. We do expect to see sequential improvement in the C cap regions issue. So.

Stefan Larsson: Ex carrying longer than the second half and will improve significantly, especially in 2026.

Stefan Larsson: But we do see expect in second half we are planning for that promotional activity to maintain through the rest of 2025, so no sequential opportunity there.

Stefan Larsson: Then exiting 'twenty five into 26, we do expect to be putting the Calvin Klein.

Stefan Larsson: Challenges fully behind us during 2026, so that's another step forward that we'll see.

Stefan Larsson: Beyond that with tariffs over time, we do expect that we'll be able to work towards full mitigation of the unmitigated impact so that will be improvement overtime as well and then we will adjust to whatever the broader macro environment is just like we've done this year.

Speaker Change: Great color best of luck.

Matt: Thank you Matt.

Matt: We have time for one more question.

Speaker Change: Yes, Sir we will take that question now from John Kernan of TD Cowen.

John Kernan: Great. Thanks for taking my question.

John Kernan: Yes.

Speaker Change: In fact, what are you planning in terms of the promotional impact in gross margin for the back half of the year it looks like and a 60 basis point impact on gross margin from tariffs in Q2.

John Kernan: Implies a pretty steep impact from promotions and maybe a few other impacts.

Speaker Change: Impacts, but I guess, how do you.

Speaker Change: Have you reserved.

John Kernan: Premium for a higher promotional environment in the back half of the year within the current gross margin guidance.

Speaker Change: Yes.

John Kernan: So the question I would say consistent with what we just talked about a little bit we've got the impact for the full year. We've put in is around 100 basis points tied to the increased promotional environment.

John Kernan: That impact is sort of we saw through the first quarter. We planned during the second quarter and we've assumed that that level remains for the rest of this year.

John Kernan: We have overall over the last couple of years been quite consistent with.

John Kernan: The uncertainty of potential outcomes, we maintain where we are called the broader macros, there and that includes assumptions around promotional environment and so I think we are planning for that to continue the trends that we've seen so far this year through the rest of the year.

Speaker Change: Understood. Thank you.

Speaker Change: Okay, all right with that we want to thank you for following along on the multi year journey that we are on to tap into the full potential of Calvin Klein and Tommy Hilfiger, and we want you to know that we are responding to the moment, we leaning in to sharpen and.

John Kernan: Expanding our very strong PVH plus.

John Kernan: The impact because when we tap into that iconic brand love for Calvin and Tommy and then we do it super focus with connecting innovation in product cut through marketing campaign investing behind that driving efficient safe behind the scenes, but then letting the consumer field that we really capture that.

John Kernan: What we are continuing to do.

Speaker Change: Thank you.

Speaker Change: Thank you again, ladies and gentlemen that will conclude todays PVH first quarter 2025 earnings call again. Thank you so much for joining US everyone and we wish you all a great day Goodbye.

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Speaker Change: Good morning, everyone and welcome to todays PVH first quarter 2025 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 <unk> on your Touchtone phone.

Speaker Change: Please note this call may be recorded and that I will be standing by should you require any assistance. It is now my pleasure to turn today's program over to Cheryl Freeman Senior Vice President of Investor Relations. Please go ahead ma'am.

Cheryl Freeman: Thank you operator, good morning, everyone and welcome to the PVH Corp, first quarter 2025 earnings conference call, leading the call today will be Stefan Larsson, Chief Executive Officer, and that Conklin Chief Financial Officer. This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material.

Cheryl Freeman: It may not be recorded rebroadcast or otherwise transmitted without pvh's written permission your participation constitutes your consent to having anything you say appear on any transcript or replay of this call.

Speaker Change: The information to be discussed includes forward looking statements that reflect pvh's view as of June <unk> 2025 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 subject of this call. These include.

Speaker Change: Pvh's right to change its strategies objectives expectations and intentions and the companys ability to realize the anticipated benefits and savings from divestitures restructuring and similar plans such as the head count cost reduction initiatives announced in August 2022, the 2021 sale of assets of an exit.

Speaker Change: From its heritage brands menswear and retail businesses in November 2023 sale of the heritage Brands' women's intimate apparel business.

Speaker Change: Earnings Calvin Klein, and Tommy Hilfiger businesses, and its current and multi year initiatives to simplify its operating model PD.

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

Speaker Change: First quarter 2025 earnings release, which can be found at www Dot PVH satcom and in the company's current report on form 8-K furnished to the SEC in connection with the release at this time I'm pleased to turn the conference over to Stefan Larsson.

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

Stefan Larsson: Wanted to start by thanking our Calvin Tommy and PVH teams around the world for their hard work this quarter as we delivered on our plan.

Stefan Larsson: Driven by our disciplined execution of the PVH plus plan, we grew revenue, 2% above our guidance and we delivered stronger than expected non-GAAP EPS also above our guidance and we remain on track to drive revenue growth for the full year in.

Stefan Larsson: In line with guidance total direct to consumer revenue was down approximately 3% with E. Commerce up 3%. We grew wholesale revenue mid single digits and benefited from earlier shipments as well as to intake and relaunch of the Calvin Klein Womens sportswear.

Stefan Larsson: And jeans business in North America.

Stefan Larsson: Since we last spoke we have seen an increasingly tough macro environment, while we have to recognize this evolved backdrop. All our focus is on what's within our control to strengthen and expand the impact of our own PVH class actions and in moments like this when the external.

Stefan Larsson: Factors gets worse is the time to sharpen our focus get even closer to the consumers and expand our execution.

Stefan Larsson: Based on this I will directly go into sharing their concrete examples of the actions. We took that drove our performance in Q1, and then briefly cover our outlook.

Stefan Larsson: And then finish with covering the specific actions, we will drive in the back half that are fully in our control and are geared to move the needle.

Stefan Larsson: For Q1 drivers I'll start with Calvin Klein the world of underwear and jeans, it's a significant portion of Calvin's global revenues and when we spoke last we had just launched our most innovative product franchise. So far the icon caught on stretch underwear for men with a viral cut.

Stefan Larsson: Through campaign, featuring bad Bonnie.

Stefan Larsson: Built on our unique product innovation rooted in our biggest product category and was complemented by very strong product marketing activations that drove traffic to stores. Some boosted conversion. This full funnel approach drove a 25% increase in combined sales of icon.

Stefan Larsson: Stretch and Qatar stretched stance globally. It's one very powerful examples of where we are leaning into our core strength aligning all the pieces of the PVH plus flopped from brand product and marketing all the way to marketplace execution than we really cut through.

Stefan Larsson: Another key product category for Calvin extending in Q1, we put a lot of innovation into our iconix fashion denim offering expanding fits washes and designs to be hyper relevant and through these actions. We grew that part of the assortment 14% in the quarter.

Stefan Larsson: Today, we see a big difference in performance between wherever we have strategically leaned into innovate and where we have yet to do so and in the back half of this year, we will accelerate the impacts of these kind of initiatives to cover a bigger part of the total assortment.

Stefan Larsson: In addition to the strategic growth initiatives in the main lines, we kicked off the year with Calvin Klein's returned to runway, which dominated the New York fashion week conversations and plays an important role in creating a strong halo for the brand.

Speaker Change: Top tier talent, including duo Lipa, Alex underscores score than Pedrick, Pascal where style and collection looks a cultural defining moments in the season like most recently at the Cannes Film Festival.

Speaker Change: Turning to tell me similar to Calvin what we see and told me from a product perspective.

Stefan Larsson: That's where we innovate and put fashion into our iconic styles, whether it's garment dyed linen shirts or an evolution of our mono ground T shirts, but when we add seasonal relevance to our chronic cable knit sweater for men's and women's we drive much stronger performance.

Stefan Larsson: We've built our most recent summer lifestyle campaign Hilfiger resorts on this learning where the product is iconic Tommy made tolerant through an infusion of seasonal relevance amplified by some of our best performing talent, including Patrick's worth Snagger and modeling Cline.

Stefan Larsson: Earlier this spring Tommy also launched two new collections of women's collection with Sofia Richie range and the hidden figures sailing collection as part of our partnership with sale GP.

Stefan Larsson: Both collections for showcase across all key platforms and channels.

Stefan Larsson: And going forward you will continue to see these kind of seasonal collections and new takes on Thomas iconic style always playing back to our biggest business system biggest categories and activated in our key wholesale doors and stores globally.

Stefan Larsson: Finally on the brand side Tanami delivered breakthrough fashion Tainment at the met Gala accurate <unk> risks drove up to the met steps in the race car from the highly anticipated film F. One wearing a custom Tommy Hilfiger Ray suite before dramatically revealing a red.

Stefan Larsson: <unk> exceeded to walk the red carpet.

Stefan Larsson: One of the most talked about entrances both in global headlines any social media and a tax should tell me this iconic style and cultural relevance.

Speaker Change: Now, let me turn to our regional performance, starting with Europe, we kept strengthening our strong brand position in the region with overall revenue increasing mid single digits in line with our plan and driven by growth in both DTC and wholesale importantly.

Speaker Change: As planned total D to C turned to growth in the quarter, increasing low single digits, and we delivered our third consecutive quarter of store growth. Despite the continued muted consumer backdrop, we drove better conversion across the region with particular strength in the big consumer momentum.

Speaker Change: <unk>.

Speaker Change: At wholesale we delivered mid single digit growth driven by the sequential improvements in order books for the spring 'twenty five season compared to full 24, we also benefited from earlier spring and summer product shipments compared to the same quarter last year.

Speaker Change: And thus we shared previously our fall order book in Europe finalized up low single digits versus the prior year, reflecting the strong execution from our teams to improve the overall assortment and the successful quality of sales initiatives, we took last year.

Speaker Change: In the Americas, our team continue to lean into the next level of execution of the PVH plus plan as we work to unlock the full growth potential of both sprouts and once again delivered a double digit EBIT margin. This is a big improvement from when we first launched the PVH plus plan.

Speaker Change: Overall revenue increased high single digits above our plan driven by earlier wholesale shipments and supported by the relaunch of the women's sportswear and jeans business at U S. Wholesale following the take back of this license.

Speaker Change: D to C store revenue in the quarter declined on lower traffic, although conversion continued to improve and we grew e-commerce mid teens.

Speaker Change: We delivered strong spring fashion newness, we drove strong growth, which for told me was flat by new nursing sweaters, Leyland fabrications and fashion Tees and E. Calvin the men's new icon Kratos stretch underwear in fashion denim across both brands, we continue to drive.

Speaker Change: Strong performance in e-commerce, with higher traffic and higher average order value.

Speaker Change: Within wholesale we launched Calvin Klein womens sportswear, and Macy's and over 150 doors supported by a special marketing campaign, and we invested in building out a new shopping experience.

Speaker Change: Moving on to Asia Pacific revenues declined low teens on a reported basis and low double digits in constant currency due to weaker consumer confidence and the earlier timing shift of lunar new year into the last quarter.

Speaker Change: While we delivered e-commerce growth in constant currency overall performance was more than offset by declines in stores in wholesales as.

Speaker Change: We shared last quarter starting in February we began to face incrementally tougher headwinds in China, which have since continued while we're optimistic about the opportunities to grow our brands in the regions. We are realistic about the continued headwinds from a challenging backdrop, particularly in China in this backdrop.

Speaker Change: We continue to drive product innovation across outerwear sweaters polo's in denim.

Speaker Change: Our strong brand ambassadors, including menu Jesu stray kids demonstrated our continued ability to amplify with global talent to excite consumers and remained strong in key consumer shopping moments.

Speaker Change: Turning to inventory and the build out of our demand driven supply chain for the start of the year. We've built up an evolved are never all those stock program of core Essentials. We did this as a deliberate effort after multiple seasons of being too low in these products and often missing.

Speaker Change: <unk>.

Speaker Change: At the same time Q1 started with lower than expected demand for basics and essentials. This has led to us, leaving the first quarter, we had higher levels of inventory.

Speaker Change: Part of our demand driven supply chain, we have adjusted future buys which will align inventory levels to current demand trends in the back half of the year. This.

Speaker Change: This is high quality fresh inventory of core essentials that we will keep adjusting over time based on demand.

Speaker Change: On the licensing front as we discussed last quarter, we have a large and diversified global licensing business, which is a key competitive advantage for us our licensing partners helped bring our vision to life across multiple complementary categories, but they are experts from watches some freight.

Speaker Change: Grounds to eyewear and they are critically important to how we drive sustainable profitable growth through the PVH plus plan.

Speaker Change: In the first quarter for Womens North America wholesale as planned we took back to Calvin Klein sportswear and jeans licenses, which are key to our lifestyle expression and for spring 'twenty six we will take back our Tommy sportswear license.

Speaker Change: Included in the licenses were taking back a specialized wholesale category businesses like outerwear, which are presented outside of our brand specific lifestyle pads, often on a dedicated section of the store and.

Speaker Change: And this week for one of these specialized categories, we've entered into a new licensing agreement for mens and womens outerwear with unexpected launches spring 'twenty six as I mentioned any new licensing park that we complement our assortments with their specific expertise and be fully aligned with.

Speaker Change: Brand directions.

Speaker Change: As a reminder, the overall contribution to our total global licensing business from the G. III license take back is only 20% of our expected licensing revenues for 2025 and 80% of our licensing revenues are from long term brand building partnerships.

Speaker Change: But we are growing together.

Speaker Change: Now, let me switch gears and talk about our overall outlook.

Speaker Change: Across the industry as I mentioned earlier, we are navigating a very uncertain consumer and macro environment that has become increasingly challenged over the past three months.

Speaker Change: The tougher retail trends, we saw in February continued weak consumer sentiment further weakening to some of its lowest recorded levels. Since the 19 fifties. This has translated into traffic trends coming down in the U S and around the world and this backdrop has led to increased promotional levels.

Speaker Change: We're also navigating the impact of tariffs based on our latest assessment, we estimate that the unmitigated impact of tariffs creates a headwind of approximately $65 million to our full year EBIT weighted predominantly in the second half of the year, we're taking a variety of steps to mitigate this impact.

Speaker Change: Which <unk> will discuss in more detail.

Speaker Change: Our business in China also continues to face a dynamic situation, while we remain on modest comps unreliable entity list. We continue to engage directly with MOFCOM as we work towards a positive resolution we remain fully committed to serving our Chinese consumers as we have for the past 20.

Speaker Change: And we are investing in our growth in China for the long term.

Speaker Change: As we navigate these external factors and as we shared last quarter. We're also working through the Calvin Klein Global brand operational challenges that we experienced as we for the first season built up the global product creation capability for Calvin Klein in New York.

Speaker Change: This work was a significant undertaking and absolutely critical to unlock the brand's full potential with the first globally created product season now in the markets with spring 'twenty five we now have our arms around the full impact of these challenges and they all come from the same root cause.

Speaker Change: And that the team have to spend too much effort getting the new go to market process to adopt which constrained product development timelines for sourcing delays combined this led to a margin headwind predominantly weighted to the first half with some carryover into the second half of this year.

Speaker Change: We have been laser focused on addressing these transitory operational challenges.

Speaker Change: Last month, we announced new leadership with the appointment of David <unk> as the global brand precedent for Calvin Klein.

Speaker Change: David has already fully in with the team, bringing his deep experience driving PVH plus performance across operations regions, and all brands and I'm encouraged by the level of clarity and rigor at which he and the team are working to resolve these challenges and get our execution to wear.

Speaker Change: It needs to be.

Speaker Change: As we shared last quarter, we are seeing sequential improvements already for the full 25 season, which will further strengthen for spring 'twenty six and we will be able to start creating the full 26 product see some from a very strong place.

Speaker Change: Through our PVH class execution, we are quarter by quarter building the capabilities, we need to build these brands for the long term. This is a process. It takes time, we will continuously learn and improve to become stronger and stronger over time.

Speaker Change: From a financial perspective, as we look ahead to 2025, although we are reaffirming our revenue guidance of flat to up slightly we're not yet in a place to fully compensate for the effects of the strong macro forces and Thats why we have to adjust our full year non-GAAP guidance.

Speaker Change: <unk> for both the EBIT margin and EPS.

Speaker Change: Important to note to stuff, we're targeting to exit the year in a stronger margin position, we suck will share more details about this will be supported by the business driving actions I just outlined to drive the back half of the year, our delivery of 200 basis points of cost savings from our pre.

Speaker Change: <unk> announced initiatives and by having resolved most of Calvin operational challenges and.

Speaker Change: And with spring 2026 product seasons in both brands on time and with strong gross margins that positions us for a strong profit start of 2026.

Speaker Change: Let me just say that this guidance is not what we set out to deliver when we started the year and as a leadership team, we're leaning into where we have the strength and the PVH plus execution and we will expand its impact already for the back half of this year.

Speaker Change: Globally for Calvin Klein. This means that we will continue to build our iconic helped through campaigns.

Speaker Change: <unk>, our core strength in the world of underwear and the world of genes building on the successful launch of our icon cotton stretch, where this fall launching the equivalent and womens underwear, which is our icon Cottonwood dollar program you will see us activate again with a full funnel how through approach fee.

Speaker Change: <unk> one of the most current global Superstars in music next.

Speaker Change: Next to this we will also continue to build out our men's cyclonic underwear campaigns similar to the Jeremy Allen White and bad Bonnie format that became viral global sensations and every time, we add product newness and innovation. This time supported by superstars from the world of sports.

Speaker Change: Music, and including K pop, where Calvin has so much strength.

Speaker Change: Along with these thunderwear anchored campaigns, we will lean in and expand the impacts of other big growth categories for the brand like fashion denim and outerwear.

Speaker Change: Finally for Calvin we will also direct more of our media investments to highly targeted traffic driving media to further amplify these campaigns and further strengthen the wholesale and the in store impact.

Speaker Change: And told me you will see us launch a new cut through for livestock campaign, but we will amplify the strength of the fall assortment with a 20% increase in media investment versus last year to drive high quality traffic and we will build out the top middle and bottom parts of the consumer funnel.

Speaker Change: For maximum impact in.

Speaker Change: In connection to this you will also see the new nursing Tommy's full product assortment with improvement across fabric function and fit. This is the product strengths that drove the European order books to growth in the fall.

Speaker Change: And across our Iqos in key product categories, we are designing into strong newness.

Speaker Change: We're also doubling down on our F. One program as the sports experience and relevance in the U S and globally you might have already seen that we just announced a new partnership with Cadillac Another American icon with Tommy will be the first lifestyle sponsor of the channel like Formula one team.

Speaker Change: Reinforcing Thomas 40 year legacy of fusing fashion sport and entertainment.

Speaker Change: Later this month Tommy's featured in the highly anticipated F. One movie with them <unk>, some Brian pit, which will be the biggest movie launched this summer globally.

Speaker Change: We're already seeing the impact of the film's strong media campaign, which features Tommy Hilfiger on the Mega screen and Piccadilly Circus, and we are starting to see incredible engagement on social media.

Speaker Change: Across the regions are Brian lesser entering full 25 with a stronger product assortment across both key category offense and strong newness and innovation in hero product with a commercial plan that tightly aligns our execution across product marketing and the marketplace.

Speaker Change: And we will in both Calvin and Tommy have very strong fall and holiday cut through campaigns with regionally relevant talent amplification.

Speaker Change: In markets around the world, you'll see us in calving furthering night, the worlds of underwear in denim and in Tommy will connect iconic Tommy lifestyle to culture anchored in our strong men's focus and we'll do it in close collaboration with our partners around the world.

Speaker Change: To further support our back half execution as I've mentioned for Calvin and also for Tommy we're increasing our investment across the marketing funnel to drive high quality traffic.

Speaker Change: In closing for the first quarter, we delivered on our plan driven by our disciplined PVH class execution, and we have our sleeves rolled up focusing 100% on what's within our control to improve the back half for the year by broadening and scaling our successful.

Speaker Change: <unk> plus plan initiatives in both Calvin and Tommy across all three regions.

Speaker Change: We are on a multiyear journey to unlock the full potential of Calvin Tommy and PVH, where it's all about tapping into the global consumer now for both Calvin Klein and Tommy Hilfiger, two of the most iconic brands in the market and step by step building them into the most desirable lifestyle brands.

Speaker Change: The world we.

Speaker Change: We're staying relentlessly focused learning and improving continuously to build the product strength consumer engagement and marketplace execution that over time will tap into the full potential of these incredible brands and make us when repeatedly with the consumer and as a result create the most <unk>.

Chuck: Holder value overtime, and with that I'll turn the call over to Chuck.

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

Chuck: As Stefan discussed we were able to deliver our first quarter results within the backdrop of a highly dynamic and uncertain macro environment driven by the strength of our two iconic global brands and disciplined execution of the PVH plus plan for.

Chuck: For the first quarter, we delivered revenue above our guidance largely due to the timing of wholesale shipments in Americas with operating margin of eight 1% within our guidance range as we navigate an increasingly promotional environment EPS.

Chuck: EPS came in slightly ahead of guidance driven by lower tax and interest expense.

Chuck: Additionally, we returned over $550 million to shareholders during the quarter with the repurchase of five 4 million shares of our common stock through a previously announced accelerated share repurchase agreements and open market purchases.

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

Chuck: As a reminder, as I mentioned during our Q4 2024 earnings call. Beginning this quarter, we have evolved our reportable segments to be one EMEA to America's three Asia Pacific and for a new Standalone licensing segment, we filed an 8-K yesterday with the recast quarter.

Speaker Change: Really an annual segment data for 2023 and 2024.

Speaker Change: Revenue for the first quarter was up 2% on both a reported and constant currency basis.

Speaker Change: Starting from a regional perspective, our EMEA business returned to growth during the quarter with revenue up 4% in constant currency, including mid single digit growth in the wholesale business and a low single digit increase in the direct to consumer business.

Speaker Change: Wholesale growth for the quarter was impacted by a shift in timing of shipments with Q2 revenue for our European business was up 5% on a reported basis.

Speaker Change: In our Americas business revenue was up 7% driven by high teens growth in the wholesale business, including the impact of Calvin Klein Womens sportswear and jeans wholesale transition in house and a shift in timing of shipments from the second half into the first half of the year. This.

Speaker Change: This year wholesale shipments are planned to reflect a more balanced first half second half weighting versus last year when shipments were more heavily weighted to the back half.

Speaker Change: In direct to consumer mid teens growth in our owned and operated digital Commerce business was more than offset by a mid single digit decline in our retail stores due to the challenging consumer environment.

Speaker Change: <unk> trends ended the quarter lower than planned leading to a more promotional environment.

Speaker Change: Aligned with our outlook revenue in our Asia Pacific business was down 11% on a constant currency basis, which included a 3% decrease due to the earlier timing of the lunar new year shopping period that I discussed last quarter the.

Speaker Change: The decrease also reflects the challenging consumer environment in the region, particularly in China.

Speaker Change: Revenue for our Asia Pacific business was down 13% on a reported basis.

Speaker Change: Licensing revenue was down 2% versus last year with the decrease more than explained by the previously mentioned transition of Calvin Klein Womens sportswear and jeans in house during the quarter.

Speaker Change: And our global brands, Tommy Hilfiger revenues were up 3% on both a reported and a constant currency basis, driven by growth in EMEA and Americas, Calvin Klein revenues were flat.

Speaker Change: From an overall PVH channel perspective, our direct to consumer revenue was down 3% both reported and in constant currency sales.

Speaker Change: Sales in our retail stores were down 5% as low single digit growth in EMEA was offset by the declines I mentioned in Americas and APAC sales in our owned and operated E. Commerce business were up 3% with strong growth in the Americas.

Speaker Change: Total wholesale revenue was up 7% on a constant currency basis, and 6% on a reported basis driven by increases in EMEA and Americas due in part to the shifts in timing that I mentioned earlier.

Speaker Change: In the first quarter, our gross margin was 58, 6% a decrease of 280 basis points compared to a record high in Q1 last year.

Speaker Change: As we've discussed previously approximately 50 basis points of the decrease was the impact of our North American license transitions. The remaining 230 basis point decrease was a result of three main factors in the quarter.

Speaker Change: First a higher mix of wholesale revenue in the first quarter than last year and a change in the mix of shipments within the wholesale channel, which has a negative impact on gross margins, but not on our overall profitability.

Speaker Change: The impact of weakening consumer sentiment and lower retail traffic, which led to higher promotions.

Speaker Change: And third incremental freight costs and customer discounts to address the impact of the Calvin Klein product shipment delays.

Speaker Change: SG&A as a percent of revenue was 55% a 90 basis point improvement versus last year, reflecting our growth driver five cost savings actions, we are making progress and we expect the benefit of these actions to grow and impact as we progressed through the year.

Speaker Change: EBIT for the quarter was $160 million and operating margin was eight 1%.

Speaker Change: Earnings per share was $2 30.

Speaker Change: Interest expense was $17 million and our tax rate for the quarter was approximately 17%.

Speaker Change: On a GAAP basis, we also took a non cash goodwill and other intangible asset impairment charge of $480 million.

Speaker Change: Which was primarily due to an increase in discount rates.

Stefan Larsson: Inventory at quarter end was up 19% compared to Q1 last year. The increase was primarily due to one as Stefan mentioned, a purposeful investment in best selling core product categories to increase to support our projected sales growth in the second quarter and three earlier receipts of summer season Prana.

Speaker Change: To improve in season stock availability.

Speaker Change: Accordingly, the vast majority of our inventory is core and current season as.

Speaker Change: As we progress through the year, we expect inventory will be impacted by tariffs, but otherwise begin to largely aligned with projected sales growth by the end of Q3.

Speaker Change: And now moving on to our outlook.

Speaker Change: I'd like to start by reiterating what Stefan mentioned earlier, we are operating in a highly dynamic and fluid consumer and macroeconomic environment globally.

Speaker Change: Significant uncertainty around global trade policies and the impact on the broader macroeconomic environment and consumer spending behavior.

Speaker Change: As such our outlook is based on our best assessment of current conditions and assumes no material worsening.

Speaker Change: Overall, we are reaffirming our full year revenue outlook, but we are updating our earnings outlook to reflect our revised expectations for the remainder of the year with three main changes versus our prior guidance.

Speaker Change: The first is the impact of the recently announced tariffs on goods coming into the U S. We expect the tariffs currently in place will have an overall net negative impact on our earnings in 2025, including an approximately $65 million unmitigated impact EBIT or.

Speaker Change: Or approximately $1 <unk> per share some of which we will be able to mitigate through strategic actions in the second half of the year and some we will need to absorb.

Speaker Change: The net impact of the tariffs and these actions are embedded within our guidance.

Speaker Change: We believe we are relatively well positioned to face tariff headwinds, we have a strong globally diversified revenue base with U S revenues accounting for approximately 30% of our total revenue.

Speaker Change: And we have a strong and established network of global sourcing partners across more than 30 countries and are leveraging these deep longstanding relationships to identify ways. We can further optimize our sourcing and production costs sharing the impact with our partners wherever possible.

Speaker Change: We will evaluate strategic discount reductions to mitigate the potential tariff impact and while we are focused on delivering price value for the consumer. We are also ready to say calibrated targeted pricing actions, where we have pricing power as normal course of business, we continually assess our prices based on a number of factors.

Speaker Change: In addition to the newly enacted tariffs the existing macro pressures have created an increasingly challenging consumer environment, particularly in the U S. The tougher retail trends that emerge beginning in early February have continued as such we are already experiencing a more promotional environment across the market we have had to.

Speaker Change: Increase our promotional levels across both brands. We are now forecasting a more promotional environment to continue for the remainder of the year.

Stefan Larsson: Similarly, our business in China continues to face a challenging consumer environment, which is driving more promotional activity there as well and as Stefan mentioned, we remain on MOFCOM unreliable entity list.

Speaker Change: And finally as Stefan discussed with the first globally created product season for Calvin Klein now in the markets. The full extent of the transitory operational challenges that we discussed last quarter are now appearing further contributing to our margin headwinds this year.

Speaker Change: The outcome of these factors are leading us to the following financial outlook.

Speaker Change: We are reaffirming our overall full year revenue guidance of flat to a slight increase on both a reported and constant currency basis.

Speaker Change: Exchange has improved since we last spoke and is driving some favorability to our topline as such we now expect our reported revenue is more likely to land at the higher end of that range.

Speaker Change: Our revenue outlook for EMEA and Americas remains unchanged with planned growth in both regions in 2025.

Speaker Change: In Asia Pacific our outlook for the region. Overall also remains unchanged with revenue planned down mid single digits in constant currency.

Speaker Change: Gross margin is now expected to decrease approximately 250 basis points versus last year. Our previous guidance was a decrease of approximately 100 basis points of which approximately half is due to the impact of the G. III transition in North America from license to wholesale and the rest largely explain.

Speaker Change: And by the transitory impacts from centralizing, the Calvin Klein global product kitchen.

Speaker Change: The incremental 150 basis points decline is attributable to higher discounts as a result of the significantly more promotional environment the impact of the incremental Calvin Klein operational issues and the net negative impact related to tariffs.

Speaker Change: This includes an unmitigated impact of approximately 80 basis points, partially offset by the impact of planned mitigation actions, which will primarily take effect in the second half.

Speaker Change: While we expect the promotional environment to continue all year within that backdrop, we are planning improvement in the second half related to what is within our control specifically, we continue to expect the transitory Calvin Klein issues to have a greater impact of first half gross margins with the impact lessening in the second half.

Speaker Change: On SG&A, we expect expense to be lower in constant currency in 2025 compared to 2024 as we previously saw macro headwinds gathering or SG&A plans for 2025 already included a decrease of approximately 100 basis points as a percentage of revenue.

Speaker Change: As I discussed last quarter, we expect to drive significant cost savings connected to our growth driver five actions with savings showing up more powerfully as we progress through the year.

Speaker Change: These actions will simplify our operating model to drive more efficient ways of working focus on our global technology stack, our global distribution network, our operating model in Europe, and our support functions.

Speaker Change: We expect these actions to deliver 200 to 300 basis points of operating margin expansion over time and expect to exit 2025, with approximately 200 basis points of this savings realized.

Speaker Change: As a result of the increased gross margin pressures our full year operating margin is now projected to be approximately eight 5% and EPS is projected to be in the range of $10 75 to $11.

Speaker Change: While operating margins are lower than last year, we expect to exit 2025 back at double digit operating margins with both gross margin and SG&A actions contributing to improvement compared to the first half.

Speaker Change: Our expectations for interest expense and our tax rate are unchanged from our prior guidance.

Speaker Change: Turning to the second quarter, we are projecting revenue to be up low single digits on a reported basis and flat to up slightly on a constant currency basis compared to 2024.

Speaker Change: In EMEA, we expect continued growth in DTC to be offset by a low single digit decline in wholesale reflecting the timing shifts with Q1 I mentioned earlier.

Speaker Change: In Americas, we are planning revenue up high single digits and relatively in line with Q1, driven by an increase in wholesale revenue, partially offset by lower DTC sales.

Speaker Change: And in Asia Pacific, We expect revenue to decline by mid single digits with the improvement versus Q1, primarily due to the timing of the lunar new year shopping period that negatively impacted Q1.

Speaker Change: We are expecting our second quarter gross margin to decline approximately 300 basis points with the Q1 trends largely continuing into Q2 and an approximately 60 basis point impact of tariffs we.

Speaker Change: We don't expect our mitigation strategies to have any substantial impact into the second half of the year.

Speaker Change: For SG&A growth driver five savings will continue to deliver efficiencies and as such our SG&A expense as a percentage of revenue is expected to decrease approximately 100 basis points compared to last year.

Speaker Change: Overall, we're expecting our second quarter operating margin to be approximately six 5% to 7% down approximately 200 to 250 basis points compared to last year.

Speaker Change: Earnings per share is expected to be in a range of $1 85 to $2 our tax rate for the second quarter is estimated at approximately 20% and interest expense is projected to be approximately $25 million.

Speaker Change: Before we open up for questions I, just wanted to conclude by saying, we're navigating a highly dynamic and uncertain macroeconomic environment. We are facing increased pressures from the significantly more promotional environment tariffs in the U S. The challenging consumer environment in China, and transitory operational challenges in Calvin Klein.

Speaker Change: While operating margins are lower than last year and our previous expectations.

Stefan Larsson: As Stefan mentioned, our focus is on taking proactive measures on what is in our control, including specific actions focused on supercharging our trajectory in the second half with this focus we expect to exit 2025 back at double digit operating margins and we are setting up for a stronger spring 2026.

Stefan Larsson: With higher on time deliveries increased product go in margins and stronger commercial plans amplified by increased marketing investments all building momentum into 2026 to deliver sustainable and increasingly profitable growth.

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

Speaker Change: Certainly thank you Mr Coghlan, ladies and gentlemen at this time, if you do you have any questions or comments. Please press star. One you can always remove yourself from the queue. If your question has been addressed by pressing star two Additionally to get to as many questions as time permits we do ask that you. Please limit yourself to one question. We will go first this morning too Jay sole of UBS.

Speaker Change: Jay Please go ahead.

Jay Sole: Great. Thank you so much.

Jay Sole: You mentioned that you're seeing decreased traffic.

Speaker Change: Across many regions in the world and increased promotional levels.

Speaker Change: Also mentioned that your brands have strong product assortments and exciting commercial plans, but what gives you confidence that both brands, both Calvin and Tommy still have good momentum with consumers that they haven't lost much in that part of what maybe is explaining the change in the guide is it something of that nature.

Speaker Change: Yes, Thanks, Jay and good morning.

Speaker Change: What is.

Speaker Change: It's so clear to us and especially when the consumer backdrop and the macro gets worse.

Speaker Change: Everywhere, where we lean in and tap into the consumer love for Calvin Klein and Tommy Hilfiger, and then we line up through the PVH plus focus.

Speaker Change: The increase newness and innovation in product cut through marketing stronger wholesale and in store execution.

Speaker Change: We really win and win big despite that macro so.

Speaker Change: Make it bigger.

Speaker Change: Our biggest product innovation in Q1, and Calvin Klein one of the most promising proof points.

Speaker Change: New product innovation and <unk>. So if you look at what we did there is we leaned into the biggest category in Calvin Klein men's underwear, we leaned into one of the biggest product franchises and then we've put unprecedented newness and innovation into it innovation, that's not existing in the market.

Speaker Change: One.

Speaker Change: And then we amplify that with one of the most streamed artist on Spotify that Bonnie and yes, it becomes viral but what's really interesting is in this backdrop drove 25% growth within that big franchise. So in one move.

Speaker Change: We moved one of the top three product franchises for the biggest category and drove 25% growth then what might what might be missed by some but not by the consumer as we also increasingly start to introduce denim next to underwear, because that's a really big iconic Cal.

Speaker Change: <unk> <unk>.

Speaker Change: Calvin Klein as well and the improved and innovated fashion denim in Q1 drove growth, 14%. So what you see in the back half what you see us doing what Pete what our focus is 100%.

Speaker Change: Is expanding as scaling this across bigger and bigger parts of the business. We're moving from this investor call too and all house call with our 20000 associates.

Speaker Change: My focus there is about not yet we are not yet in a position to fully mitigate the macro headwinds, but look at where we lean in and execute 25% growth biggest franchise, 14% growth on the fashion denim and then you will see.

Speaker Change: In the fall how these such US continue with more product innovation and product franchise introduction formats than we do exactly the same for womens. So one of the biggest underway our franchises for womens for fall is completely reinvent that backed up with one.

Speaker Change: Again once again one of the biggest artists in the World and then we continue the biggest artists in the World biggest sports K pop and then we continue to build on that for Tommy.

Speaker Change: We see the same thing in Tommy so when we lean into the iconic strength of the Tommy lifestyle. The key both categories and then we infuse newness into those we win the base. So it's all about going back to the iconic DNA, making at current and then for Tom.

Speaker Change: The lifestyle setting so what's really exciting is the formula one partnerships that some of you might.

Speaker Change: So the launch of that yesterday, so we are coming back big into Formula one at Formula One.

Speaker Change: One of the biggest if not the biggest growing sport from a viewership in the world also with especially with the young consumer and there we are combining to American I cause Cadillac first U S team coming back on the grid.

Speaker Change: Another American icon, Tommy Hilfiger, who was <unk>.

Speaker Change: 20 years earlier than most other lifestyle brands set formula one so.

Speaker Change: We have the proof points is 100% correlated to where we lean in and execute and coming back to the town Hall right. After this.

Speaker Change: Talking about the actual the.

Speaker Change: Sharpening actions and the scale that we grow with us for the back half.

Speaker Change: Got it thank you so much.

Speaker Change: Thank you the next now to Michael Binetti of Evercore.

Michael Binetti: Hey, guys. Thanks for taking our questions here.

Speaker Change: This job at the relaunch of the Formula one business this week.

Speaker Change: Just I was wondering if that could you just reorient us a little bit around the buckets and the cost out efforts that we talked about last quarter.

Speaker Change: What were they I think.

Speaker Change: If any timing has moved around and just remind us I think that I think many of those stretch beyond 2025, and 2026 to help us calibrate. The models here and then just backing up and there are there any concerns as you look at some of the unevenness and the operations around Calvin Klein here recently that some of these cost saves are cutting into the last mile.

Speaker Change: All are contributing to operating volatility in the past few quarters.

Michael Binetti: Yeah, So let's start hi, Michael Good morning, So, let's start with the Calvin Klein operational challenge that we experienced from bringing the Calvin Klein global product capabilities to gather which is an absolutely critical needed move to unlock the full value of.

Speaker Change: After Brian going forward and win with this kind of product newness and innovation, we just talked about.

Speaker Change: What's exciting to see is that the team has worked through it in a way.

Speaker Change: The biggest effect is soon behind US we are improving.

Speaker Change: For fall 'twenty five already in the back half of this year. We starts now basically we are improving it significantly for spring another really big step up and then it.

Speaker Change: Very soon we start the product CSR from scratch.

Speaker Change: For a full 26 and then we start from strength so.

Speaker Change: Very clear and the way we see that we are making this progress that we see that.

Speaker Change: For spring 'twenty six.

Speaker Change: We see that we are on time on both fronts, we see that go in margin.

Speaker Change: <unk> improved our assessed last year significantly so we see the kpis, we see that yes, they have to take too much time in the FERC sent to sort out the go to market process.

Speaker Change: I am very much by also amplified by David coming in.

Speaker Change: <unk> deep operational and brand experience to connect both.

Speaker Change: Creative strengths that we already have to scale that but also secure.

Speaker Change: Systematic repeatable operating model.

Speaker Change: Good morning, Michael Yeah, I think maybe on the cost piece, maybe I'll try to put that into the context of the bigger financial picture for so in the first half as we take a look at the the financial outlook. As we said, it's really a gross margin story and I say that because in the first half we are growing revenue, which is a big commitment for us this year and we're seeing SG&A percent.

Speaker Change: A revenue coming down so that's a good strong foundation. So I described in the prepared remarks, what's happening around gross margins, we have that picture in the second quarter is largely going to be consistent with that so that sets up the baseline.

Speaker Change: For us and this is where the cost actions come in and what's important is the bridge to the double digit operating margins in <unk>, and that's actually pretty simple and very much in our control the first.

Speaker Change: This is the general seasonality of our business. So due to holiday sales last year for example, <unk> revenue, 14% higher than <unk>, so with that we get really powerful leverage.

Speaker Change: Beyond that though it comes to the value driver five our cost actions that we've been talking about for a couple of quarters. Now. So we've made very good progress no slides on timing and I think to remind everybody to pillars.

Speaker Change: A couple of them that are directly in our control and we're already seeing significant progress on so a decentralized technology mapping into a single global textile taking advantage of both our scale getting cost out and coming out with significantly better outcomes and also around the global logistics network with a big focus on increasing.

Speaker Change: The utilization in the U S.

Speaker Change: So we're already seeing some progress on those in the first half and that is why youre seeing the SG&A deleverage even in the first half as we move into the back end of the year. The totality of all of the actions we're still on track to deliver between 203 hundred basis points of <unk>.

Speaker Change: SG&A leverage reductions out of that and 200 basis points of that delivered by the fourth quarter of this year compared to the fourth quarter of last year. So the combination of those two leaves us feeling very good about the work we're doing around cost and.

Speaker Change: Where that points us to from a trajectory.

Speaker Change: For the second half and let leaving the year with double digit operating margin again.

Speaker Change: Okay. Thanks for the detail guys I appreciate it.

Speaker Change: Thank you.

Matthew Boss: Thank you. We'll go next now to Dana Telsey of details the group.

Dana Telsey: Hi, Good morning, everyone I wanted to dial in on carrot, and how you're thinking about tariff impact as we go through the year on the mitigation strategies that believes in that $65 million mitigated how you're thinking about it and what are you seeing in terms of price increases for each brand in the U S.

Matthew Boss: And impact on margins. Thank you.

Dana Telsey: Thank you Dana and good morning.

Dana Telsey: Let me start by creating some context around what the tariff situation means for PVH. So it's important to just note that 30% of our business is in the U S. 70% of our business is international so we have a much higher international share than most of our competitors.

Speaker Change: And as <unk> mentioned, we have identified $65 million in unmitigated tariff effects for the rest of the year and just like everyone else. We are working through our mitigation actions in this fluid environment. So.

Dana Telsey: We have the strength of having Calvin and Tommy which is two of the strongest and most beloved brands. So.

Speaker Change: That is strength when it comes to all of the different parts of the value chain. The partnership with our all the way from the partnership with our sourcing to the partnership with our retail partners are softer do you mind, giving a little bit more detail on what that Stefan mentioned, our two biggest mitigation advantages are that globally diversified.

Dana Telsey: A new base and our strong global supply base, but beyond that we are working through several other specific initiatives. So first we're leveraging those deep longstanding supply chain relationships identify ways. We can further optimize sourcing and production cost sharing that the impact of tariffs with partners where possible.

Stefan Larsson: And then beyond that Stefan mentioned, we remain laser focused on perceived value for consumers. So we will evaluate strategic discount reductions to mitigate potential tariff impact.

Dana Telsey: And lastly, consistent with our normal course of business. We're also ready to take calibrated and targeted pricing actions, where we have particular pricing power.

Dana Telsey: Okay.

Sandra: Thank you Sandra.

Speaker Change: Thank you. We'll go next now to Brooke Roach of Goldman Sachs.

Brooke Roach: Good morning, and thank you for taking our question Stefan you've talked about acceleration of some of the innovative and creative product into the back half and also the opportunity to take some strategic pricing reductions.

Sandra: <unk> increases whether thats, a reduction of discounting or otherwise can you help us square that with the outsized levels of promotions that you're expecting in the near term what do you have to do to make the brand more resilient from a pricing perspective of macro impacts start to weigh on the consumer. Thank you.

Brook: Thanks Brook.

Speaker Change: It comes back to doing more in scaling the impact of.

Speaker Change: The PVH plus execution and how we have been strength in the product in the key growth categories in putting innovation into the hero products.

Speaker Change: It's if you look at Tommy and Calvin example, before which is quite powerful with our biggest product introduction in a decade with plus 25%. So that's a great example, plus a 14% increase in denim doing strategically sharpening our focus to do more.

Speaker Change: More and more of that that has a bigger and bigger impact on the total business, but also for Tommy we see it in.

Speaker Change: Key categories like sweaters, where we lean into our iconic cable nets, and we expand that and we put new.

Sandra: Better fabrication, we innovate in colors, we connect them to the lifestyle of Tommy and.

Speaker Change: As formula one.

Dana Telsey: If.

Dana Telsey: Yes.

Dana Telsey: Great.

Dana Telsey: Great lifestyle.

Dana Telsey: A great anchoring point for the lifestyle. Because then we would take that Tommy love for the brand and we connected to those innovations in key product categories and then we connected to the support of Formula One and then we follow up and that's something that's worth saying as well for the back.

Dana Telsey: Have we are putting more marketing spend in a more focused way to drive traffic to to do what you just asked.

Dana Telsey: Brokerages to to mitigate more and more of those tougher headwinds because it's the way we operate the business is that it's 100% almost fully in our control and expanding that impact.

Dana Telsey: Thanks, so much.

Matthew Boss: Thank you we'll go next to Matthew boss of Jpmorgan.

Matthew Boss: Great and thanks for all the color.

Matthew Boss: So Stefan maybe the breakdown the step down in topline trends I know you cited to start the year and then the leg lower.

Matthew Boss: You cited here in May and in the Americas or the need for additional promotional activity to hold the trend line I guess, how much of this do you attribute to the macro backdrop relative to execution, what's the pace of improvement that you see as is reasonable and then Sac could you just walk through the progression or maybe dig.

Dana Telsey: Unlike deeper into the embedded gross margin for the second quarter versus the back half of the year and just drivers of gross margin recapture if we think about next year.

Dana Telsey: Yes, Thank you Matt.

Dana Telsey: What we have seen over the past three months as we mentioned this.

Dana Telsey: A tougher cost sumer and macro backdrop, especially in North America. So we see the.

Dana Telsey: Consumer sentiment coming down translating in tougher traffic trends to the sector, and then impacting us and impacting our same store traffic more than ecommerce. So.

Dana Telsey: <unk>.

Dana Telsey: What we also see that the.

Dana Telsey: China.

Dana Telsey: Backdrop from a consumer sentiment perspective.

Dana Telsey: Continuing to be tough and coming down.

Dana Telsey: And even though that we are able to execute with strength in the big cultural moments.

Dana Telsey: Yes.

Dana Telsey: But when we look at today, how much the North America consumer sentiment and the tariff effect plus the China.

Dana Telsey: We are not yet in a place where we can fully offset that but why do I say not yet is because one the actions we're taking in the back half is stronger and it's expanding that PVH plus.

Dana Telsey: Impac.

Speaker Change: It also connects to what <unk> said that in the back half we will have most of the 200 basis points of cost savings from the cost initiatives that we have been on now for quite some time, but it is really kicking in in the back half and we have good.

Speaker Change: Good visibility to seeing that that is coming into place and then we also see that we are resolving calvin operational challenges.

Speaker Change: Significantly improved in the back half and then when I look at 2026 product season, both price our on time, both front half.

Speaker Change: A positive gross margin going module, starting 'twenty six so that that's how we see that.

Speaker Change: We are able to keep the revenue growth because we said we were going to drive back to growth. This year, we're able to.

Speaker Change: Keep the revenue growth going for this year, we're taking a margin hit that we are in the beginning of this not able to fully compensate and then coming out of the year, we are back out.

Speaker Change: Alright, and thank you Matt to the second part of your question and then maybe I'll answer it looking at our gross margin percent for the full year. So original plan for the full year gross margins down around 100 basis points half of that was tied to the G. III business model transition and about half of that original decrease was tied to the transitory Calvin Klein issues we've talked.

Speaker Change: About here now as we look to the full year being approximately 250 basis points down that extra 150 basis points is two main drivers.

Speaker Change: 50 basis points is due to the mitigated impact of tariffs and the other 100 basis points as the is an increase in promotion Ality that we were just talking about so just to put that in context that 100 basis points.

Speaker Change: <unk> all three of those components Stefan mentioned here. So there is an increase tied to the U S.

Speaker Change: Declining macro consumer sentiment and lower traffic there is tougher consumer backdrop in Asia, and our particular situation in China, and then third is sort of a bigger impact than we are planning initially around the CK operational challenges. So I think that as we take a look there in the second half of the progression.

Speaker Change: We do expect to see sequential improvement in the C cap regions issue. So.

Speaker Change: <unk> carrying longer than the second half and will improve significantly, especially in 2026.

Speaker Change: But we do see expect in second half we are planning for that promotional activity to maintain through the rest of 2025, So no sequential opportunity. There then.

Speaker Change: And exiting 'twenty five into 26, we do expect to be putting the Calvin Klein.

Speaker Change: Challenges fully behind us during 2026, so thats another step forward that we will see and beyond that with tariffs over time, we do expect that we'll be able to work towards full mitigation of the unmitigated impact so that will be improvement overtime as well and then we will adjust to whatever the broader macro environment is just like we've done this year.

Speaker Change: Great color best of luck.

Speaker Change: Thank you Matt.

Speaker Change: We have time for one more question.

Speaker Change: Yes, Sir we will take that question now from John Kernan of TD Cowen.

Speaker Change: Great. Thanks for taking my question.

Speaker Change: Yes.

Speaker Change: In fact, what are you planning in terms of the promotional impact in gross margin for the back half of the year it looks like the <unk>.

Speaker Change: 60 basis point impact on gross margin from tariffs in Q2 implies a pretty steep impact from promotions and maybe a few other <unk>.

Speaker Change: Impacts, but I guess, how do you.

Speaker Change: How have you reserved.

Speaker Change: Room for a higher promotional environment in the back half of the year within the current gross margin guidance.

Speaker Change: Yes.

Speaker Change: So the question I would say consistent with what we just talked about a little bit we've got the impact for the full year. We put in is around 100 basis points tied to the increased promotional environment.

Speaker Change: That impact is sort of we saw through the first quarter. We planned during the second quarter and we've assumed that that level remains for the rest of this year. We have overall over the last couple of years been quite consistent with.

Speaker Change: The uncertainty of potential outcomes, we maintain where we are called the broader macros, there and that includes assumptions around promotional environment and so I think we are planning for that to continue the trends that we've seen so far this year through the rest of the year.

Speaker Change: Understood. Thank you.

Speaker Change: Okay.

Speaker Change: With that we want to thank you for following along on the multi year journey that we are on to tap into the full potential of Calvin Klein Tommy Hilfiger.

Speaker Change: And we want you to know that we are responding to the moment, we leaning in to sharpen and expanding our very strong PVA edge plus.

Speaker Change: Impact because when we tap into that iconic brand love for Calvin and Tommy and then we'd do it super focus with connecting innovation and product Toughed through marketing campaign investing behind that driving efficient safe behind the scenes, but then letting the consumer feel that we really capture and that's what we.

Speaker Change: We're continuing to do.

Speaker Change: Thank you.

Speaker Change: Thank you again, ladies and gentlemen that will conclude todays PVH first quarter 2025 earnings call again, thanks, so much for joining US everyone and we wish you all a great day Goodbye.