Good morning. I'm Mark Fisher, General Counsel and Secretary of PVH Corp. It is without any doubt much joy and excitement on your part I'd let you know that the information provided at this meeting may include market and industry data from research, surveys, studies and publications issued by third parties and information from customers. While we believe that any such information is reliable, we have not verified it and do not represent its accuracy. The presentation also contains forward looking statements that reflect our view as of May 29, 2019 of future events and performance.
These statements are subject to risks and uncertainties, including those identified in our SEC filings. As such, our future results could differ materially from previous results or current expectations. These risks include our right to change our strategies, objectives and intentions, our need to use significant cash flow to service our debt obligations, our businesses vulnerability to weather, economic conditions, fuel prices, fashion trends, loss of retail accounts, epidemics, war, terrorism, scarcity of raw materials and other factors. Our reliance on the sales of our business partners, our exposure to the behavior of our associates, business partners and the celebrities and designers whose names we own and license, and the impact of newer revised legislation and regulation such as the U. S.
Tax Cuts and Jobs Act, the Dutch Tax Act and the presentation also The presentation also includes non GAAP financial measures as defined by the SEC. Reconciliations of these measures are included at the end of the presentation, a copy of which is posted on pvh.com as well as in our current reports on Form 8 ks identified in the press release announcing this meeting. The 8ks are available on pvh.com and the SEC's website. And now I'd like to introduce Manny Chirico, Chairman and CEO of PVH.
Good morning and welcome to our shareholders meeting. I'd like to officially call the 2019 Annual Meeting of Shareholders of PVH Corp. To order. First, I'd like to introduce the directors and nominees for director who are present today, and I'll do this alphabetically. Mary Baglevo, Juan Figueroa, Joe Fuller, Jim Marino, Penny McIntyre, Amy McPherson, Henry Nacella, Ed Rosenfeld, Craig Rydon and Amanda Sorry.
All of these individuals, along with myself and Brent Kalendikos, who could not be could be could be here today, are nominees for Director this year. I would also like to introduce our newest executive, Stefan Larsen, who joined PVH on June 3 in the newly created position of President. Stefan was most recently the Chief Executive Officer of Ralph Lauren Corp, where he successfully refocused the company. And prior to that, he was the Group President for Old Navy, where he significantly turned around that business. Stefan's talent and operational track record make him a strong addition to the PVH senior management.
Stefan? Welcome. I would now like to introduce I would now make you aware that Ernst and Young, our auditors, are available to respond to any questions. Becky Burke, David Verdemani and Joel Wagner of Ernst and Young are here in person. The secretary has informed me that we have an affidavit certifying the mailing of the notice of the annual meeting, the proxy, the form of the proxy and the annual report.
It will be annexed to the minutes of this meeting. Cynthia Gazzney of EQ Shareowner Services, our transfer agent, has been appointed as the Inspector of Election for this meeting. An oath of Inspector has been filed and will be annexed to the minutes of this meeting. Are there any stockholders who have not executed a copy of a proxy or wish to change their proxy or may want to vote their shares in person, please let me know and we can have a form and a ballot available. The number of shares of our common stock eligible to vote as of April 23, 2019, was 75,000,000 45,752 shares.
The Inspector percent of the eligible votes represented at the meeting, and therefore, we have a quorum. In fact, we have approximately 65,200,000 votes or 87% of the eligible votes represented at the meeting. As indicated in the proxy statement, we have 5 matters to vote upon at the meeting. After the introduction of each matter, you will be given the opportunity to comment on the specific proposal. Please hold all other questions until the question and answer period later in the meeting.
The meeting is now open to consider the election of 12 directors for the coming year. May I have the proposal? Are there any questions or comments about the directors? There being none, does anyone need a ballot to vote for this proposal? We'll move to the next matter.
The meeting is now open to consider the approval on an advisory basis of the compensation paid to the company's named executive officers. May I have the proposal?
I move that the stockholders of PBH Corp. Approve on an advisory basis the compensation paid to our named executive officers as disclosed pursuant to the rules of the Securities and Exchange Commission in the proxy statement for this meeting.
Any questions that anyone may have? There being none, I'll close that matter. The meeting is now open to consider the approval of the amendment to our certificate of incorporation to eliminate the requirement of an affirmative vote of 80% of our outstanding shares to approve certain transactions within with certain stockholders. Mr. Fisher?
I move that the stockholders of PBH Corp. Approve the proposal to amend the company's certificate of incorporation to eliminate the requirement of an affirmative vote of at least 80% of the company's outstanding shares in order for stockholders to approve certain transactions with certain stockholders.
Are there any questions, comments? There being none, I would close that matter. The meeting is now open to consider the approval of the amendment to our certificate of incorporation to eliminate the requirement of an affirmative vote of 80% of our outstanding shares for stockholders to amend our bylaws.
I move that the stockholders of PBH Corp. Approve the proposal to amend the company's certificate of incorporation to eliminate the requirement of an affirmative vote of at least 80% of the company's outstanding shares in order for stockholders to amend our bylaws. Any questions or comments?
Does anyone need a ballot to vote? There being none, I close that matter. The ratification of the appointment of auditors. The meeting is now open to consider the ratification of the appointment of Ernst and Young, LLP as auditors for the current fiscal year. May I have the proposal?
I move that the stockholders of PVH Corp. Ratify the appointment of Ernst and Young LLP as independent auditors of the company for the fiscal year ending February 2, 2020 as set forth in the proxy statement for this meeting.
Any questions or comments? There being none, I'd close that matter. Before we go on to any questions and answers, I'm going to make a brief presentation about our business and how it's trending and overall comments about the year. Again, I think as shareholders, I think you're well aware of our size and scale in the industry. We're the 2nd largest apparel company in the world.
And you get a sense of this of the leverage and scale that, that gives us as we move forward with our portfolio of iconic brands. We have 3 distinct businesses, all positioned well for global growth. Our Tommy Hilfiger business, which is about global retail sales, just under $9,000,000,000 revenues of businesses that we operate directly, over $4,000,000,000 of revenues with an EBIT margin approaching 15%. The business there has been very strong. Our Calvin Klein business, our largest global brand, just under $10,000,000,000 of global retail sales.
Our revenues here, about $4,000,000,000 just under $4,000,000,000 of revenues with an EBIT margin of 11.2%. This business has gone through some changes and restructuring. We clearly believe that there's about 200 basis points of improvement that will be gauntlet in this business over the next 2 to 3 years as well as continued growth on the top line, particularly driven from our international businesses. And then our heritage businesses, our legacy businesses, overall global retail sales, about $3,500,000,000 These are predominantly North America led brands. They predominantly are more moderately positioned brands with strong position in the market.
This business generates a significant amount of cash flow and has enabled us to make the key acquisitions and the reinvestments in our global platform as we go forward. Our heritage businesses continue to be managed on a from a real cash flow point of view and a return on investment, and we're constantly pruning that portfolio as we move forward to look for opportunities to become more efficient. It gives us significant scale from a global supply chain point of view and gives us scale from an operations point of view, particularly here in North America. Over the last 15 to 16 years, we've demonstrated a strong history of delivering strong top line growth on average compound annual revenue growth of double digits, approaching 13% and earnings per share growth over the same period of time of about 16%. Clearly, we've demonstrated an ability as a company to acquire businesses, integrate them efficiently, be able to get the returns that we anticipated at the time of the acquisitions and promised to deliver to our shareholders, and we've been able to deliver those results consistently.
The last 2 years in 2017 'eighteen, we've seen double digit earnings growth and high single digit constant currency revenue growth and have been able to really navigate through a challenging environment. Current year, as we're looking at it, we had a strong first quarter in a very volatile, uncertain macro environment. We're clearly starting to feel more pressure in the macro environment from a retail perspective here in North America and the pressures we're seeing in China, particularly around the trade disputes that we see. The tariff situation for us here in China has some impact and we'll need to manage through that. But to even a greater extent, the dispute has created a level of uncertainty, particularly in China where we have one of the larger businesses for both Calvin and Tommy.
It represents about 10% of our global revenues. And we have seen some pressure in that business the last 6 to 9 months, and we are working our way through that as hopefully cooler heads prevail in the negotiations surrounding tariffs and the trade disputes that we can get back to where for the last since the acquisition of Wannaco in 2013, we've seen strong high single digit revenue growth in China and strong high single to double digit profitability growth in China. We continue to believe our position in China is enviable and gives us a competitive advantage. But at this moment in time, it's also creating some more uncertainty and volatility in the business as we manage through it. We have a history of making acquisitions and appropriately, I would say, allocating capital when we make those acquisitions.
We do, at that time, take a position and lever our balance sheet up to we always talk about somewhere around 4x leverage. And then we have a strong history of paying down that debt that we've in order to make those investments over a 3 to 4 year period. And you could see the strength of the cash flows from operations, and we define that as our operating our net income plus cap expense and dividends. It's a rich history of being able to use that to return to pay down debt and then to return cash to our shareholders through stock buybacks and dividends. So I think that's consistent.
You could see the leverage that is significantly reduced over the period of time, our gross leverage ratio going down annually each year. And if you look at the last 12 months, that's clearly just the normal working capital cycle that you see a build from the end of the fiscal year to April 30. That's just a build the normal build of inventory and receivables associated with the business dynamics of the business. We would expect to be under 2.2x by the end of the year. When you think about our strategic vision and our framework, our standard we set a goal for ourselves to set the standard of style as the most admired fashion and lifestyle company in the world.
We power brands that drive fashion forward for good. Our priorities on the side, our business priorities, I'm not going to read them all to you, but consistently delivered through all of our businesses. And our core values about how we'll conduct a business, how we'll treat each other, our associates around the world and how we'll deal with our partners around the world and our belief that transparency is critical, integrity, above all, is just a given and that we're accountable for our results and how we do business. We own the business from that perspective, and we are responsible for delivering the business in the appropriate way. Not to pound our chest and talk about how to really how great we are, but it's just I think it's when independent entities around the world come back and put you on lists like this, 100 top corporate citizens in the world being part of the Just 100, best employers for women's, best places to work.
I think it's just an indication of the type of environment we created PVH for our associates, the way we conduct business, and it's an independent verification that we're staying true to those standards as we go forward. And I think this year, in the Q1, we announced our priorities, our targets, our goals with our fashion forward targets, our fashion forward for goods, the way we conduct business around the world. And we know we're accountable for our results, and we try to always underpromise and over deliver. But in the same way, we recognize we have more stakeholders than just our stockholders, our primary stakeholders. But we also have to be responsible to our associates.
We need to be responsible to our partners around the world. We need to be responsible to the way we conduct business, the impacts that we have on the environment, the impacts we have on people's lives within our supply chain, how we operate those business, the standards we require our strategic manufacturing partners to work on, not only in the fact the few factories that we own but in the factories that they operate, where our brands are positioned in those factories. So clearly, we're focused on reducing on the negative impacts to 0, 100% increase in the positive impacts that we have about the way we source the programs that we have in place and impacting over 1,000,000 lives within the value chain and our supply chain as we go forward. And what continues to drive us is our corporate values, our standards of individuality, allowing our associates to be themselves, to feel comfortable in the environment, a focus on inclusion and diversity. The partnership we try to create between our businesses, our business units, our corporate environment and how we operate the business, hopefully, the sense you get of the passion we have for running this business that we try to operate with the greatest integrity and hold ourselves accountable for that, not only from the way we conduct business, but the way that we communicate with our shareholders, the way that we communicate with our stakeholders and that we are fully transparent with that and then holding ourselves accountable for operating and financial performance but also for the way we conduct business.
I think these 15 targets represent that we are holding ourselves accountable for the way we conduct business around the world and the impact we have on the world and that we are going to set targets and then measure ourselves against the targets. And I would say, I think we're really trying to not only move ourselves forward, but move the entire industry forward in these areas as we work through our daily business lives. And with that, I'll open it up for any shareholders that may have a question or a comment. I'd ask if you please raise your hand and please wait to be recognized and please identify yourself. And in order to provide for an informative meeting and to allow as many shareholders as possible to participate within this limited time available to us.
It would be appreciated if your questions or remarks are briefly stated. Questions and comments should be relevant to our business and our company. And yes, sir, right there.
Yes. And good morning. My name is Colin Cannondale, shareholder. I have a 2 part question. And the first question is according to Page 2 in 10 ks, we have a joint venture in Mexico.
And I'm just wondering, since yesterday on the Mexican side, they ratified the potential USMCA. And if Congress here in the U. S. Ratifies new USMCA agreement, how will that affect our joint venture in Mexico compared to what we currently have in NAFTA? And the second part of the question is not only pertaining to the joint venture, but overall, and you touched upon the potential impact of the tariffs.
If in 45 days, if President Trump decides to impose tariffs in Mexico based on this lookout period, how will that affect not only our joint venture, but overall based on Page 22, we have $400,000,000 of imports from China's side. And last week, when I attended the shareholder mini at G3 Apparel, which I'm sure we have, you know, Morris Goldfar, which we have a lucrative licensing agreement, he stated in terms of his strategy is hopefully the distributors and manufacturers will eat some of the cost. The question is, will we have enough leverage to let these folks eat some of the cost if these tariffs from China should expand to 25%?
Thank you. First part of the question, the U. S. And MCA, we are very supportive of that agreement going forward. We think it will have given the fact that Mexico is not a major supplier of goods for our North America business for our U.
S, Canada businesses. It will have a minor impact as we move forward economically. Well, the ratification of that agreement, I think, will bring a level of certainty that doesn't exist today. I think the politicking that's going on around this agreement really needs to be settled, and that agreement needs to be ratified. From a total trade point of view, it's a tremendous win for the United States the way the agreement is being set up.
It's also very positive for Canada and Mexico overall, and I think the benefits that would endure to us would be the stabilization and the consumer confidence that would come from the settling of that agreement. The second part of your question on China tariffs, the number that you referred to in the 10 ks was last year's number. If you think about our exposure to China over the last 4 or 5 years, goods imported from China, let's say, 4 to 5 years ago, we were approaching 35% of our sourcing base coming out of China. By midyear today, that number is down to about 15% round numbers. And I think as we move into 2019, that number will be further reduced to somewhere between 10% to 12%.
I think when you think about that competitively, we are ahead of most of our competitive set with the strategic decision to start to move away from China. The biggest the challenge that we have is dealing with the uncertainty because, as you correctly stated, there's a potential in 45 days or sooner that we could have tariffs of 25% on that portion of the goods. And if you think about how do you run a business, operate a business, I don't know what the cost of my goods will be in 45 days, whether and that could be as much as a gross number before we mitigate against that of $35,000,000 to $40,000,000 that we're talking about in total of additional tariffs and additional cost of product as we go forward. We think there's 3 ways to deal with it. And I don't think it's that scientific.
On the long term basis, it's more efficiency in the supply chain and leverage with our sourcing base to focus on that. There's the retailers that may have to work on shorter margins. And there is the consumer that ultimately over time will have to pay higher prices. I think we are looking at all 3 of those buckets with our partners to really try to manage through it. The biggest challenge we're going to face this year is the window to address the issues.
There is no window. We just the uncertainty, we're not sure what the price of the goods should be as we go forward. Changing tickets in the middle of the back to school season with 500,000,000 units coming in over the next 6 months is an impossibility to do for all goods coming in at that point in time. So we're going to have to work it through. As you get into 2020 and things become more balanced, I think there's clearly the opportunity to mitigate a significant amount of those tariff increases, but we just need the time to be able to let react to the business.
Hopefully, and I know we've been involved, a number of industries have talked about, if this is going to happen, if it's necessary from a total nation point of view to be in this position that there would be more notice and defined period of time to give us a chance to react to it. That's what we've been talking to Congress about. We've also talked about other alternatives. So clearly, we think there is better ways than just use tariffs as the only lever to work forward. And as you read the newspapers and follow the news, the uncertainty around this goes up and down, and we'll see how the next 45 days play out.
But I think competitively, we're as well positioned as anyone in the industry. Any other questions? Yes, sir.
Mr. Chairman, my name is Michael Picariello, and I represent a Carpenter Union Pension Fund that holds shares in PVH Corporation. The Carpenter's Union Pension Fund collectively have assets of $60,000,000,000 they hold 142,000 shares of the company's common stock. Mr. Chairman, the topic that has received growing interest in business press and at leading business schools is the growth in the size of the ownership interest held by mutual funds, particularly passive index funds.
BlackRock, Vanguard, Fidelity, JPMorgan Chase each own in excess of 5% of the company's outstanding shares with a combined ownership position of 37%. Could you speak on your view of the growing concentration of institutional investor ownership and its impact on corporate governance and industry competitiveness? Specifically, does the increase in concentration of ownership by passive investors aggravate short termism in the market or alternatively enable companies to take a longer term strategic perspective? Thank you, Mr. Chairman.
Thank you. Look, that's a very that's an academic question. It's a good question. I think as we with that group, we do feel pressure at times for short termism. Hedge funds, similar kind of pressure that comes at you constantly.
I think we've always tried to balance that with a much more long term view. We also recognize there's a reality. We are a public company. People want transparency and understanding. And I think it's critical that you can't totally discount quarterly earnings as much as everybody would not like to be measured every quarter because of the vagaries of the market, but it's a reality and you need to function within that.
What we've tried to do over the last 10 years is talk about our long term goals with our shareholders, try to continue to attract value investors that are looking more long term and continue to stay focused on the key priorities and strategic objectives we have, But in fairness, with an understanding that there are going to be pressures that come from quarterly earnings and trying to be I think what we've tried to do is try to be as transparent as possible about our results when they're good, to talk about specifically why they're good and when things are more challenging to specifically talk about where those challenges exist and lay that out for our shareholders and then work and make sure we keep in mind our long term goals. So I hope I answered your question. There being I lost my script. I apologize. If there are no further questions, we'll move to the report of the Inspector of Elections on voting and the conclusion of the meeting.
Michelle? Michelle? Michelle O'Donnell, our Assistant Secretary. Thank you.
The Inspector of Election has certified to the results of the matters voted upon at this 2019 Annual Meeting of Stockholders. The certification, which will be appended to the minutes of this meeting, provides in part that the Annual Meeting was held pursuant to notice duly given. The inspector was sworn to execute faithfully the duties of the inspector of election with strict impartiality and according to the best of her ability. There were present in person or by proxy holders of 65,000,000,186,647 shares of common stock or 87% of the shares eligible to be voted at the meeting. A quorum for all purposes was present at the meeting.
Each of the 12 nominees for director received a majority of the votes cast and was declared to be duly elected for a term of 1 year. The advisory proposal to approve the compensation paid to our named executive officers was approved by 90.5% of the votes cast and was declared to have been duly adopted. The vote on the proposal to amend the company's certificate of incorporation to eliminate the requirement of an affirmative vote of 80% of our outstanding shares for stockholders to approve certain transactions with certain stockholders received an affirmative vote of 83.3 percent of our outstanding shares and as a result was approved. The vote on the proposal to amend the company's Certificate of Incorporation to eliminate the requirement of an affirmative vote of 80% of our outstanding shares for stockholders to amend our bylaws received an affirmative vote of 83.3 percent of our outstanding shares and as a result was approved. The resolution ratifying the appointment of Ernst and Young LLP as auditors for the fiscal year ending February 2, 2020, received an affirmative vote of a majority of the shares present and was declared to have been duly adopted.
Thank you, Michelle, and thank you for all your hard work in organizing our Annual Shareholders Meeting. I'd also like to thank all our shareholders for coming today and thank you for your support.