Good morning, and welcome to this next session of the Goldman Sachs Global Consumer and Retail Conference. My name is Brooke Roach. I cover the apparel, softlines, and brands sector here at Goldman, and I am thrilled to introduce our next session with PVH Corp. Here joining me today is Stefan Larsson, CEO, Alexis Rollier, CFO, Melissa Stone, EVP of Global FP&A, and we are very thrilled to have you here. Welcome.
Thank you.
Thank you.
Thank you.
Stefan, we will turn it to you.
Yes, thank you. We are in the business of building brands, and we are the stewards of two of the most iconic, globally beloved brands, Calvin Klein and Tommy Hilfiger . What better way to start than with two 30-second views of how we started this fall with the fall campaigns. I am going to come to it later because it is more than a campaign. It is the connection between the brand direction to the DNA that the consumer already loved, but made current, focused on very clear product categories and very strong talent, and then you can shop that from social all the way out. I feel that is probably the best way to start.
Excellent. Let us play the reel.
Yeah.
[Presentation]
Oh. All right. Well, with that
Yeah
Thank you for showing us those clips. Stefan, you've spent the last several years building the foundations of the PVH+ Plan strategy through product marketing, marketplace execution, and simplification of the operating structure. As you sit here today, what do you view as the most important proof points that indicate to you that the brand is entering a period of sustainable growth and margin expansion ahead?
What I'm the most proud of, because we have done a lot of heavy lifting over the past few years, what I'm really proud of is how clear we are now with each brand's direction and how it connects to what the consumer has always loved Calvin for, as an example, underwear, denim. And where you see that strongest in both Calvin and Tommy is the consumer traffic increase to e-commerce. If you start with like, Calvin Klein, over the past few years, we have built that to the most followed and engaged brand in fashion of all our competitors in social media, all platforms.
And Tommy is the third most engaged and biggest reach on social media. Why that matters and what makes us excited today is that social media engagement has built real strength with a young consumer, so the Gen Z, the young millennials. We see the traffic to e-commerce going up significantly. So in Q2, that we just reported, we were up double digit in traffic to e-commerce for Calvin and up high single digit for Tommy.
And then you see that translate to mid-single digit growth in e-commerce, and then you see it translating to where we don't have any macro disruptions, North America and APAC, we have growth in D2C overall. So the most exciting part is how we line up the different building blocks to drive sustainable, profitable growth, and how you can actually see that now when you go on TikTok or Instagram or our e-commerce or our best partner's e-commerce.
That's really great. Alexis, we're thrilled that you can join us here today. For those who don't know you yet, what brought you to PVH? What areas of opportunity excite you the most, and are there any initial thoughts that you can share following your first few days at the organization?
Thank you, Brooke, and good morning to you all. It's a pleasure to be here so soon in my journey. I'm definitely new to the company. It's day number 14 for me in the company, and I'm the new CFO. My prior role was Global COO and CFO of Sephora. I've been with Sephora for many, many years. What attracted me to the company is mainly two things. One is really the strength and the power of the two brands of Calvin and Tommy. I've always been working for very strong brands, and I feel the potential of those two brands is just amazing. Second, and importantly for me, of course, is the big opportunity that I see with PVH.
The opportunity I see is actually connect the strategy, the PVH+ Plan, it is already in motion, already existing, with a strict and strong financial discipline that is already existing, but that I'm sure we can strengthen, and operational excellence. Those two areas, financial discipline and financial leadership and operational excellence, are two areas I've been leading for many years at Sephora with some success. Just maybe to say a couple of words on Sephora journey. I'm not here to talk about Sephora, but we scale that business and that brand in a very significant manner.
Importantly, we built up profitability to fuel the growth of the company and to make it more profitable. How did we do that? Multiple streams of work, gross margin management, promotional control, cost optimization through multiple streams. I see many of those actually areas with similarity to where PVH is today. I feel actually my experience can definitely be helpful to the company to further strengthen the brands and build up profitability. I'm super excited to be joining the team and the leadership and to be connecting with you in the near future.
Excellent. Let's unpack the regional execution of the PVH+ Plan. Perhaps we can start with EMEA, which has historically been a very large area of strength for PVH, but has been a little bit more uneven recently. Can you talk a little bit more about what you're seeing in the EMEA consumer today and the actions that you're taking to improve both DTC and wholesale performance in that market?
Yes. Europe is very strong for us. I spend a lot of time in Europe. It's a big, important business for us. We have seen the pressure, as the market have seen with the Middle East conflict. We flagged that in Q1. Since then, we have seen that we have been able to improve D2C trends despite the ongoing conflict. In Q2, improved versus Q1. E-commerce growth, we are able to drive e-commerce growth across both brands in Europe. Having spent a lot of time, I would say in the last two months, I've been in five markets, seven airports.
Airports are a great place to see the strength of Tommy and Calvin when you are in big European airports, because you sit there and take a coffee or you stand in line, the amount of consumers, the consumer love for Calvin and Tommy, the amount of products, sneakers, denim, outerwear, sweaters, hoodies. Europe is the source of strength for us, and what I'm particularly excited about is that where we have the biggest influence on reaching the consumer and really driving the business, we see the e-commerce growth and the D2C improvements.
Then we are working very closely with all our biggest partners in Europe to get even closer to the consumer, even more data-driven. When I meet with our partners, the strength of Calvin and Tommy, and the importance for them is real, and the strength with the end consumer, and then connecting the strategy we have, which is the key growth categories all the way out. We have more work to do there, but it's a real strength for us, and there will be disruptions in different places of the world, but underlying of that, I feel really good about it.
Let's unpack that a little bit more. Your outlook for the region for this quarter or for this year has moderated as a result of macro. As you think about the region beyond 2026, how are you thinking about the path to get back to sustainable growth and the growth targets that you've outlined under the PVH+ Plan?
Yes. So, it's very much where Alexis and I connected as well, is his experience from this journey as well. So where are we right now? So we have spent a lot of time on the heavy lifting, as we talked about when we started the fireside chat, on getting the brand very clearly directed on the DNA made current, built product capabilities. Last year, we centralized the global product capability in Calvin Klein, and we have all the benefits from that coming out right now. Each brand has four to five categories that stand super strong with the consumer. Each brand has driven a lot of strength, as we said, with the Gen Z and young millennial.
Then you connect. So you connect the strengthening of consumer focus with the four or five growth categories by brand. You drive really impactful full-funnel marketing, as you can see, that, again, it's the best way we have lined up the different drivers. Then we invest into the shopping experience, social, e-commerce, and our top doors and top stores. So when you see that, it's the foundation to drive revenue growth. When we do that, where we do that already now in Q2 as an example, denim is up 10%. AUR in denim is up 10%.
Underwear is up mid-single digits. AUR is up as well in underwear. In Tommy Hilfiger, we see sweaters, shirts, polos up significantly as well, and AUR up. When we look at the D2C growth, we see AUR coming up, promotions coming down. So it's really where the growth will come from is putting these building blocks in place that we have done over the last few years, and then adding that operational discipline that Alexis was talking about, and just consistently execute on it. I was speaking with our Global President for Calvin Klein last night. We caught up ahead of the week, and I said I was going to see all of you guys. I said, "What do you believe is the most important to share with investors?"
He took some time, and he said, "I believe it's we have the building blocks lined up." That what we have learned over the journey is we have to double down on those green shoots. We have to really make sure that the denim strength goes all the way out. When you are in an average door or store in Germany, the U.S., or China, we have doubled the denim exposure. We have all the iconic denim, all the new fits, all the right inventory, all the right marketing. When we do, it is the biggest challenge when I am out in Europe, as we talked about. The biggest challenge in denim is just having enough denim and enough impact because the consumer loves it.
That is really great to hear. Let us switch to North America. In your DTC channel, you have been making investments in the shopping experience in stores and online. Can you unpack the key drivers here, and what does that mean for your digital and store growth business ahead?
Yes. When you engage with our brands, and when the consumer engages, they start in social. You see the focus we have for the North American consumer on social, socially relevant product and brand storytelling. Then you go into our e-commerce, our partners' e-commerce. What you see different now versus just six months ago, is the connection to really strong category focus. On top of that, within each category, you see the innovation and newness into our big franchises. That is what the North America consumer responds really well to.
We see the biggest and most positive leading indicators in that traffic growth from social to e-commerce, and e-commerce and how the consumer responds to where we have put those pieces together the best, it works the best. What you will see in North America more is how we invest with our best partners, like Macy's, in new shopping shops. You will see how we renovate our outlet stores, factory stores.
We have full price stores in New York in Calvin Klein with SoHo. You will see how we bring the best of the brand to the marketplace. It is what you feel when you are in a Tommy campaign or Calvin campaign. We want to bottle that up and get that all the way into every door and every store. Where we do that, because we do that in increasingly bigger parts of the assortment, we already drive growth with higher pricing power.
That's great to hear. One question that we're asking every company at our conference today is on the health of the consumer. What are your expectations for the environment in the second half of 2026 relative to your recent results? Do you expect things to be same, better, or worse? For 2027, do you expect the health of the consumer to be better, the same, or worse than 2026?
Yeah. We plan as if the consumer, the way they are today, they will continue for the rest of the year. We don't plan for improvements. We don't plan it to get worse. We plan for the consumer we have seen in the first half. We are locked in to win more with that consumer. For 2027, I'm optimistic in terms of the consumer continues to lead in fashion. What I see, even in the markets where we have macro disruptions, I see that when you have strong brands, you deliver really strong on your product promise, you deliver great value.
We are in the premium space for the many people. We're in the mass aspirational space. When you deliver a really strong brand experience in the door and the store, it really works, and it really resonates with the consumer. You see that being. I was having dinner last night with a big wholesale partner in Europe, and we just left the dinner with the conclusion of being a big beloved brand that you drive relevance in, is going to be really good for the next five years, 10 years. Because you have so much consumer love and scale to tap into.
You just have to follow the consumer. Speaking with this partner last night, we had dinner and talked through the business and how we can improve it. It's just our best wholesalers have a lot of consumer data. Getting closer to their data, connecting it with our data, and they see how we perform, what the consumer wants more of, how we are relative to the competition. We have the strength to really lean into cut-through moments where we combine all those parts, the product, the marketing, the experience. I'm optimistic medium to long term on the consumer, given that you as a brand or as a company in this space, you realize that the consumer is in charge, and the consumer keeps moving.
That's really great.
Brooke, I would just add, totally agree with what Stefan said, but in terms of our guidance and our outlook for the year, we did embed some flexibility to strategically support a more promotional holiday environment in Q4, should that become necessary.
That's really great. Maybe we can shift to that just to make sure we completely clear that up. One question that we're asking every company at our conference today is on pricing and AURs. I guess, the question that we would ask you is, do you expect your prices or AUR to be higher, lower, or the same in the second half of 2026 versus the first half?
AUR, we are pleased with, look, coming out of Q2 and Q1 and Q2, that where we drive growth, we drive it with AUR expansions. We expect the same AUR expansion in the back half.
Excellent. On that full price selling and promotionality opportunity, we have heard a lot of comments from other retailers about a promotional marketplace. What are your views on the promotional backdrop today, and how are you balancing price increases with promotional intensity? What does this mean for your merchandise margin ex tariffs?
Yeah, so if we take North America as an example, and we take the tariff effect out.
Mm-hmm. Yeah.
We were able to drive higher gross margin, compared to non-tariff. So gross margin is up despite the tariff impact.
Yes, gross margin for the company as a whole in Q2. In Q2, we recognized tariff refunds, but even if you strip that benefit out, gross margin as a whole for the company was up overall. In the Americas, even with a higher year-over-year tariff cost, we were able to drive gross margins up. We are really seeing the strength of AURs in our D2C business driving that strength.
But AUR only comes up when you deliver as a brand. That is why every other week, we gather our 800 top leaders. We drive example after example from them because I am out 50%-60% of my time traveling, seeing stores, partners. But taking their examples, they share examples with themselves, the 800 leaders, of how we drive growth and how we drive AUR expansion.
It is always the same. When the denim is the right denim, and it is denim because Calvin Klein is known for denim, it works. Same with underwear, same with outerwear, same with shirts, same with cable knits, with Tommy. So it is really about that discipline that David, our head of Calvin Klein, was talking about last night, of just doubling down where we already see that it works.
Very clear. You had mentioned some conversations with some wholesale partners. We are getting a lot of questions about North America wholesale and the opportunity that PVH has there, excluding some of the timing and licensing transitions that have muddled the reported numbers this year. How are those conversations trending today? Are you seeing any shifts in the competitive dynamic, and how are forward order indications shaping up?
Yeah. So two, three parts to that question. On the first question, in North America, I believe we have never been closer to our partners in North America, and that holds true for Europe and Asia as well. When you look at North America, to start with, we are seeing a stronger back half than first half. We see strengthening trends in wholesale in North America. We see a sequential strengthening in APAC as well from Q1- Q2. We see in Europe that we know that when our wholesale partners have a tough season as spring 2026, they will be more conservative with their future order buys for spring 2027.
We knew that already, and that's what came through. What we're doing now is we leverage the partnership we have to say half of their selling is roughly coming from forward-looking orders, and half is coming from in-season. What we're doing is that we are beefing up our capability to replenish more of our best sellers in-season. That will mitigate their cautious approach coming in, with the forward-looking orders. That's where it matters because the best sellers, we know what the best sellers are now because we are together with them, so much closer to the consumer.
We know so much more, down to SKU level, what is going to be in the marketing and what's the story we're going to tell, and that they trust us that the talent we have, is relevant. As an example, this past week, we talked a little before the fireside chat about the runway. I don't know if you have seen on social our runway, the effects of the runway. Can I take 30 seconds on that?
Of course.
Thirty seconds on the runway. We had a Tommy Hilfiger runway because it really excites me, and it connects to shareholder value over time. You have seen it on your feeds, super strong. We took 400- 500 talent globally, and we dressed them in the current Tommy Hilfiger and current Calvin Klein line that you can buy online. You can buy it in Macy's, you can buy it in our stores. We took 400 or 500 talent times all their social engagement, all their excitement for seeing the best expression of Tommy, the best expression of Calvin.
Then we had our best partners, at the fashion show, both seeing the strength when we combine the best of the product, marketing, talent, music. For Tommy, we were in the Plaza Hotel. Some of you know, Tommy lived in the Plaza Hotel for 10 years. We're building out the brand around Tommy's dream and Tommy's life, and it resonated so well. I heard it from my wife and I have kids between 16 and 22. Suddenly they started texting me saying, "What's going on with Tommy?"
Then on Friday, "What's going on with Calvin?" You see our engagement during those moments are 25%, 30% on social, which is benchmark is 3%, 4%. Why does that matter to shareholder value creation? It matters because we drive a consumer desirability. Then we build that in. Licensing, I'm happy to speak about licensing as well, but let's follow your question.
That was actually going to be my next question. Maybe we should move to licensing. You're now through the largest transition of the women's portfolio in North America.
Yes.
Can you update us on the progress that's been made so far? Maybe the lessons learned as you've moved through this transition, and how we should be thinking about the revenue and margin implications of licensing over the course of the next few years.
Yeah. We're at the really exciting phase, following a lot of heavy lifting. So at the end of 2026, we are more or less done with the transition. The licensing we have transitioned is women's North America wholesale to get better in control of the product execution so we can win with the consumer over time. So that's why we took that back. Now we are in a place where we are going to finish that at the end of the year. And our underlying licensing business, $350 million of licensing revenues, is growing. We are growing that already.
And next year, in 2027, we're going to grow licensing overall. And why I'm so excited about that is there are two engines driving here for us. First, we are in control, since three, four years, working better and better at driving brand relevance in our core categories that we can do better than anyone else. And then we partner with some of the best licensees across the world in categories where they have expertise that we don't have. And they want to partner with us, and they can grow their business because we grow our underlying demand.
So if you see, we are driving the consumer flywheel, as you see in e-commerce, D2C growth, with our best partners, and then we add the strength of our licensees. And that's a reoccurring revenue stream that, again, when I spend a lot of time with them, we beefed up the leadership. We have Joel Samaha, who joined in the summer, who has deep licensing experience, already working with the team to build growth in licensing for 2027, 2028, 2029. And when you combine that's a pretty powerful combination of strong core desirability and growth, and then growth in the licensing part. But how they play together is really exciting.
And Brooke, I would just add to that, you mentioned the revenue and gross margin impact. So obviously as we've been transitioning from a licensed model to a wholesale model, that does change the geography on the P&L. But when we look forward to 2027, we just have a couple of residual licenses, luggage and swim namely, that they're transitioning to new long-term strategic partners, so it's licensing to licensing. And so you don't see another impact from a gross margin and P&L geography perspective.
Very clear. Melissa, let's stick with you. You just identified $45 million of annualized run rate cost savings with a portion expected this year and a portion expected in 2027. How much of this is already benefiting the 2026 P&L, and what are the primary savings categories? How should we be thinking about the potential flow-through into 2027?
So we did talk about $45 million of annualized run rate savings, and a little less than half of that will benefit 2026, and that's already factored into our guidance. A little bit more than half, the remainder, is going to benefit us in 2027, mostly in the first half of the year. Of course, we continue to look for opportunities to further realize SG&A savings. We're excited to have Alexis joining us and his expertise in this area as we move forward. Obviously there's main areas that we've been focused on, and Stefan has talked about, in indirect procurement and also in our overall cost management across the company.
We took some time, that frustrated some of you, and I apologize for that, to find Alexis. The reason why it took time was that I wanted to find a CFO that was equally excited about driving the business and the brands as the efficiencies. I don't know if you want to share anything, Alexis, about your thinking about efficiencies, because since we decided to do this together, before you started, we have been in constant dialogue. We haven't waited for Alexis to come in. You add an approach of, because historically, in a legacy setting, it's either growth or cost efficiency, and we have to do both, and we have big opportunities to do both.
Yes.
That's what you did.
I see a lot of similarities between what I did at Sephora and where we are right now at PVH by identifying, and there are already a lot of areas where we can build efficiency, leverage our global scale as well-
Yeah.
...in many areas of the business. There are already some streams internally that are going after that, but also probably some new ones that we have started to look at. I have started to do a lot of deep dive in the cost structure across all geographies, brands, et c, to go deep and really identify the opportunities. Then to your point, reinvest partly into the business, being super deliberate on where strategically it makes sense to invest geographically, brands, channel to fuel growth and build up progressively of, I would say, a virtuous circle of reinvestment, growth, and profitability buildup.
Very clear. Melissa, let's turn back to you. The 8.8% margin guidance this year embeds a tariff refund benefit of about a point. You have reinvested that this year in a lot of growth drivers. Can you help us unpack how we should be thinking about the earnings algorithm into 2027? What are the drivers that help you expand from that 7.8% framework, or is 8.8% the right place from which to begin?
Yeah. We have talked about in terms of how we think about the business going forward. Obviously, from a revenue perspective, we have been driving a lot of brand heat. We will look to continue to drive low single-digit revenue growth over time.
But when we look at the EBIT margin opportunities, obviously from a gross margin perspective, we have had a lot of success recently in driving those higher AURs in D2C, and we will continue to focus on that as well as opportunities within our sourcing and supply chain network as we leverage the power of PVH and our two global product kitchens, which we have already seen success with, and we will continue to leverage that going forward. Then on cost, as we have talked about, we have been working on cost, but we are really just starting at the beginning and we have more work to do there.
Great. One question on margins that we are asking all companies at our conference today is on margin headwinds or tailwinds. Do you expect to see more margin headwinds or more margin tailwinds in 2027 versus 2026?
The way I see it is we have to create the tailwinds, and that is partly why Alexis is here.
Very clear. Thank you. As we think about margins, one of the big areas of investment that you have been investing behind is in marketing. You have mentioned this several times throughout the day, whether that is Wendy, whether that is the Plaza Hotel, some of the other things that we are seeing.
Wendy the dog, Travis Kelce's dog, has now millions of followers. We have a dog license as well.
Very clear. Maybe talk to us a little bit more about what you've learned from marketing investments this year. What are you seeing from an ROI perspective, and do you think you need to expand marketing as a percent of sales as you continue to build brand heat?
We feel good about marketing as percent of sales at 6%, so we feel good about that. We're going to create the space to continue to be competitive while we expand the EBIT margin. That's why we have to, my comment on, we will create the tailwind from a margin expansion perspective. The return on investment is coming when we connect the, sorry to be repetitive, but it's when we connect the different parts. I really want you to, if you're interested in Calvin, Tommy, the opportunity, you see how we better and better connect.
We are clearer. What's different from a year ago? We are much clearer on the consumer segments we are going after. We're going after the Gen Z, the young millennial, the status shopper, and the style enthusiast within those. We are going after them because they like our brands the most. They shop us more often, and they spend more. We are getting better and better at targeting them, and we are getting better and better at getting flow-through into e-commerce traffic growth. Then we capitalize that better in e-commerce, and in D2C, where we don't have any macro disruptions, and now together with our best.
All that are leading indicators for how we lead wholesale together with our partners. It's the connection, and every time we have that connection, and Alexis, you have just been here for two weeks, but already started to see, "Ah, when we combine that, we can drive 10% growth, 5% growth with 5%-10% higher AUR," which is quite substantial. But we need to do, where is the job? The job is to expand that, to do that more disciplined at a bigger part of the assortment.
Excellent. Do you think that you have the levers in place to drive back to a double digit and potentially 15% margin, as was stated with the PVH+ Plan?
We are not going to guide 2027, but we have done a lot of the heavy lifting. Pam is smiling here because you know I cannot guide 2027. What I feel good about is that the brands are more relevant than any time before. The brand following is bigger than the business performance. It is our job now to, Alexis, I, and the team, and Melissa, to build in the business into the already bigger brand strength. We are at a point where we have the team in place to do that as well, which is Alexis is one example of that.
David is another example. Joel is another example. Then you go through the management team, and we have a really strong management team. Patricia Gabriel comes from FMCG, great operations, supply chain experience. Those things, the heavy lifting concretely means we had to build our sourcing capability globally, and it took us three, four years to do that. Now we have. When we see macro pressures, coming back to your question on margin pressure, we see macro pressure on raw material, we compensate that with leveraging, having built up a global sourcing capability. We will just keep working on that.
Very clear. We're about out of time, Stefan. Any closing thoughts or comments that you'd like to share with the audience?
I am excited about where we are and what we are going to do in the next step, which is driving, now building into that brand strength, driving the revenue growth, and then increased, with Alexis' support, increased discipline on our investment and our operations. Yeah, very much looking forward to doing that. And check out on TikTok, Instagram, check out Tommy and Calvin, because I hope you feel what I see, which is really exciting.
Well, thank you, Stefan. Thank you, Melissa. Thank you, Alexis.
Thank you.
Thank you very much.