Financial Data and Key Metrics Changes - The company reported a revenue decline of 5% year-over-year, with a 2% decline attributed to the sale of the Heritage Intimates business [42] - Non-GAAP EBIT margin was 10.5%, flat compared to the previous year, driven by higher gross margins and strong expense management [40][53] - Gross margin improved by 170 basis points year-over-year to 58.4%, with half of the increase due to a higher direct-to-consumer mix [50] Business Line Data and Key Metrics Changes - Direct-to-consumer (D2C) revenue was flat on a reported basis and down 1% in constant currency, with improvements noted in September and October [10][47] - Wholesale revenue declined by 4% on a reported basis and 5% in constant currency, excluding a 4% negative impact from the Heritage Brand sale [11][48] - Calvin Klein revenues decreased by 3% on a reported basis, while Tommy Hilfiger revenues were down 1% [49] Market Data and Key Metrics Changes - North America saw a low-single-digit decline in D2C revenue, with a high-single-digit decline in wholesale due to shipment timing [23][46] - In Europe, overall revenue declined by 1% on a reported basis, with a 6% impact from quality of sales actions [27] - Asia Pacific delivered mid-single-digit growth on a reported basis, with Japan leading and China increasing by 7% in local currency [32] Company Strategy and Development Direction - The company is focused on executing the PVH+ plan, aiming for long-term profitable growth through improved product execution and consumer engagement [15][64] - A flagship store for Calvin Klein is set to open in New York's SoHo, enhancing brand visibility and consumer engagement [18] - The company aims to return to modest growth in 2025, targeting a long-term operating margin of 15% [14][71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth in 2025, supported by improved D2C trends and inventory composition [72] - The company is navigating a challenging macro environment but remains focused on driving efficiencies and maintaining profitability [38][110] - Management highlighted the importance of consumer engagement and brand relevance in driving future growth [95] Other Important Information - The company is under investigation by China's Ministry of Commerce, which is ongoing, and it has cooperated fully with the authorities [34][36] - The company generated approximately 6% of its revenue and 16% of EBIT from China in 2023 [36] Q&A Session Summary Question: Could you elaborate on customer demand for fall product assortments? - Management noted double-digit sell-through improvements for Fall '24 products across all regions and channels, indicating strong demand [68][70] Question: Can you help us size the fourth quarter gross margin guidance? - Management explained that the gross margin is expected to decline by 200 basis points due to a more promotional environment and increased freight costs [86][88] Question: Can you discuss the promotional activity in North America? - Management indicated that the holiday shopping season started earlier this year, leading to increased promotional pressure, but they are managing inventory effectively [110] Question: How is the transition of licensing impacting the business? - Management stated that bringing women's products back in-house is crucial for long-term competitiveness and brand strength [116]
PVH(PVH) - 2024 Q3 - Earnings Call Transcript