Stefan Larsson, Chief Executive Officer, commented, “We delivered a strong fourth quarter and fiscal 2023, generating high single-digit direct-to-consumer growth, with growth in both Calvin Klein and Tommy Hilfiger and all regions. We significantly expanded our gross margins, drove strong pricing power, and are beginning to realize the benefits from the early buildout of our demand-driven supply chain, which allowed us to decrease inventory 21% to last year with much better stock freshness to start the new spring season.”

Mr. Larsson added, “Looking ahead to 2024, we will continue to build momentum with our PVH+ Plan, driving brand desirability for both Calvin and Tommy in product, consumer engagement and marketplace execution, powered by our demand-driven underlying operating engine. This will directly translate into growth in Asia and North America, while in Europe where the macro has become more challenged, our focus is on quality of sales to further strengthen our market-leading position. We see big, value-creating upside through the compounded effect of our consistency in PVH+ Plan execution and strong brand-building focus as we drive long-term, profitable, brand-accretive growth.”

Zac Coughlin, Chief Financial Officer, said, “Our disciplined execution of the PVH+ Plan drove strong gross margin expansion and EPS growth for 2023. In a tougher macroeconomic backdrop in 2024, we are leaning into the next level of PVH+ Plan execution across the Company to create value by increasing quality of sales, driving gross margin improvements and cost efficiencies to deliver significant cash flow and attractive returns for our shareholders. Reflecting confidence in our long-term growth potential, the Board authorized a $2.0 billion increase to the Company’s stock repurchase program.”

Non-GAAP Amounts:
Amounts stated to be on a non-GAAP basis exclude the items that are defined or described in greater detail near the end of this release under the heading “Non-GAAP Exclusions.” Amounts stated on a constant currency basis also are deemed to be on a non-GAAP basis. Reconciliations of amounts on a GAAP basis to amounts on a non-GAAP basis are presented after the Non-GAAP Exclusions section and identify and quantify all excluded items.

Fourth Quarter Review:

• Revenue was flat compared to the prior year period (decreased 1% on a constant currency basis). Overall revenue in the Company’s international businesses increased 4% over the prior year period as strong growth in the Asia Pacific region across all markets more than offset a continued challenging macroeconomic environment in Europe, particularly impacting the wholesale business. In North America, revenue in the Tommy Hilfiger and Calvin Klein businesses combined was down 2% compared to the prior year period, as strong growth in the direct-to-consumer business was more than offset by a decline in wholesale revenue, as wholesale customers continue to take a cautious approach. The benefit from the 53rd week in the fourth quarter of 2023 was largely offset by a reduction related to the sale of the Heritage Brands women’s intimates business that closed in the fourth quarter of 2023.
  • Direct-to-consumer revenue increased 9% compared to the prior year period (increased 9% on a constant currency basis), with growth in all regions in both the Company’s owned and operated stores and digital commerce business. Owned and operated digital commerce revenue increased 10% compared to the prior year period (increased 9% on a constant currency basis).
  • Wholesale revenue decreased 10% compared to the prior year period (decreased 12% on a constant currency basis), inclusive of a 3% reduction related to the sale of the Heritage Brands women’s intimates business, as wholesale customers continue to take a cautious approach.
  • Total digital revenue increased 1% compared to the prior year period (decreased 1% on a constant currency basis) as the strong growth in the Company’s digital commerce business discussed above was partially offset by a decrease in wholesale sales to traditional retailers’ ecommerce businesses and pure players. Total digital penetration as a percentage of total revenue was approximately 20%.
• Gross margin was 60.3% compared to 55.9% in the prior year period. The increase reflects benefits from lower freight costs, a favorable shift in regional and channel mix and lower product costs.
• Inventory decreased 21% compared to the prior year period, in line with expectations, as the Company continues to proactively manage its inventory levels.

Fourth Quarter Consolidated Results:

• Revenue of $2.490 billion was flat compared to the prior year period (decreased 1% on a constant currency basis). The benefit from the 53rd week in 2023 was largely offset by the revenue reduction related to the sale of the Heritage Brands women’s intimates business.
  • Tommy Hilfiger revenue increased 1% compared to the prior year period (decreased 1% on a constant currency basis).
    • Tommy Hilfiger International revenue decreased 1% (decreased 3% on a constant currency basis).
    • Tommy Hilfiger North America revenue increased 4%.
  • Calvin Klein revenue increased 4% compared to the prior year period (increased 3% on a constant currency basis).
    • Calvin Klein International revenue increased 12% (increased 10% on a constant currency basis).
    • Calvin Klein North America revenue decreased 8% driven by a decrease in the wholesale business.
  • Heritage Brands revenue decreased 41% compared to the prior year period, which included a 30% decrease resulting from the sale of the Heritage Brands women’s intimates business.
• Earnings before interest and taxes (“EBIT”) on a GAAP basis was $357 million, inclusive of a $5 million positive impact due to foreign currency translation, compared to $297 million in the prior year period. Included in the fourth quarter and the prior year period were recognized actuarial gains on retirement plans of $46 million and $78 million, respectively. EBIT on a GAAP basis for these periods also includes the other amounts for the applicable period described under the heading “Non-GAAP Exclusions” later in this release. EBIT on a non-GAAP basis for these periods excludes these amounts.EBIT on a non-GAAP basis was $301 million, inclusive of the $5 million positive impact due to foreign currency translation, compared to $215 million in the prior year period. The increase was driven by the gross margin improvement discussed above. The Company continued to take a disciplined approach to managing expenses and driving cost efficiencies, while making targeted investments to drive its strategic initiatives.
• Earnings per share (“EPS”)
  • GAAP basis: $4.55 compared to $2.18 in the prior year period.
  • Non-GAAP basis: $3.72 compared to $2.38 in the prior year period.

EPS on both a GAAP and a non-GAAP basis for the fourth quarter of 2023 includes the positive impact of $0.06 per share related to foreign currency translation.

EPS on a GAAP basis for these periods also included the amounts for the applicable period described under the heading “Non-GAAP Exclusions” later in this release. EPS on a non-GAAP basis for these periods excludes these amounts.

• Interest expense decreased to $20 million from $22 million in the prior year period.
• Effective tax rate was 19.3% on a GAAP basis as compared to 49.7% in the prior year period. The effective tax rate for the prior year period included the negative impact resulting from a $417 million pre-tax noncash goodwill impairment charge recorded in the third quarter of 2022, which was non-deductible for tax purposes and factored into the Company’s annualized effective tax rate. The effective tax rate on a GAAP basis for these periods also includes pre-tax amounts and related tax effects for the applicable period described under the heading “Non-GAAP Exclusions” later in this release. The effective tax rate on a non-GAAP basis for these periods excludes these amounts. The effective tax rate was 21.1% on a non-GAAP basis as compared to 21.7% in the prior year period.

Full Year 2023 Consolidated Results:

• Revenue increased 2% to $9.218 billion compared to 2022 (increased 1% on a constant currency basis). The benefit from the 53rd week in 2023 was largely offset by the revenue reduction related to the sale of the Heritage Brands women’s intimates business.
  • Tommy Hilfiger revenue increased 4% compared to 2022 (increased 2% on a constant currency basis).
    • Tommy Hilfiger International revenue increased 3% (increased 1% on a constant currency basis).
    • Tommy Hilfiger North America revenue increased 6%.
  • Calvin Klein revenue increased 3% compared to 2022 (increased 3% on a constant currency basis).
    • Calvin Klein International revenue increased 10% (increased 9% on a constant currency basis).
    • Calvin Klein North America revenue decreased 7% driven by a decrease in the wholesale business.
  • Heritage Brands revenue decreased 18% compared to 2022, including a 7% decrease resulting from the sale of the Heritage Brands women’s intimates business.
• EBIT on a GAAP basis was $929 million, inclusive of an $11 million positive impact due to foreign currency translation, compared to $471 million in 2022. These results include the amounts for the applicable period described under the heading “Non-GAAP Exclusions” later in this release. EBIT on a non-GAAP basis for these periods excludes these amounts.EBIT on a non-GAAP basis was $931 million, inclusive of the $11 million positive impact due to foreign currency translation, compared to $857 million in 2022. The increase was driven by a 140 basis point improvement in gross margin, partially offset by higher expenses, including an increase in marketing and other investments to drive the Company’s strategic growth initiatives compared to 2022. The Company continued to take a disciplined approach to managing expenses and driving cost efficiencies, while making targeted investments to drive its strategic initiatives.
• EPS
  • GAAP basis: $10.76 compared to $3.03 in 2022.
  • Non-GAAP basis: $10.68 compared to $8.97 in 2022.

EPS on both a GAAP and a non-GAAP basis for 2023 includes the positive impact of $0.13 per share related to foreign currency translation.

EPS on a GAAP basis for 2022 and 2023 also include the amounts for the applicable period described under the heading “Non-GAAP Exclusions” later in this release. EPS on a non-GAAP basis for these periods excluded these amounts.

• Interest expense increased to $88 million from $83 million in 2022 primarily due to higher interest rates.
• Effective tax rate was 21.1% on a GAAP basis as compared to 48.4% in 2022. The effective tax rate was 21.9% on a non-GAAP basis as compared to 23.3% in 2022.

Stock Repurchase Program:
Delivering on its commitment under the PVH+ Plan to return excess cash to stockholders, the Company repurchased 2.5 million shares of its common stock for $282 million during the fourth quarter of 2023, bringing total share repurchases for the full year 2023 to 5.7 million shares for $550 million.

On March 27, 2024, the Board of Directors approved a $2.0 billion increase to the stock repurchase program and extended it through July 2028.

2024 Outlook:

Full Year 2024 Guidance

• Revenue is projected to decrease 6% to 7% as compared to 2023 (decrease 6% to 7% on a constant currency basis), inclusive of a 2% reduction related to the sale of the Heritage Brands women’s intimates business and a 1% reduction from the 53rd week in 2023.
• Operating margin is projected to be approximately flat compared to 10.1% in 2023.
• EPS is projected to be in a range of $10.75 to $11.00 compared to $10.76 on a GAAP basis and $10.68 on a non-GAAP basis in 2023. The 2024 EPS projection includes the estimated negative impact of approximately $0.10 per share related to foreign currency translation. EPS on a GAAP basis for 2023 included the amounts described under the heading “Non-GAAP Exclusions” later in this release. EPS on a non-GAAP basis for 2023 excluded these amounts.
• Interest expense is projected to be relatively flat as compared to $88 million in 2023.
• Effective tax rate is projected to be approximately 21%.

First Quarter 2024 Guidance

• Revenue is projected to decrease approximately 11% as compared to the first quarter of 2023 (decrease approximately 10% on a constant currency basis), inclusive of a reduction of 3% related to the sale of the Heritage Brands women’s intimates business.
• EPS is projected to be approximately $2.15 compared to $2.14 in the first quarter of 2023. The first quarter 2024 EPS projection includes the estimated negative impact of approximately $0.05 per share related to foreign currency translation.
• Interest expense is projected to decrease to approximately $20 million compared to $22 million in the first quarter of 2023.
• Effective tax rate is projected to be approximately 21%.

Please see the section entitled “Full Year and Quarterly Reconciliations of GAAP to Non-GAAP Amounts” at the end of this release for further detail and reconciliations of GAAP to non-GAAP amounts discussed in this section.

Non-GAAP Exclusions:
The discussions in this release that refer to non-GAAP amounts exclude the following:

• Pre-tax gain of $46 million recorded in the fourth quarter of 2023 related to the recognized actuarial gain on retirement plans.
• Pre-tax net gain of $13 million recorded in the fourth quarter of 2023 in connection with the sale of the Company’s Heritage Brands women’s intimates business, which includes a gain on the sale, less costs to sell, and severance and other termination benefits associated with the transaction.
• Pre-tax restructuring costs of $61 million incurred in 2023 consisting principally of severance related to actions taken in the second and third quarters of 2023 under the plans initially announced in August 2022 to reduce people costs in the Company’s global offices by approximately 10% by the end of 2023, of which $39 million was incurred in the second quarter, $19 million was incurred in the third quarter and $4 million was incurred in the fourth quarter.
• Pre-tax gain of $78 million recorded in the fourth quarter of 2022 related to the recognized actuarial gain on retirement plans.
• Pre-tax noncash goodwill impairment charge of $417 million recorded in the third quarter of 2022, which was non-operational and primarily driven by a significant increase in discount rates.
• Pre-tax restructuring costs of $20 million incurred in 2022, consisting principally of severance related to initial actions under the plans announced in August 2022 to reduce people costs in the Company’s global offices by approximately 10% by the end of 2023, of which $17 million was incurred in the third quarter and $4 million was incurred in the fourth quarter.
• Pre-tax net costs of $43 million recorded in 2022 in connection with the Company’s decision to exit from its Russia business, primarily consisting of noncash asset impairments and a gain on contract terminations, of which $50 million of charges were recorded in the second quarter and an $8 million gain was recorded in the fourth quarter.
• Pre-tax gain of $16 million recorded in the second quarter of 2022 in connection with the sale of the Company’s equity investment in Karl Lagerfeld Holding B.V.
• Estimated tax effects associated with the above pre-tax items, which are based on the Company’s assessment of deductibility. In making this assessment, the Company evaluated each item that it had identified above as a non-GAAP exclusion to determine if such item was (i) taxable or tax deductible, in which case the tax effect was taken at the applicable income tax rate in the local jurisdiction, or (ii) non-taxable or non-deductible, in which case the Company assumed no tax effect.

T

PVH CORP.
Consolidated GAAP Statements of Operations
(In millions, except per share data)

Please see following pages for information related to non-GAAP measures discussed in this release.

PVH CORP.
Reconciliations of GAAP to Non-GAAP Amounts
(In millions, except per share data)

PVH CORP.
Reconciliations of GAAP to Non-GAAP Amounts (continued)
(In millions, except per share data)

PVH CORP.
Reconciliations of GAAP to Non-GAAP Amounts (continued)
(In millions, except per share data)

PVH CORP.
Notes to Consolidated GAAP Statements of Operations
(In millions, except per share data)

A. The Company computed its diluted net income per common share as follows:

PVH CORP.
Consolidated Balance Sheets
(In millions)

quarter and full year revenue:

Note: Year over year balances are impacted by changes in foreign currency exchange rates.

PVH CORP.
Segment Data
(In millions)

PVH CORP.
Segment Data (continued)
(In millions)