PVH Corp. ver: 3

Q1 2021 Earnings Conference Call


spk_0: the and welcome to the pv hate corp first quarter twenty twenty one earnings call today's conference is being recorded at this time i read shrugged the conference over to dean apartment please go ahead ma'am thank you operator the morning everyone and welcome to the tv a quiet first quarter twenty twenty one a cop and call this webcast and pa
spk_1: up and call it being recorded on behalf of pt age and consists of copyrighted material it may not be recorded we broadcast or otherwise transmitted without pvh had written permission your participation in the question and answer session constitute your content the having anything they appear on any transcript a replay of this call the information to be discussed and good forward looking statements that with like teenagers view as a june second twenty twenty one a future events and financial performance the statement are subject to risks and uncertainties indicated in the company that if the filing an affair public statement included in the press release that is a subject of the call he lived than authorities and good tv it is right to change it strategies object as expectation van intention and athlete he is significant cash flow to services that obligation significantly at the time the coven eighteen pandemic continued the have a significant impact on the company's business financial condition cash flow and a lot of operations there is significant uncertainty about the duration and extent of the impact of the pandemic the dynamic nature of the circumstances mean what if that on the call could cookies materially at any time therefore the operation of the company's business and it's future result of appalachians could differ materially from historical practices and results will cry description estimates and suggestion pvh with on undertake any obligation to update publicly any forward looking statements including without limitation any at the met their suggestions regarding revenue or earnings generally financial information projection to be discussed will be on a non gaap basis as define under as se fuel reconciliation to gap a mouth and put it in theaters first quarter twenty twenty unusually which can be found on w w w that tv dot com and and the companies can't report on one eight k furniture the as he see in connection with the release at this time i'm pleased the time the comp and silver the stuff stefan martha and ceo of pvh
spk_2: good morning and thank you for joining with me on the call today are march schaefer or c o of fear of go and dana perlman our a repeat chief strategy officer and treasure i look forward to sharing the progress we're making in building our next growth chapter of we drive thrus an accelerated recovery polls colbert to win in the new normal before i do that i would like to thank our entire pvh team for an incredible job if successfully navigating the company through the pandemic and delivering a very strong start of the year this corner removed from navigating through the pandemic to increasingly coming into an accelerated recovery face this has been driven by the discipline execution of our key strategic focus areas lead guy calvin klein and tommy hilfiger our international markets products strength and winning in the marketplace supercharged by ecommerce we have a very strong first quarter we over delivered our revenue growth marginal rate and he ps versus our expectation and the most important part of the strong performance is the underlying drivers behind it which are important proof points for what we said the to achieve through our strategic focus areas as we are connecting closer to where the consumers going the strength and value creating potential of our global growth browse calvin klein and tommy hilfiger is real and already starting to deliver results you will remember from our last call that our focus is to win with the consumer by driving brand relevance taking profitable market share and further strengthening our platform capabilities and all the time doing that more efficiently we're are becoming even more demand and data driven enabling us to create value in a more systematic and repeatable way we believe that our increased and sustained focus on these aspects will drive long term revenue and margarine growth for our shareholders driven by a gross margin expansion and eschew in a leverage having had opportunity to see a number of are important markets reopen and having been out walking stores again i'm optimistic by what i'm saying while the consumer continues to lean into digital the consumer is also out shopping in stores and there is a general feeling of optimism and excitement we're seeing signs of a real shift in consumer sentiment whether consumers excited to come out of covered restrictions reflecting a new hybrid lifestyle consumers are involving their cash on and comfort focus to include more elements of self expression through boulder colors increasingly influenced by the nineties pop culture this combination of stay at home comforts with the joy of being able to socialize again it's reflected us consumers mix and match cash on the central categories like underwear lounge active and day where and we see an increased interest in done him these consumer trends are positive for the fashion sector overall and for us in particular looking ahead based upon our strong underlying performers we are increasing our full year outlook we are prudently managing our business as we navigate the ongoing effects of the pandemic including down in certain markets and supply chain disruptions in countries that are being tragically affected such as india and sri lanka we are confident in our ability to navigate the some sort them to his and continue to drive an accelerated recovery let me now turn to some of the key proof points on how are a key strategic focus areas positively drove our performance in the first quarter and mike will then share of financial details first we continue to supercharge you commerce channel with digital revenue growing approximately ninety five percent in the quarter including sixty six percent growth in our owned and operated sites as we leverage are multi channel business model to meet the consumer when they wanted to shop next we continue to increase our focus on driving product relevance across all brass a regions across the board our focus on t growth categories hero products and cutting the unproductive assortment tail shielding strong results and we see increased pricing power and margin expansion in both calvin and tommy across our largest markets and channels lastly we continue to drive cost efficiencies across our business globally through the initiatives we have underway and we will continue to efficiently manage our qa structure turning to our regional updates despite continue to colvin related challenges in the quarter including clothes stores are a team stroll performance significantly about plan involves revenue and profitability across our businesses globally we delivered pet the lowly strong with salt in our international business which return to pre pandemic revenue levels at a faster pace than expected let me start with a show we remain pleased with our performance in the markets are performance was led by the strength in china and despite covered resurgence is an important markets like japan singapore and korea our revenues were relatively in line with pre pandemic levels our asia and china teams continue to accelerate performance through a number of focused and well executed initiatives china is the furthest along in this recovery overall and we continue to see increased traffic towards stores in addition to our growing digital business overall revenues were above pre pandemic levels our more focused strategies to strengthen product coupled with better operational excellence in stores are driving higher conversion and strong full price selling are continuing to realize cosmology an expansion from hire a yours we also continue to supercharge hey commerce by successfully capturing key consumer moments around important holidays with positive responses for new seats and product launches which are resonating both online and in stores we are prepared and looking forward to several upcoming important selling perez the next being for six eighteen which will be supported by strong product and channel execution overall we remain optimistic of the long term opportunity to grow our rounds in asia as we expand awareness and continue to invest in the market moving on to europe our performance in the quarter was truly outstanding we experienced earlier and much stronger than expected demand from our whole set of partners who came out of the holiday season with very strong sensors and low a mentor and levels for both tommy and cabin and wanted to be ready for the reopening of europe this led to the positive timing related impact of earlier than expected and wholesale shipments during the first quarter vs our plans for the second quarter
spk_3: however
spk_2: the underlying business performance in europe was very strong driven by our teams disciplined execution of our accelerated recovery priorities including consistent and very strong product execution across both tommy and cabin combined with a market pressures that allowed us to very closely follow whether consumer wanted to shop which in this quarter meant supercharging our digital channels through our connected him and tory enabling us to meet demand from all channels we generate a strong digital sales growth of over one hundred percent driven by both our own and operate as size as well as sales to our digital partners particularly pure players and this growth also benefited from the store closures if important to note that us markets have reopened the consumer has come back to our stores with better than expected traffic for both tommy carbon we continue to gain market share driven by strong consumer demand for our product resulting in increased price the power and margin expansion for tommy we continue to see strength for both men's and women's sports sportswear across multiple product categories including a strong and rising trend for done danny for calvin underwear and castle essential remain key performance drivers in addition to new denim silhouettes footwear our newest category which was recently brought in house is seeing strong consumer acceptance across all markets the momentum in our future order book continues to be very strong windfall holiday twenty twenty one now finalized and it's up double digits versus the prior year and pre pandemic levels we remain very confident in our team's ability to continue to drive sustainable profitable growth in europe for the remainder of the year and beyond however given the positive timing impact in the quarter we're not expecting to see the same level of out of farmers in the coming quarters turning to north america during the first quarter our inventory levels were very clean and we bought conservatively which led to improvements in a you are and gross margin however sales were still down significantly in the quarter compared to pre pandemic levels as i am mentioned previously the law lack of tourism in north america which pre pandemic account for thirty to forty percent of our revenues in the market has negatively impacted our business we expect to see tourism come back gradually all the time although this is very much dependent on the pace of vaccinations in the rest of the world and the loosening of travel restrictions lastly during the quarter we had fifty percent of our stores in calla like closed due to college restrictions in the meantime we are leveraging our learnings and leaning in to build more strength with our domestic consumer from this focused work we already see a number of important the news show proof points we drew digital over sixty percent we growth on both our own and operate as size as well as sales tar keyhole wholesale partners including a digital pure players in stores we saw increases in traffic with the domestic consumer although not enough to offset the lack of international tourism importantly though this improved domestic consumer performers came in the result of less discounting increase pricing power and strong march
spk_4: me probe
spk_2: from a product prospective our inventory position is very good and we have started to see the positive effects of our key category and hero product focus as well as from tough thing to unproductive assortment tail so even though the top line is still very challenge by the tourism effect below the surface we're seeing strong positive comps for important zero products that perform significantly above pre pandemic levels why we are pleased to see these early positive signs from our accelerated recovery focus we recognize that we still have much work to do to unlock the region's full potential even if it's still early days for trash who just joined us a few months ago in that role of c o for pvh america's i'm very encouraged by how she and her team are starting to drive products strength with pricing power and margin expansion as well as doubling down on e commerce growth in both direct to consumer channels and through our wholesale partners and we see significant opportunity for the region next i would like to share a few brief global brand highlights beginning with calvin klein global brand health remain strong with consistently strong high level of awareness as well as increased purchase intent during the quarter calvin lost his first global product collaboration with here on preston the collection focuses on reinvent that essentials true to the calvin klein brand dna and connected to our culture is today the response to date has been very positive and we have a number of encouraging learnings globally the collaboration has attracted a new younger and very valuable consumer we have seen strong consumer demand a cross product categories starting with underwear however the fastest to sell out product categories were done him track jackets hoodies t shirts which demonstrates calvin klein strength and potential as a true mouth i category lifestyle brand through this collaboration we have also seen hire a was an average order value than any time before in recent history we will continue to build out collaboration of thing campaigns to fuel brand heat and cultural relevance one important campaign right now is so pride capsule which cuts across social ecommerce and stores moving on to tommy hilfiger we continue to generate increases across all brand health kp eyes including a when has this ability and consideration as well as strong search interest in europe tommy drove strong sell through for our spring capsules including our collaboration with pasta the amsterdam bay street where brand which was very well received additionally the brand made another step to as circularity with the launch our first limited edition upcycled collection the remakes collection is part of the tommy for life program and a pioneering circle of business model using pre loved tommy hilfiger and tommy genes products and marks and not a milestone in our sustainability mission we also launched a third installment of thomas drop shop with an artist capsule told you signed will london based creative stevie g featuring limited edition hoodies and taste and finally turning to our heritage business why we saw some improvements in our heritage brands this quarter the business continue to face challenges we remain on track to exit the remaining heritage brands retail stores this summer our instruments business performed well during the quarter with solid revenue growth compared to both last year and pre pandemic levels all was still under pressure we have started to see some early signs of improvement in our dress shirt this as as people reengage in social that is and return tortoises for the heritage brands we are continuing to actively review additional ways to optimize the business in closing i feel very good about the strong performance we drove in the quarter and i'm confident in our ability to continue to execute an increasingly strong recovery as reflected in our increased full year guidance in addition i feel particularly pleased with the discipline way we achieved the growth in the quarter and how that position south for sustainable profitable growth for many years to come i'm proud of how our teams continue to lean in to was within our control to drive an accelerated recovery and position us as one of the winners in the new normal every quarter we are taking further steps to get even closer to where the consumers going and i look for where to continuing to share more with you about to progress along the way and before i handed over to might you will have seen that yesterday we announced a couple of updates regarding our global leadership cheryl able hutches will be stepping down as chief executive officer of calvin klein moving to an advisory position on july first trish donnelly ceo pvh america's who has had oversight or calvin klein will now take full the global responsibility for the brand i would like to extend my sincere thanks to channel for the valuable impact chefs made during her fifteen years with the company in many areas of our business and we also share that after thirty years we'd pvh mike will be leaving to pursue other opportunities mike will be widow through september so we will have time to celebrate his many contributions to the company so for today i would like to say thank you might for your partnership and stewardship over the years and for helping us build a strong foundation and strong leaders and teams we have today on which we will continue to bend so we that i would like to handed over to mike like step on the comments i'm about to make a based on non gap results in are reconciled than a press release over oil revenues for the first quarter were up fifty five percent as reported and of forty six percent on a constant currency basis as compared to the prior year and exceeded our prior revenue guidance driven by growth across all regions and channels revenue an international business exceeded twenty nineteen pretend them levels when we think about the comparison of twenty twenty one verse or first quarter results to the prior year
spk_5: it is important to remember that during the first quarter of twenty twenty virtually all of our retail stores and are wholesale customer stores were close globally for six weeks on average as a result of the of them
spk_2: a total direct to consumer business was up sixty six percent versus the prior year including a sixty six percent increase in digital commerce across all regions and brands a retail stores face continue pressure during the first quarter although too much less to extend them in the previous year with a significant percentage of us to as temporarily closed in europe canada and japan all regions and brand businesses experience strong digital growth due in part of the continued store closures particularly in europe although he expected little penetration to remain consistent for the rest of the year we expect digital girls will not be as pronounced as to as reopened a wholesale revenue as of fifty three percent versus the prior year including very strong sales to a digital channels the agrees was driven by strong performance in your due in part to an unplanned shift in the timing of wholesale shipments be to the first quarter from the second quarter looking at our segments tommy hilfiger revenues were up sixty three percent as reported and fifty two percent on a constant currency basis with international up seventy eight percent has recorded and sixty three percent under constant currency basis north america was up twenty five percent calvin klein revenue is up sixty five percent as reported and fifty six percent on the constant currency bases with international up ninety one percent as reported and seventy seven percent on the constant turns basis north america was up twenty seven percent or heritage rebel news where up nine percent which included a reduction of fourteen percent of adult the resulting from the sale of a speedo north america business in april two of twenty twenty gross margin was fifty nine point one percent for the quarter as compared to forty nine point five percent in the prior year which reflected improvements across all regions and brands did a less promotional selling a favorable shift in regional sales makes and the absence of significant inventories reserves and have been recorded in the prior year we continue to tightly manage our inventory which decrease seven percent at the end of the quarter as compared to the prior year
spk_5: earnings per share was a dollar ninety two on a non gaap basis for the first quarter of twenty twenty one and was a dollar and nine cents higher than the top end of our previous guides the beat included the impact of the unplanned time in ship the of europe wholesale shipments into the first quarter from the second quarter that i previously mentioned and as well as a shift of advertising and other expenses add of the first quarter into the remainder of the year
spk_2: together these time in shifts represent approximately forty cents of the beep with the balance of sixty nine cents due to the business our performance across all regions and brats notably or even margin was very strong a twelve percent of the corner
spk_5: this was due to the favorable shift in regional sales makes as or international business generally carry higher operating margins as well as unprecedented strengthen our international business is he bit margins
spk_2: the strength international was due in part to europe channel next as a larger portion of revenue came from the wholesale channel including sales to a brick and mortar and pure played digital customers which carry very low expenses the higher proportion of europe posts wholesale was due to a significant percentage of us to usb been temporarily closed and the unplanned timing shit
spk_5: of wholesale shipments into the first quarter from the second quarter
spk_2: moving onto our outlook we're providing a twenty twenty one outlook despite the significant uncertainty due to the pandemic and as such a could be subject to material change our outlook does not contemplate new store closures new lockdowns are extensions of car lockdowns beyond what is already know we continue to monitor industry whites supply chain headwinds and our outlook contemplate certain inventory glades of approximately four to six weeks on average was axed which is expected to result in a this no air freight and other clause in order to maintain our sales plan in the second half of the year where we while we have been able to successfully react to out the of to delayed shipments thanks to the strength of the or supply chain the current volatility in the industry may further impact our results in ways that we cannot currently able to predict or actual twenty twenty one results could differ materially for my current outlook
spk_5: as a result of the occurrence of any on contemplated to that's
spk_2: we continue to be encouraged by international businesses which have exceeded and are expected to continue to exceed pre pandemic levels throughout the remainder of twenty twenty one we expect north america to continue to face the ongoing challenge of reduced international tourism which is the source of a significant amount of revenue and not expected to return to pre pandemic levels within the year
spk_5: additionally our outlook reflects and proximity twenty million dollars of estimated operating losses associated with the wind down at the heritage man's retail business in the first half of the year
spk_2: for the full year we're projecting revenue to grow approximately twenty four to twenty six percent as recorded and approximately twenty one twenty three percent and a constant currency basis compared to twenty twenty we expect gross margin will continue to show improvements in twenty twenty one compared to twenty twenty two the less promotional selling the we did not expect us to get the good of improvements for the remainder of the year as we experience in the first quarter you imply to a less favorable shift regional sales mix as growth in our international business this which generally carry higher gross negligence was more pronounced in the first quarter relative to a lower margin businesses north america we continue to manage a cluster up for pro actively including reducing operating expenses and reallocating resources to support growth areas in the business we continue to expect the increasing gross margin percent in twenty twenty one vs twenty twenty and a decrease in operating expenses as a percentage of revenue and twenty twenty one versus twenty twenty will be relatively similar in magnitude with each worth the few hundred basis points we expect a bit margin will continue to show improvement in twenty twenty one compared to twenty twenty although we do not expect a significant improvements for the remainder of the year as we experience in the first quarter due to a less favorable shift and regional sales mix we also did not expect the unprecedented strength we realize no international business isn't the first quarter to continue at that level for the remainder of the year as to as it reopened in a wholesale business
spk_5: becomes a smaller proportion of the business
spk_2: we expect our interest expense decrease and twenty twenty one to approximately one hundred and ten million we're planning debt repayments of of seven hundred million for the full year which is equivalent to the incremental borrowings we took on and twenty twenty two managed to the pandemic as of today we have already made me payments of six
spk_5: hundred million this includes five hundred million of repayments made in the first quarter an additional hundred million made after the corner a tax rate for the air is estimated at seventeen and a half to ninety percent as a reminder for me think about our tax rate by quarter we expect that rate for the first three quarters will be relatively
spk_2: similar with the fourth quarter expected to benefit from certain the items which bring down the overall rate that the year for the full year and twenty twenty one we're projecting non gaap earnings per share to be approximately six thousand and fifty cents which is an increase compared to our previous guidance of approximately six dollars our current projection an increase from a previous kinds of approximately sixty nine cents due to the business our performance experienced in the first quarter and while we're cautiously optimistic the er prudently planning the balance of the a given supply chain disruptions an overall macro uncertainty for the second quarter or revenue is projected to increase thirty four to thirty six percent as reported and twenty nine to thirty one percent on the constant currency basis second quarter non gaap earnings per share his plan that a range of a dollar fifteen to a dollar eighteen compared to thirteen cents in the prior year period we expect interest expense to be about twenty seven million and taxes to be in range of thirty six this thirty eight percent in the second quarter and with that operator will open it up the questions
spk_0: thank you you wish to ask a question at this time signal by pressing star one on your telephone that please uncharted me trunks and your telephone is switched off to allow your signature each applicant again star one asked a question i can now take effect question from my fee of five percent at peace go at
spk_6: right thanks good morning might be greatly me and my next birthday on an overall acceleration and tell that you out cute remind that's that presented over picnic at ten am and how sustainable it attraction at your thing and the overall category
spk_2: thou shall we say i hired a good morning so am as i mentioned in in in my remarks danny with the increasing demand consumer demand and data and for both cab and tommy and what we see if that makes between and we see the mix between the consumer continuing to shop casual essential category if for at the at home piece of their life and now when especially in the markets rather restrictions are open up from kobe it with see the cancer right sided and increasingly going out and fit and makes we see this hybrid lifestyle at a denim it's an important part there so we see the strength in cash ah sen charles and then we see that name we see colors and so we overall as i mentioned it's it's with your strength at for that being positive for for the industry as a hold of for us in particular
spk_6: and then that fall at for might share a little bit more about what you're seeing with and petkoff right now and and are their price increases he contemplated off that any potential pressure and thoughts
spk_5: yeah look for the for twenty one missing low single digit kind of increases but as we look to spring in the future was seeing mid single digit kind of increases so the supply chain is under pressure to some degree i'm at this point what will work and through it out and in which i don't understand what we can do you on the product side to to mitigate against those costs i'm also looking at what we can do on that on the country of origin side to see where we can go to mitigate those costs so it's a work and process but yes if we don't see the if we cannot mitigate those costs we will have to see some sort of
spk_2: increases as we move through into next year and beyond but for this year i think the impact to be relatively minimal
spk_6: very helpful thank you
spk_7: thank you are
spk_0: i a now take our next question from like have been at credit suisse peace go ahead
spk_8: hey guys thanks for taking our questions and michael admire like congrats and thanks so much and on all the help over the years
spk_9: stay on we talked about this event last quarter but
spk_8: i'm i think that you know that you and the u s tommy and calvin or lower than first quarter of nineteen by roughly forty percent each i think he pointed to tourism so me that explain some of the downside to that twenty nineteen watermark but skin talk to school bit more about where you see the u s business of the next few years should we think about it as revenues lower than that
spk_2: twenty nineteen mark for few years and the bigger focuses on profitability or she was really be approaching as twenty nineteen revenues of the next year or two maybe someone just your bigger picture thinking on the region and an i'll have a followup esa okay thanks michael also starting with north america south yes to your point we have a big negative tourism effect so i know my year we have thirty to forty percent of our business across calvin and tommy driven by tourism and a big part of that this is temporary gone and that we are all the time we will see that come back question is how soon it with come back then we have had fifty percent of canada is is worth mentioning as well that has had a negative effect but underneath there we have a lot of work to do with the domestic consumer in north america self were already leaning into this opportunity as you know self big important part was trash the leadership trish came and trish dominate us are sealed for pvh north america at she has a high performance experience from six seven near assess the ceo of urban outfitters winning with the young consumer winning with product pricing power driving digital to best in class share self and under under the surface of the negative tourism effect and the canada closures we see some important proof fine so we see that digital we were able to drive digital sales sixty percent up at we were able to drive products strength so we were able to drive sales to the domestic also know when higher pricing power increase gross margins less discounting but this is a
spk_0: this this this is an opportunity that we will continue to lean in to and when it comes to the future years will will come back to that of the the more clarity we get from navigating through it
spk_8: okay and then damn i guess you you read the opry marty guidance the air seven half a percent think that takes about eight hundred eight hundred fifty basis points above twenty twenty and i think when we talk he said the house at him for know comes from gross margin and half mast in a or on the basis points there that puts gross margin are fifty seven so you know well above the fifty four point seven he hadn't toy nineteen and because still points session a around four point four billion and that that's maybe it just a touch lower than where you are in twenty nineteen an addict revenues are planned about nine percent lower than twenty nineteen so i want to i'd love to hear your thoughts on the sustainability of that just the costs are up that construct your on
spk_2: i'm a level is a in our being being there somewhere between a team you mention the focus on efficiency and and managing hostile if you timeshare unless you conference call so how do you think about what you know how to had a plan the estuary going forward is that a sustainable in a budget for way you see the ravages of the next election corners and in years and so when wet were when it comes to i'll start and then handed over to my but when it comes a lot grading efficient says will start where'd the rhythm make shift in the operating efficiencies so within each region we're driving more at fisher says them what you see the total and what we already have done as we set out to save two hundred fifty million dollars were on a yearly analyze basis that where we we we have secured and we have reinvest that hundred million solve that so we have a hundred and so far we have a hundred and fifty million run run rate net
spk_10: yearly savings and we will continue to drive efficiencies and we will find ways to simplify how we do business so without that i'll allow handed over to mike if you want to give some more details yet night i think you hit most other stuff i think as we grow that engine as if the international business continues vaseline automotive business that hire gross margin iraq reading much higher operating expense iraq pretty much in business so potter the part of what you're seeing is is makeshift on if the tories and comes back i think you're start to see more of a shift back to north america in a lower and lower operating
spk_2: lower operating expense margin so it's part of this is nippy of the driven by shifting that in where the business is being done
spk_8: and as and just to build a lot from what might just said michael is we're going to continue to drive efficiencies year over year and reinvest make sure that we had the same time reinvest in the growth areas
spk_11: okay thanks like as well
spk_0: thank you michael
spk_12: and we can now take our next question from jay someone of you bs please glad great thanks so much of the and michael mad max aggressors as wanna require a deviation am i why as little bit about europe because i think tom there's a question about it was the strength in europe this quarter driven by restocking or some sort of opportunistic opportunities based on maybe what you're able to visit a companies or was a really about stay
spk_13: wrong sell through you know product and brand strength and can be tested about of that the order bucks and how they've told the for fall of twenty one
spk_2: does i'll start there jay which of thank you i sell europe had and and a really really strong quarter said there was a one time effect from the timing of the whole fair share benson and might will be able to give you a little bit more details around that but when we looked underneath that was very very strong performance so the the brand relevant that we are able to execute in europe the products strength and the pricing power as the margin expansion and then how we have been able to for a long period of time now follow the consumer in how we win in the marketplace so we we we see europe strength continue am and we see europe opening up again after the locked down from colbert and and we have full confidence in our team's ability to continue to build on the strength we already see so we're without allah handed over to my to to describe little bit more of the one time effect but what what excites me the most and what i'm interested in is what's the long term
spk_7: ranked of the business and it's very very strong and when we break it down into the underlying value drivers so what drives profitable market shared wealth sustainable profitable marketshare rope
spk_10: in europe ticks all the boxes there are so very very strong performance from the tape and look it was it was a great quarter as the certain and we beat up the top and the were is overall hundred and forty million europe was a big piece of the be you know coming into the quarter they were locked down those store closures and and there was a lot of uncertainty and how stores would open we had good plan for the shipment in may with about forty million dollars worth of product sales that that we were pleasantly surprised there was the man and the customers asked for the goods for naples is it shipped so on it and i was part of a the with the quarter so added on hundred and forty about forty million of the beat was europe also sells and then not for the balance of the year we we basically held to a previous guy we really didn't like any changes on revenue and be float through the other hundred million in revenue be with year and and europe and just yeah go ahead not unusual to mention the order books on the order books for the fall holiday season or of double digits on those and up frozen so we are really happy with the performance there and just shows continued strength and and the beach were opposed really all categories
spk_2: we're seeing super strength in that business does to be alone a what but my what you're saying and and building out on your question j when it comes to yours performers and the sustainability we see in that performers and we also see that the accelerator recovery priorities that we set out of the company to drive when we hit colbert or really drive into performers now and will continue to drive the performer so when we have focused in on our core strength calvin and tommy if over ninety percent of our revenues international with europe it's a big part is over sixty percent of our business and we see strength in europe strength in asia and then we focus in on products strength and we see a you are growth growth maggio rate improvements across the board and then we focus their non can next thing even closer to where the consumers going in the marketplace and europe if leading their as you know from an ecommerce contribution but overall as a company where now twenty five percent the commerce contribution and drug hundred almost hundred percent growth so that and and then your layer on the efficiency so two other fifty million dollars
spk_12: saving so that's where i keep my focus which is as a management team that what we see how we said we were gonna drive the business is how we are driving the business and and and we see the strength continue that's why we take the europe
spk_0: type i do so much
spk_14: i'll take next question some almost evercore peace go ahead
spk_12: the morning thanks for all the information my congratulations and best wishes
spk_14: i'm i'd love to ask a broader question for your thoughts on the strong gross margin that trans industry wide ah lower promotions ah says something have been hearing consistently know what's your view on sustainability of that element of the gross margin strength ah as the industry rebuild them and tories do you expect the
spk_15: promos to return over time
spk_2: and i have a quick follow up thanks and so thanks omar so the way we'll week we look at it this of a a big part of how we're gonna drive the piano going forward as through the gross margin raped expansion and part of that this makeshift shift from doubling down on international and part of it as a result of how we drive products strength so that we focus in on t growth categories hero products we kept up continuously cut the productive spews
spk_10: so we see that were just in the beginning of that journey so over the coming few years we see that cross module rate will be a very important component in how we deliver that yeah no mileage said on the on the sector
spk_5: we are ya plan that would be came out of the pandemic with him into his down matches us what our customers are at a news i do think there was a a significant amount of router on clear and that was in in the sector i do think as time goes on probably see some increase in that level of clearance in our customers and and how the business just operate normally day to day for that but i hope that there was a lesson learned about levels of clearance in that me see some opportunities in the future did to just have less clearance
spk_2: i have a gross margins
spk_12: and that connects to just would be building a what might just said that connect to our focus on planning a buying inventory closer to demand and that is a journey we we we just started on but there is real value creating potentially and up
spk_2: understood that actually have really helpful arm and then mid mid what are the what is the role and where young data analytics and your ability to use data analytics not just with to engage with consumers directly but and things like inventory planning and merchandising as we're quite as far ahead when it comes to having the tools and a the methodology as to use data to become more demand driven then if if the journey we are on his to to to adjust the way we trade assortment planned assortment by it allocated to
spk_16: really take full advantage of of those data capabilities so i've been coming into to pvh have been positively surprised by the data capabilities that we have the work we have to do now is to apply that to how how we plan and by the business
spk_0: thanks best
spk_17: i can now take our next question from kimberly came back against and peace go ahead green quantum so much good morning on our you can just ask about how you're thinking about strategy to manage through the supply chain disruption put your school i think mike you mentioned on higher use of are afraid that i would imagine but you've got a all for a wide range of strategies that your looking at to try to ensure that you can tell him came from a timely manner as possible so i was wondering if you could just outline as for us and then secondarily i'm like just a clarification on your international margin on discussion we understand at higher gross margin that comes with higher ed
spk_18: all of the aggregate either margin internationally higher
spk_5: as well thank you
spk_10: the of other the clarification for so yes the international business is typically wrong with higher gross expense and operating margins being i so that that's that's been on that are typically area i'm on the supply side on we are seeing uncertainty there are delays but there's just some uncertainty surrounding the supply as well so as we look at some of countries where we do significant amounts of business india i'm for nets in sri lanka for underwear those countries are under lockdown in india is close the on that were not allowed the oven or or factories are not allowed to operate and in sri lanka work will sit partially open and factories are operating but capacities an issue so it it really what's what's concerning to is when these factories will come out of those walker how they will open up fast scheduling is that bill open in the first week of june so it's coming up quickly and lot greater visibility in the next couple weeks as moving good at a really isn't just airfreight the of many different modes of of expedited crates of a huge his best ships believe in an outer affray on we have found the afraid constrained or not
spk_19: a lot of flights but we are looking on certain product categories and under was particularly one where we can get goods and quicker and the cost is not great the goods are smaller and scout in terms of seismic for quite a few into a pack of so on each each water is looked at individually and we we manage his
spk_20: peel by feel
spk_2: i concur and and and two mikes point that the that the projections of how we are taking up the year
spk_21: the guidance for the year the projects and that that what's in that guy in says the current year we have on the supply chain as he to a sham and if it opens up sooner than what we expect than we have outside
spk_22: turf or can't cook
spk_0: let's take the last question
spk_8: like an alpaca final question from like south wells fargo please go ahead
spk_18: hi how are you this is well on for i ah i just want to ask about on sunday ticket prices across across the board across tommy haas calvin what what eating you guys think iran
spk_8: hum what sort of the average ah
spk_2: price increase for our foot for the products wait a hard to say which shaming because i see it does a continuous work that we have a to the the when we continuously drive brand relevance with the young kosovar we are also driving our ability to drive revenue with increase pricing power and than how we do that it is that we break it down into the differ
spk_23: and product categories and different hero products so if that that's over on we are early on the journey of driving pricing power and margin expansion and this is a job that we will continue for mountain many years is part of our growth algorithm
spk_8: that it's that's helpful and just kid to dig in a little bit more on on all mars question in a you we have is significant talent that not like this
spk_5: without that expansion once you you just frame your house think about gross margin on for how much one of these you know talent or on a transitory how much a structural is in that half of it is a half of the two thirds to sort of prime out house think about gross margin and how sustainable this sure the look i a big via the guide on gross margins a couple hundred basis points up over the prior year and electing somebody called it out earlier operating margins club seven and a half the eight percent so and pretty much flat zero up an emergent bless is so half of that is coming
spk_10: you as gross margin improvement
spk_24: going from the zero to the eight percent support three hundred and fifty to four hundred basis points kind of improve so
spk_5: as for the year
spk_10: as you think about it by quarter the first quarter was a big club the we're going to be up in every quarter as you worked it's good as two three and four
spk_2: so i think that i jeopardize in a box with
spk_8: and and and and just building on that as when when we look at the growth marginal rate improvements that we plan for the remainder of the year and onward sister is an international peace there is a product strength peace and there is a planning you're buying to and closer to demand peace
spk_2: understand thank you
spk_0: right so with that wheatley thank you all for joining and we look forward to reconnecting and next quarter

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