This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk_0: good morning everyone and welcome at to today's pvh ages fourth quarter and forty or two thousand twenty two earnings conference call at this time of the or in a list and only mode later you will have an opportunity to ask questions during the question and answer session you may register to ask a question at any time by pressing be store and one keys on your touch tone phone please note that this call may be recorded and that i will be standing by should you need any assistance it is now my pleasure to turn date program over to cheryl freeman senior vice president of investor relations
spk_1: figure operator good morning everyone and welcome to the pvh corp fourth quarter and full year twenty twenty two or three hour ago leading the call today will be stuck on morphine chief executive officer and that coughlin chief financial officer this webcast and conference call is being recorded on behalf of pvh and consists of copyrighted material it may not be recorded rebroadcast or otherwise transmitted without pvh has written permission your participation competition consent having anything you say have you any transcript or replay of that call the information to be discussed includes forward looking statements that reflect pvh of view as of march twenty twenty twenty three a future events and for one be the statement their subject or with an uncertainty of indicated in the company's ftc filing and the safe harbor statement including the press release that as a sub first of the call these include pvh rate that she's strategies objective expectations and intention and the company's ability to realize anticipated benefit and fading from to that sure restructuring and similar plan such as the plan cost efficient the action and out in his second quarter earnings release and it's twenty twenty one sale of africa an exit from his heritage brampton to focus on the calvin klein and tommy hilfiger businesses technically the coven eighteen pandemic global inflationary pressures and the war in ukraine continued at impact on pvh of business cash flow and result of operation there is significant uncertainty about the duration and extent of the impact as a result what a settlement call could change materially at any time therefore the operation of the companies the and it's future results of operations could differ materially from historical practices and results for curry description estimates the suggestion pvh does not undertake any obligations of the publicly any forward looking statements including without limitation and he estimates were running remedy warning generally the financial information and projection to be discussed will be on a non get the that as define under ftc will reconciliation the gap amount are included in pvh of fourth quarter twenty twenty two earnings really which can be found on w w w that pvh that come in the companies can't report on from ak furnished to the fcc a connection with the really
spk_2: at this time i'm pleased to from the conference over to stop on and thankyou cheryl and good morning everyone of thank you for joining our called today we are pleased to report that we drove strong fourth quarter financial performance ahead of expectations for both the top and bottom line led by strength in our direct to consumer businesses revenue exceeded our expectations on both a recorded and constant currency basis and the underlying growth excluding the impact or currency and the russia ukraine exit was plus nine percent in the fourth quarter driven by better than expected results for both tommy hilfiger and calvin klein we are coming in to twenty twenty three with strong momentum and expect to continue to grow our top line led by outside speed to see growth while planning to deliver even margin expansion and double digit fps growth the growth in twenty twenty two was driven by strong consumer response to our product marketing and marketplace execution across both brands and across all regions we show that we were able to compete to win in what proved to be a much more challenging macro environment than any of us expected going into the year and i would like to highlight some of the proactive choices we made to make that happen last april we share the long term vision and multiyear growth plan at are a mess today the pvh plus plan is so brand focused direct to consumer and digitally led gross plan that will over time build calvin klein and tommy hilfiger into the most to fireball lifestyle brand in the world and in parallel making pvh one of the highest performing brand groups in our sector the clarity of our direction and plan have provided a very strong focus for everyone in the company we know where we're going we know how we will get there and we made great progress in the first year of execution this stronger execution focus is gaining traction across the company and we will continue into this year in twenty twenty two both calvin and tommy delivered increased strength in product with hero products across key categories and in our consumer engagement with capture campaigns collaborations and work last talent partnerships this strengthen product and consumer engagement is a big greece and we drove high quality plus nine percent underlying revenue growth with increase pricing power for twenty twenty two from a regional perspective europe continue to grow from a position of strength in a challenging environment and delivered a very strong plus ten percent growth in yours when adjusting for the rush exit in asia we are sending out to accelerate our growth we were able to drive outstanding performance in the market stuff we're not in colby lockdown driving class eleven percent constant currency grounds for the total region and plus twenty three percent constant currency growth outside of china and in north america we were able to start to win more with our domestic summer driving plus nine percent growth for tommy and calvin together in a brand a creative way recognizing that this is the beginning of a multiyear unlock from supply chain perspective we successfully navigated through the covered related challenges over the year we increased our on time deliver from sixty percent to ninety five percent which have and will continue to deliver positive impact on both availability and cost and we are now about to unleash the next steps in building our supply chain to become a real strategic value driver we are creating a strong data driven sourcing approach that will return not only efficiencies and cost reduction opportunities but also enable us to invest back into great products in addition where optimizing our school breath to create higher productivity by cutting the unproductive assortment tail we also came into the year and knowing that an important to underlying driver of the pvh plus plan is to become more cost competitive in a way that simplifies how we work increase our speed and decision making and empowers our team to execute and enables us to drive new growth by making strategic investment in the area such as marketing supply chain and technology i'm pleased to share that we made significant progress here during the year perhaps the most important improvement we are made this past year was to continue to strengthen our management team with the capabilities needed to translate are pvh plus planned to impact from my experience the strength of the leadership team is the single most important factor in successfully translating of value creating plan into action and impact i'm proud to share that we made significant progress in this critical area back toddlin joined us our see a photo david seven a sour chief supply chain officer a sarah blonde as our chief strategy officer all three bring highly relevant experience and we are already seeing the positive him back from their leadership and then us of this month eva serrano joined us calvin klein global precedent having spent twenty years as one of the key leaders behind the growth of sarraj and inditex and donald kohler joined us calvin klein america as president having spent a big part of his career on the team that turned around burberry both from global roles and thus head of north america for them with these appointments complimenting our strong existing leadership team we have the capability capabilities experiences and the competitive mindset needed to deliver on our long term pvh plus growth commitments finally i spent a big part of my time in twenty twenty two traveling to experience our markets or stores on the consumers perspective and i continue to be impressed by our people and teams around the world i want to thank all of our associates for their hard work during twenty twenty two and give a speech show recognition to our store managers they're incredible work ethic expertise and their passion to every day go out there when with a consumer is an inspiration to all of us now turning to our regional performance and how we are connecting al bronze and executing the pvh plus plan across each region starting with europe our europe team continued to drive very strong performance reflecting the power our brands have with consumers in the region despite macro headwinds we really leaned into the business of finish the year strong we delivered double digits year over year growth for the fourth quarter and had another record quarter exceeding one billion euros in revenue for the year europe also delivered double digit the underlying revenue growth adjusted for fx and are rush exit including growth in every quarter or of twenty twenty two growth in the fourth quarter was led by our retail stores which generated very strong performance during the holidays selling period we also saw strong early wholesale ship them so spring twenty twenty three collections which have been very well received by our partners growth was enabled by better product availability increased operational efficiency as and faster product deliveries our tommy product strategy continues to be driven by product elevation winning assortments and product store is true to the tommy dna all with a focus on reaching than ration of consumer this was supported by our hero product strategy which was a strong and a broad growth in twenty twenty two any twenty twenty three were further increasing our category as and with that amplifying our iconic products or calvin we continue to leverage are proven playbook from tommy to further build out calvin as a lifestyle brand across product categories we see strong growth momentum in footwear accessories next door established calvin klein underwear and james businesses we have seemed favorable demand from consumers for our spring collection with on plan early seltzer at wholesale looking ahead adjusting for russia and improved delivery performance compared to last year's supply chain disruptions are shipped order book for form is fixed
spk_3: acted to be up low single digits while our wholesale partners are taking a conservative approach given the potential for macro economic volatility we are well positioned to capitalize she's stronger demand continue through our best thing class operating model and strong never out of stock
spk_2: program moving on to asia pacific our asia team continue to deliver a solid growth in constant currency in the fourth quarter outside or greater china in greater china we generate a stronger than expected eleven eleven performance which was offset by the widespread covert impact for the year the region gem narrated strong double digit constant currency growth and both cabin and tommy continue to increase their brand awareness our focus on key growth categories and hero products an ongoing efforts to refine the product to sort man through on the relevant products with skew rationalization on driving results in the fourth quarter our hero products outperformed would hire a yours and lower discounts we continue to lean in and when key consumer moments such a lunar new year by driving engagement and performance about plan fueled by successful product capsule launches and consumer activate shows both brands continue to move up the rankings on t mall underscoring the strength of our brands and product in the market and how well are resonating with consumers for the holiday we launched a tommy me feed capsule collection which featured iconic cartoon character murphy the only channel campaign and capsule launch was brought to life for cross retail social media inflows your collaborationist and ecommerce partnerships fueling strong the brand heat charming also lost the dedicated capsule and consumers have the opportunity to dress virtual avatars in the collection cold ready player me as we look to or twenty twenty three we are working to further expand the of digital capabilities and to enable a single consumer view across channels as well as fast a digital execution we continue to make investments in new channel such as though you live streaming and collaborate he shows with the team all innovation center which leverage as big data and consumer insights to offer a customised shots we also laying the foundation for new and then house capabilities in our supply chain through a show frazier sourcing as well as improving our demand planning to focus increasing the encore replenishment and a read and react model to naval shorter leave times with higher in see some by looking ahead are rather have a clear premium brand and product positioning with opportunity to grow farther in all markets we continue to lean into further increasing overall brand awareness especially in china were both calvin and tommy are under penetrated lastly shifting gears to our business in north america that by step we are getting early traction in growing the business in a brand a creative way underpinned by a clear category and products focus to deliver a sustainable profitable growth with an increased focus on the domestic consumer our tommy and calvin businesses delivered mid single digit growth in the fourth quarter lead by our d to see stores we delivered strong performance despite a very promotion on holiday period given elevated inventory levels across the market for the year are tommy and and businesses increased hi single digits our d to see stores delivered high single digit positive comes in the fourth quarter driven by improved product assortments and in stock levels most importantly we continue to drive improved domestic consumer comps our assortment and product improvements continue to yield results for tommy our global best seller initiative which focuses on combining global winning design scaled quickly to seventy percent of our d to see business this initiative is generating hire a yours stronger seltzer is and higher gross margins compared to the balance of the assortment one great example that was shared with you last quarter of pertain to are expanding polo business building on the prior quarter success in the key category in the fourth quarter our three biggest polo product franchises were up plus twenty one percent versus two thousand and ninety we also saw significant progress with on time delivers in the region with over and ninety percent of our spring season on time compared to year ago where we were just thirty two percent on time at the start of the year this improvement if a direct result of our improved supply chain leadership looking ahead to twenty twenty three we are focused on applying are learning is from twenty twenty two a further scale our growth initiatives in north america we're doubling down on the performance drivers in our d to see stores through rigorous assortment building and the editing he even better match to demand with a focus on in the stock improvements in key categories for tommy were expanding the tommy global best seller initiative to the wholesale channel and for calvin were building market share and ck underwear by improving replenishment execution and in stock levels across all channels coupled with our impact for marketing execution at the same time we're making investments in store upgrades to ensure our stores deliver an elevated consumer experience next i'll share a few global brand highlights and how we are bringing both brands to live for the consumer beginning with calvin klein jonathan bottom the are global calvin klein cml an hour calvin marketing team have done a fantastic job and going back to the iconic dna of callings nine and made it highly relevant to today during the past few months we have been able to see this were attempt to live under the campaign umbrella of calvin's or nothing in january the campaign launched we global tennis star carlos our us in our signature cotton underwear styles wearing our classic straight james and he drove strong results more recently the spring chapter of the campaign was launched globally starring ambassadors and friends of the brand including michael be jordan janney kim kendall jenner fk a twigs and the aaron taylor johnson dressed in the latest underwear in june james the full cast introduced a wide range of news ties for the season campaign launched with michael be jordan time to the release of he's highly anticipated film creed three the campaign images quickly went viral across social media and generated very high engagement the cola post between calvin and mike michael being jordan is now one of our highest performing posts to date with a total reach of eight million on own social we so incredibly strong organic broadcast and digital coverage across entertainment pop culture and fashion outlets including on jimmy kimmel live for a total reach a while one point three billion in the twenty four hours after launch and the campaign pick out didn't stop there the browns cola post with kendall jenner is now the highest reaching post of the year with thirteen point four million a reach again a testament to the power of the right the imagery and the right talent to cut through also launching this week jong kook a member of the extremely popular south korean boy band bts we joined the brand as global ambassador of for calvin klein jeans and calvin klein underwear moving on to tommy hilfiger tommy with it's unique classic american cool dna continue to drive strong brand visibility and relevance among our target consumers the brand generated approximately four billion impressions from november two january tapping into a moment of strong consumer relevance the brand smithy collaboration which i just spoke to although developed for the lunar new year celebrations was leverage globally and he was one of our strongest performing capsules looking ahead are told to bring campaign classics reborn with sean mendez recently launched globally and as part of that tommy and sean just hosted a tour of immersive events in london where lean milan and mexico city selected flagship stores held in store activations sustainability stance at the heart of this collaboration with a collection incorporating a broad range of recycled and others sustainable materials the tommy genes label a source of fostering new consumer connections through the upcoming tommy areas collaboration which features a bold and a play on all things tommy james the collection is inspired by archival tommy pieces and will in the coming days be available for early access online in our own stores any key three to a retailer's globally or both brands were looking forward to an exciting twenty twenty three it would be a year to take another big step forward in delivering on our pvh plus commitments towards our long term vision of building tommy and calvin into the most desirable lifestyle runs in the world all while becoming one of the highest performing brand groups in our sector i recognize the macro economic environment will likely continue to be tough so we will be relentless in executing are five pvh class growths drivers across both brands and all regions in winning with product we will advance our category office and create the best hero products in the market and winning with consumer engagement we will deliver see some out cut through campaigns charge by an increasingly strong network of aspiration on top you'll also see us improved aspiration of presence of all consumer touch points ranging from social media ecommerce to in store will see investing more into marketing as a share of sales to make sure we continue to cut through with our initiatives in winning in the digital marketplace we will continue to drive de to see ya fans across both the commerce stores we you improve productivity all why we strengthen our partnership and business with are key wholesale partners and increasing our full price penetration we are continuing to drive a my strength both owned and operated and with keep partners we're only in the beginning of developing our demand driven supply chain and this year we will make progress in cost of goods delivery accuracy and leveraging our scale across both routes all while we take baby steps to become cost competitive going after efficiencies while investing behind our girls drivers i look forward to building on the strong momentum we started in twenty twenty two to win in twenty twenty three and beyond we're starting to get real traction around addition the plan the execution and most importantly the team and the mindset needed to get it doc over time the recent norm is power in the compound in effect on being consistent in direction and valley creating focus through the pvh floss plan
spk_4: i'll turn the call over to sack to discussed of financials in more detail thanks defining and morning my comments are based on non gap results and are reconciled and our press release as defined disgust we're extremely pleased with our results for the fourth quarter in the four year would significantly exceeded both our top and bottom line guidance driven by strengthen our european business and continued cost discipline globally twenty twenty two was era of unprecedented macroeconomic volatility in an is tough environment with a hard to win by focusing on what is within our control our ability to drive underlying revenue growth of nine percent for twenty twenty two and earnings per share of a dollars and ninety seven cents in line with our initial expectations at the start of the year approximately nine dollars per share is a testament to a disciplined execution of our strategic priorities and the power of our to global brands cow calvin klein and tommy hilfiger we are encouraged by the past their momentum we drove in the fourth quarter and are confident that we can deliver solid top line growth and twenty twenty three while driving increasingly improve profitability i would not discuss or twenty twenty two results in more detail and then we'll move on to our outlook for twenty twenty three our shown fourth quarter results delivered underlying revenue growth of nine percent versus last year exceeding are topline guidance by four percent on a constant currency basis and we delivered earnings per share of two thousand thirty eight cents significantly exceeding earnings guidance by seventy three cents our underlying revenue growth
spk_2: was driven by both are tommy hilfiger and calvin klein brands
spk_4: we delivered strong revenue growth in europe and continued growth in north america driven by the direct to consumer business
spk_2: we continue to experience negative impacts in china from the coven pandemic but the rest of asia pacific continue to drive growth in constant currency
spk_4: on a reported basis fourth quarter revenue was up two percent which reflected a six percent negative impacts from exchange and a one percent negative impact from the war in ukraine we continue to focus on driving performance in a direct to consumer business where we have the closest connection to our consumer and dtc was a double digits on an underlying basis driven by strong hi single digit growth in north america in mid teens growth in europe in euros on a reported basis did you see revenue was up four percent compared to last year which was i did a six percent negative impact from exchange and a one percent negative impact from the war in ukraine
spk_5: tom original perspective fourth quarter revenue for international business was up eleven percent versus last year on a constant currency basis continuing to significantly exceed twenty nineteen pre pandemic levels within our international business or european business had another record quarter following the first one billy
spk_4: in europe quarter in the company's history in the third quarter our age of us have a bit as was down a percent on a reported basis a good he nine percent negative impact of exchange
spk_2: fourth quarter results and asia pacific were severely impacted as covered cases in china rose following the lifting of restrictions their but saw improvement at the end of the quarter and into the first quarter of twenty twenty three
spk_5: in north america revenue in the fourth quarter was up five percent overall for tommy hilfiger and calvin klein with our retail store business up high single digits vs last year as we drove sequential improvement versus the third quarter in sales to domestic consumers our domestic comp sales are now up mid single digits
spk_2: compared to twenty nineteen levels
spk_4: our global brands also continued strong underlying grow balance across both brands with tommy hilfiger revenues up ten percent on a constant currency basis and calvin klein revenues up eight percent on a consequence you basis
spk_2: reported revenues up three percent for both tommy hilfiger and calvin klein
spk_4: in the fourth quarter we deliver gross margin of fifty five point nine percent up approximately one hundred and ninety basis points compared to prevent damage levels but down approximately two hundred and forty basis points compared to last year gross margin reflected favorable region and channel next compared to last year as well as planned price increases those benefits were more than offset by higher product cost elevated ocean freight rates and increase commercial selling compared to last year as inventory levels are elevated across the industry later our discuss our some of that transition into tailwind for twenty twenty three
spk_5: sg in a expense as a percentage of revenue for the fourth quarter it was forty seven point two percent down nearly four hundred basis points from last year and better across all dimensions of the business we continue to take a disciplined approach to managing expenses driving cost efficiencies while making targeted investments in
spk_4: strategic areas to fuel growth in line with the fifth growth driver of the pvh plus plan in total even for the quarter was two hundred and fifteen million dollars exceeding expectations due to strong revenue performance and lower expenses operating margin was eight point six percent as reported and nine percent excluding the negative impact of approximately forty basis points due to exchange
spk_2: earnings per share was two thousand and thirty eight cents compared to two dollars and eighty four sent in last year's fourth quarter and exceeded our guidance by seventy three cents almost entirely driven by the improvement in a bit
spk_4: earnings per share for the quarter also good a twenty three said negative impact compared to the prior year related to exchange and thirteen sent negative impact to the war in ukraine
spk_2: excluding these to external factors earnings per share was almost flat to prior year
spk_5: our tax rate was approximately twenty two percent as a reminder in last year's fourth quarter we benefited from noncash tax rate relief tied to our purchase of the calvin klein brand back in two thousand and three this benefit ran out and twenty twenty one as a result attacks are in the fourth quarter of last year was a benefit of approximate
spk_2: thirty three percent
spk_4: inventory was up thirty four percent at the end of the quarter compared to the prior year period due to a combination of factors as we've discussed inventory levels were abnormally low and twenty twenty one do to supply chain and logistics disruptions which intensified in the second half of twenty twenty one
spk_5: we have seen steady progress over the course or twenty twenty two towards pre pandemic production capacity and significantly improved delivery times and in the fourth quarter this year we experience much earlier receipts at him and tory as the supply chain and logistics disruptions had east this enabled us to capitalize on incremental top line
spk_4: opportunities and wholesale for the quarter but also contributed to the higher ending inventory levels
spk_2: absent the elevation due to timing of receipts we have normalize back to inventory levels that support or plan growth we also felt the full impact this quarter of higher product costs compared to last year
spk_4: looking into twenty twenty three we expect cost to improve as we move to the year particularly in a second half
spk_2: we ended the for your twenty twenty two with revenue of nine billion dollars and underlying revenue growth of high single digits a line to our long term financial algorithm and driven by growth in all regions and in both are tommy hilfiger and calvin klein brands our for your reported revenue was down one percent versus prior year and are funded a negative impact of seven percent from exchange and three percent from the exit of heritage brands and the war ukraine
spk_4: operating margin was nine point five percent and our tax rate for the year was twenty three point three percent overall we deliver earnings per share of eight dollars and ninety seven cents delivering our national start of your guidance of approximately nine dollars per share additionally we delivered on our commitment under the pvh plus plan to return excess cash or shareholders are turning over four hundred million dollars to shareholders during the year to the repurchase of six point two million pvh shares and our dividend including approximately seventy three million dollars for the reproach
spk_6: as of one point one million shares in the fourth quarter
spk_4: moving on to our outlook
spk_5: in twenty twenty three we expect to continue to execute our strategic priorities to unlock before potential of our to global brands tommy hilfiger and calvin klein and as a result drive strong financial performance across all regions we ended twenty twenty two strongly in are entering twenty twenty three with momentum behind the
spk_2: pvh plus plan
spk_4: with that said we now have that macro economic uncertainty is still exist with consumer sentiment tempered by inflationary concerns particularly in north america into a lesser extent in europe and retailers planning cautiously due to elevated inventory levels industry wide as such we have approached or plans for twenty twenty
spk_2: three with a healthy balance of optimism and prudence we're projecting revenue growth in all regions with operating margin expanding to approximately ten percent at earnings growing eleven percent to approximately ten dollars per share
spk_4: for the four year or overall revenue is projected to grow approximately three to four percent as reported and approximately two to three percent on a country currency basis compared to twenty twenty two
spk_5: this reflects a benefit of less than one percent from the fifty third week of twenty twenty three europe and north america are planned to grow low single digits were strong growth and are direct to consumer channel tempered by wholesale as retailers are being cautious on buys an age of us if they planned to grow by low double digits as china has ears
spk_2: zeid covered restrictions we expect a for your gross margin rate increase over one hundred basis points compared to twenty twenty two despite approximately one hundred basis points of higher cost you to exchange which we have previously discussed the improvement in are gross margin is supported by a favorable shift in channel and regional makes compared to twenty twenty two as week's salary growth in are higher margin dtc business in line with our pvh plus strategies and are dtc and international business as make of a larger portion of total revenue
spk_4: additionally we are seeing ocean freight rates coming down rapidly we are using significantly less airfreight and abnormally high raw material cost will ease as he moved to twenty twenty three particularly in the second half of the year sg in a expanses a percentage of revenue for the full year is expected to increase approximately seventy basis points compared to twenty twenty two we continue to drive cost efficiencies across the business while targeting our investment focus on key areas that drive growth especially marketing we expect to generate increasing savings as we move through the are related to our plan to reduce people cost in our global officers by approximately ten percent but and a twenty twenty three but these benefits are more than offset by the impact of regional and channel mix which other favorable to are gross margin carry higher expenses
spk_5: we expect our for your operating margin will increase to approximately ten percent reflecting hi single digit you but growth interest expense is projected to be approximately one hundred million dollars and our tax rate for the year is estimated at approximately twenty four percent
spk_4: for the for your twenty twenty three we're projecting earnings per share to be approximately ten dollars up eleven percent versus twenty twenty two looking at the balance sheet we expect to build cash with a significant increase in cash from operations reflecting an improvement on working capital due to lower inventories compared to twenty twenty two as receipt below normalizes we're projecting capital spending of three hundred fifty million dollars which is approximately four
spk_2: four percent of sales as we invest our stores supply chain and technology and in line with our previous plus plan priorities
spk_4: we're also currently planning at least two hundred million dollars of share repurchases and will continue to review opportunities for capital deployments as we move through twenty twenty three
spk_2: to zero in on the first quarter specifically we expect to continue to be challenge by residual inflationary pressures and lingering macro economic uncertainties
spk_4: how overall revenue is projected to be relatively flat as reported and to increase by approximately three percent on a constant currency base as compared to the prior year first quarter earnings per share are projected to be approximately one dollar ninety cents which reflects a negative impact of approximately ten cents due to exchange translation our tax rate for the first quarter is estimated at approximately twenty four percent interest expense is projected to be approximately twenty three million before i open up for questions i just want to reiterate that we remain confident in our ability to win in a tough environment as evidenced by or performance in twenty twenty two and while we expect the macro environment will continue to be volatile and twenty twenty three we are continuing to focus on executing our strategies and drive top line grow
spk_5: improved profitability and strong double digit mps were world the twenty twenty three
spk_0: and what that operate it we were like to open it up to questions yeah climate he would like to ask the question please press the star and one key on your cat's tongue phone
spk_7: if at any time you find the your question has been addressed you may run not your stop and look here by pressing start hill our first question will come from bob trouble with guggenheim your line is open
spk_8: i am good morning i'm couple questions i have actually i'm on the first one can you to talk about your what surprised you the most in the fourth quarter and minute the results would kiss while had what we expected and then the second piece of it is a when you think about the pvh plus plan you know
spk_9: what elements did to get the most traction on they give you the and that you portrayed you know for f y twenty three thanks well thank you and and good morning bob levy it's it is so for of from the surprises in queue for i would say what what if the laptop surprise us because we set out to pvh plus plan almost a year ago and we've started leaning into our iconic brands and said those are absolutely unique props there are a handful of those grounds globally and we have to of them calvin and tommy and the pvh clubs plan is about leaning into each other
spk_2: these iconic browns main product categories and we were able to get traction on that there are lead time so we set out to do that the year ago and what you can see in in the fourth quarter was that we were starting to get traction so starting to get early traction on the product category focus starting to get traction in queue for on developing some of the best hero products in the market the most important products in the consumers wardrobe and then we were able to really deliver capture campaigns with work last time and so we were able to tap into the iconic strength of the brand we were able to increase the products strength and then bring that to market than compete to win in effect mentioned a much tougher macro wait
spk_8: a through campaigning calvin and a cultural campaigning tommy that look at it as a campaign umbrella that will continue to go because it's really combining the category of the hero products the world class talent and and that's what we can see queue for consumer facing then
spk_9: on the underlying business engine side we were able to drive better much better supply chain execution so we were sixty percent on time delivery last year heavily affected by by the cool vid disruptions today where and ninety five kills to one hundred percent on time and then we were able
spk_2: to drive cost is why the investing more in growth so you wouldn't hear sucks
spk_10: take you through how are we invest more in marketing and and then as as the final part is the leadership team and getting the capabilities on the leadership team we needed to execute this so this this is some of the highlights so what what i see drove for fourth call
spk_0: moderate and also how it will continue that this is just the beginning and that drives to confidence for doubt look this year
spk_11: thank you thank you our next question will come from my company with credit your line us open hey guys thanks for taking a question for me i add something grass on a on a great quarter here on
spk_2: i guess i guess i have to on for that on the finance attacked and or more color on size in a bucket solicited driver two hundred basis points underlying gross margin expansion of it it would help us again a little bit of an idea of that magnitude of a different bucket there to see how your see in it and then you mentioned north america direct to consumer sales to domestic consumers are now i think admit single digits above twenty nineteen and are you talk previously about almost thirty percent of sales and those doors are from tourists before covered can you offer any specific quantitative examples where north america you see stores are in terms of total productivity levels and profitability levels compared to pre coven and and what you think is the right pace investors can think about rico
spk_8: after some of that opportunity
spk_12: well thanks you my college stuff on so let me just start from from the business side in terms of the gross margin
spk_2: strengthening in the outlook because i'm i'm encouraged by a lotta what i see on the gross margin side first cost of goods are coming down freight good freight if coming down the and and also the supply chain strengthening so that we are getting better at leveraging our scale with vendors so that's all favorable versus last year and then on the gross margin side we also have a shift in the business a regional and shannon make shift so international grows faster a deep to see
spk_4: he grows faster
spk_5: so that's when the highest level from a business perspective suck if you don't mind going through more in detail and the put some numbers around that room i go i think that person was with said gross margin we expect to grow by over hundred basis points this year versus less fear and keeping in mind that includes
spk_4: me a hundred basis points and transactional exchange had when we thought that previously to your said your question the two hundred basis points of underlying improvement
spk_2: esteban mention for if we are planning for a significant increase in dtc penetration the line of the pbx plus plan and that drives almost one hundred basis points of gross margin improvement
spk_5: and then second you expect that several of the macro headwinds that we experience are increasingly transition to tear wins but as we work through twenty twenty three so included in that are significant reductions in ocean freight rates and a decrease in utilization air freight as the supply chains and normalized
spk_4: those two changes alone or worth approximate hundred basis points of gross margin improvements are the those the two main drivers that we expect to see who the in our favor and again starting with both of you know the exchange more the first half story and then increasingly these other measures taking a more powerful impact in the second half of the year
spk_2: i'm in any taught us a little bit i think about in terms of the international stores
spk_11: at this point in time or outlook does not count on a return to twenty nine few levels of international tourists were still assuming a significant decrease vs twenty nineteen we're seeing the beginnings of some of that start to come back this year and as the coming back in they're buying strongly but a day
spk_13: big we've learned of the last couple years and not count on that the focus were made on the on really satisfying the domestic consumer and that a be very from there if internet or tours come in that a be a source of growth later in the year that's not currently planned for
spk_10: thank you
spk_0: and michael one one part of what's exciting into for was to see the domestic consumer the focus we have had over the last year on when a more with a domestic costume in north america to really see that we started to get traction there and that's something that we will continue to lean into
spk_14: and we haven't heard many other north america outlets improving says i see here think thanks for this the colors on
spk_2: thank you my
spk_8: thank you
spk_2: or next question will come from accent go with you bs your line it's open great thank you so much and i think imagine for the for your guy did you expect revenue growth in all regions least elaborate a little bit of give us idea of the pie higher thinking about growth in north america versus your purses asia thank you
spk_4: yes absolutely a thank you j so in europe
spk_5: if let me just take it step back to queue for that we were able to drive a very strong holiday performance in a in in a very tough back where in europe and we see the momentum continue and we see d to see two sacks point at as he mentioned with the d to see being the the may
spk_14: main driver with see that being true for both europe and north america and asia ah when we look at north america it's continuing to build strength without domestic consumer in a brand a creative way and then when it highlights on a shave to come back of a
spk_10: of china and the chinese consumer and and we are very encouraged by what we're seeing are the days they're coming out of appropriate and i think you just to put some numbers behind that we talked about it a sort of the mid single digit range growth for the overall businessman's comprised of
spk_0: low single digit expectations and both north america and europe and then load double digits nature i think both in north america and europe we wanted to make sure with the uncertain consumer backdrop that were planning prudently for the year and i think we see some of that era own terms the work we have with their accounts of a bit more cautious approach or the considering the volatile
spk_15: the were experiencing in a we think that that is a pretty way to plan for the your focus on those things in our control and then depending on how the your evolves if they're stronger consumer demand a that we're ready to address that both in the us and europe is that comes okay great thank you so much
spk_2: thanks to thank you our next question will come from been a policy with tea baggers your linus open
spk_9: good morning everyone wanting congratulations on the nice progress as you think about europe and the border but going forward and what you're saying and wholesale globally what trends are you saying how you seen order books moving forward and the fall expression of your new collection being distributed balancing that
spk_2: define what certainly dp see how you taking about the growth both by ecommerce and your own stores as a move to twenty three thank you well thank you day now so when we look out for twenty twenty three in europe with see strong consumer demand super look at you one we see strong consumer demand continuing from tool for last year so start of the year strong consumer demand in both the to see channels
spk_5: and in all sales fell throws so consumers response transferring product is wrong
spk_4: for the back half of the year a wholesale partners are taking a more cautious
spk_5: approach and he comes back to the the volatile macro what what really makes us have a uniquely strong position in this situation is that in europe in particular we have a very very strong ability to react in to unfold field in seats and demand both in
spk_2: d to see and in wholesale so continuing to see the consumer strength that we see now for the rest of the year we will be able to react and fulfilled into that beyond the preplanned order books
spk_5: yep and i think just to sort of talk a bit more to put numbers around a dinner and the european order books is a reminder for spring twenty three
spk_2: we had order books in at high single digits
spk_15: and you know we're happy to say that that is actualize fully as product supply chains normalize and products that are showing up earlier than expected now giving a mind that's about in line with were pre pandemic was but earlier than us or the accounts are planning the accounts been very eager to take their products away but a ship
spk_16: i'm in partially in fourth quarter and the rest early here in the first quarter and we're seeing from the flows for such as are setting is strong consumer a sponsor the with a great about the spring order book as stuff i mention the followed or books have come in and the numbers are low single digits from a growth perspective which is no not aligned with or see
spk_2: from consumer a sponsor days with believe they're they're taking a cautious outlook and they were lining our overall expectations of the year to that but i do think it's important highlight what's the on and mention that a we saw specifically do the covert period know that volatility our european operating model the team is built the never stop for film a model best in class way but if she's quickly into demand that showed itself then and i think is in consumer trend stay where they are we believe we well positioned to do that as well heading into the year
spk_9: bought it and then to flashy to some marketing how do you see marketing progress do the yeah and what percentage of sales dc marketing becoming thank you thanks dana so under marketing side as i mentioned in my prepared remarks calvin jonathan under calvin team has done a fantastic job to start with calvin in calvin's or nothing is to campaign umbrella is very much connecting back to the iconic beloved dna and making it super relevant for today whether it's like a be jordan kendall jenner and most recently jong kook from from bts the bts star for is now becoming a calvin global ambassador and eight he was remarkable yesterday we tested on instagram at fact and i were following the reaction hour by hour seen in a few hours we got a million and a half like we got hundred and fifty seven thousand comments like from our customers are consumers saying things like our dream have come true
spk_2: i'm dying my life if complete i'm ready to die
spk_5: i'm crying right now said that the it you can all do you get you to you can only do that if you have an iconic beloved rand like calvin and tommy and then connect dot with incredible products an incredible talent than than something i saw a late last night a team member sent through to tommy and shawn mendes and are doing the classics reborn campaign also focusing on the dna the classic american cool the style icons and making them relevant for today and fantastic response to that than what i received last night was a video clip from one of the
spk_17: it's it's called the arts one of the premier shopping centers and mexico city shawn mendes were there and did an inept immersive at that appearance and thousands of people screaming going why and so safe if if this fantastic balance between
spk_0: dipole next time that dna of the brand and then making it current so these campaign umbrella would just continue and it's it's for us it's about systematically repeatedly executing better and better and better so that's that's from a marketing perspective and then we do
spk_18: then as i mentioned we are investing more in marketing so sacked will you be able to share more of the details of what what that means a number of yeah we're making a commitment this year to increase marketing spend both and dollars and i adding importantly as well in percentage of revenue to the percentage of revenue increased thirty to forty basis points this year to almost six percent
spk_8: and that's just the first step on a journey to t v investments priority for us as he was we work on delivering the pb it was plan so a big step forward almost six percent this year
spk_2: thank you thanks them and know
spk_16: i next question will come from chris knock down with bank of america your rivals open
spk_4: the guys the morning
spk_5: miss got the underlying assumptions around your north america wholesale business would be very helpful if you could discuss how sell out trends are faring for both brands giving your help the or inventory position and then whether you think you're in a position that trace of retailers begin the turn more positive as you move to the year thanks yeah thanks chris so he made in north america as we mentioned that the of performance in north america was driven by first of all our need to see business but there is an underlying driver of improvement in north america that i really want to mention which is which was and it connects to wholesale which is
spk_18: while we strengthen our performance in the full price wholesale channel with mazes to were seeing improved sell true trends for both calvin and tommy and and wifi tremendous potential here and in am in in in working with mazes and and expressing our full price
spk_2: press as in north america stronger for both calvin and tommy with we're seeing so much potential there and and the exciting part in two for and start of this year is that we'll see we're seeing a translate to to go a high growth and and and improved shelters app
spk_9: we that said there is a cautious outlook in north america as well from from all our whole said partners coming back to the
spk_19: the macro economic the volatility yeah i figure we expect as we'd said dtc to be our big focus in north america and then but closely behind that stuff i mentioned sort of our our full price execution with our key partners like macy's you know beyond that we do expect the the broader also environment to remain sort of i would say recounts rico
spk_16: cautious
spk_0: and with our focus increasingly on those global best sellers and that course that a products i think it you know when we see the improve sell out were able to work closely with those partners and they're eager to follow back in with inventory as were buildings you know something closer towards a nearby the stock model with them to go through so they were optimistic that
spk_20: you know to those trends continue with you during the year that will be able to continue to fulfill that demand
spk_14: regardless of where the consumer demand goes okay grey and then pump and going to be one way and doesn't sign up need to talk about how that reopening is going and what level of recovery assuming in the backlog to get to your the close oh god yes absolutely so so china as i mentioned before us while china as a market and is a very important growth market for us and seeing the reopening of seeing the cancerous combat spin really strong positive trend so that's why we are planning age
spk_2: yeah for twenty twenty three at the highest growth region
spk_9: so what we see is very encouraging
spk_2: we have time for one more question
spk_4: thank you i last question will come from ike barracks out with false park out your atlanta falcons hey everyone i let me add my congrats on piggy this who are looking out the next couple years back it's only it's been about a year since the to the unless they and the pvh plus plan on targets given
spk_5: yeah you're fifteen percent margin goal for twenty five was laid out get you're you're looking for ten the sea or how are you feeling in turkey a year later
spk_21: in your progress towards that fifteen and then i guess to that point on beyond twenty five when these licensing dynamic start to play and i assume that students for the margin is are some way we should think about margins past twenty five as the business model changes a bit mom more from own are we from license thanks
spk_22: oh thanks i gave stuff on here so if i start from just an overall business perspective and and value creating perspective
spk_2: first year in now into the pvh floss plan there is significant growth opportunities goals from their revenue and a margin expansion perspectives in each other through each of these five gross drivers the the the product the increased marketing consumer engagement the
spk_23: the place execution the demand driven supply chain that we are moving towards the cost efficiencies and then investing behind these girls rival so a one year when when i look at this i see that we are just in the beginning of unlocking this value and it's the independent the macro because you're so much
spk_0: we have in our own house and was what excites me the most it's to see how how we have a team have come together during this year and and really locked into the direction we set out and now it's just about consistently delivery improvements sat now we we built our pbs plus the financial model with mexico nobody in over anymore two year period i grew safe to assume that we've experienced before into macro economic cycles and we've seen them so obviously we're going to drive group whose opportunities of they're just like we saw on twenty twenty two with high single digit underlying grew up in all dimensions and we will also continue to manage the remainder the piano to our profit efficiency so the dtc channel max and pricing power to drive gross margin improvement and all elements of cost product cost supply chain costs your thought about that already today in all elements of as dna and that we knew and we talked about we had efficient she's to work your way through so we knew the journey would not be linear and obviously it hasn't been in a first year but as stuff on said we're just as committed to delivering the other targets as we let out a year ago and the more just to build on most active saying the more we lay in in as a team on these five girls drivers we also see the specific opportunities and then we unlock them step step by step and rough thank you very much pressure that
spk_1: so we that branding our call and looking forward to reconnecting and next quarter thank you thank you for you can gentlemen does does can quickly people to fourth quarter and forty or two thousand twenty two armies compact call we appreciate your participation and you meant have come at any time good morning everyone and welcome at today's pvh his fourth quarter and forty or two thousand twenty two earnings conference call at this time of depends or in a list and only mode later you will have an opportunity to ask questions during the question and answer session you may register to ask a question at any time by pressing be store and one keys on your touch tone phone please note that this call may be recorded and that i will be standing by should you need any assistance
spk_2: it is now my pleasure to turn today's program over to cheryl freeman senior vice president of investor relations figure operator good morning everyone and welcome to the pvh corp fourth quarter and full year twenty twenty two or three call leading the call today will be on morphine chief executive officer and that coughlin chief financial officer this webcast and conflict got this being recorded on behalf of pvh and consists of copyrighted material it may not be recorded rebroadcast or otherwise transmitted without pvh is written permission your participation competition consent having anything you say have you any transcript or replay of that call the information to be discussed and forward looking statements that reflect pvh his view as of march twenty twenty twenty three of future events avenue for one be a statement their subject or with an uncertainty as indicated in the company's ftc filing and the safe harbor statement including the press release that is this i picked of the call these include pvh rate the chief strategies objective expectations and intention and the company's ability to realize anticipated benefits and fading from to that sure restructuring and similar plan such as the plan cost efficient the action and out in it's second quarter earnings release and it's twenty twenty one sale of africa an exit from his heritage brampton to focus on the calvin klein and tommy hilfiger businesses technically the coven eighteen pandemic global inflationary pressures and the war in ukraine continued at impact on pvh of business cashflow and result of operation there is significant uncertainty about the duration and extent of these impacts as a result what that settlement call could change materially at any time therefore the operation of the companies is it and it's pitcher results both of operations could differ materially from historical practices and results for curry description estimates and suggestion pvh does not undertake any obligations of the publicly any forward looking statements including without limitation and he estimates for writing remedy working generally the financial information and projection to be discussed will be on and i got the that as define under the will reconciliation the gap amount are included in pvh of fourth quarter twenty twenty two earnings release which can be found on w w w that pvh that i'm in the companies can't report on from hk furnished to the fcc a connection the really at this time i'm pleased to from the conference over to stop on our son thank you cheryl and good morning everyone of thank you for joining our called today we are pleased to report that we drove strong fourth quarter financial performance ahead of expectations for both the top and bottom line led by strength in our direct to consumer businesses revenue exceeded our expectations on both a reporter and constant currency basis and lying growth excluding the impact of currency and the russia ukraine exit was plus nine percent in the fourth quarter driven by better than expected results for both tommy hilfiger and calvin klein we are coming into twenty twenty three with strong momentum and expect to continue to grow our top line led by outside the to see growth while planning to deliver even margin expansion and double digit eap yes growth the growth in twenty twenty two was driven by strong consumer response to our product marketing and marketplace execution across both brands and across all regions we showed that we were able to compete to win in what proved to be a much more challenging macro environment than any of us expected going into the year and i would like to highlight some of the practice choices we made to make that happen last april we shared a long term vision and multi year growth plan at are a mess today the pvh plus plan is our brand focused direct to consumer and digitally led gross plan that will over time build calvin klein and tommy hilfiger into the most desirable lifestyle brand in the world and in parallel making pvh one of the highest performing brand groups in our sector the clarity of our direction and plan have provided a very strong focus for everyone in the company we know where we're going we know how we will get there and we made great progress in the first year of execution this stronger execution focus is gaining traction across the company and we will continue into this year in twenty twenty two both calvin and tommy delivered increased strength in product with hero products across key categories and in our consumer engagement with cut through campaigns collaborations and work class talent partnerships this strength in product and consumer engagement is a big reason we drove high quality plus nine percent underlying revenue growth with increase pricing power for twenty twenty two from a regional perspective europe continue to grow from a position of strength in a challenging environment and delivered a very strong plus ten percent growth in years when adjusting for the rush exit in asia we are sending out to accelerate our growth we were able to drive outstanding performance in the market stuff we're not in colby lockdown driving plus eleven percent constant currency growth for the total region and plus twenty three percent constant currency growth outside of china and in north america we were able to start to win more with our domestic consumer driving plus nine percent growth for tommy and calvin together in a brand a creative way recognizing that this is the beginning of a multiyear unlock from the supply chain perspective we successfully navigated through the covered related challenges over the year we increased our on time deliveries from sixty percent to ninety five percent which have and will continue to deliver positive impact on both availability and cost we are now about to unleash the next steps in building our supply chain to become a real strategic value driver we are creating a strong data driven sourcing approach that will return not only efficiencies and cost reduction opportunities but also enable us to invest back into great price in addition where optimizing our school breath to create higher productivity by cutting the unproductive assortment tail we also came into the year and knowing that than important underlying driver of the pvh plus plan is to become more cost competitive in a way that simplifies how we work increase our speed and decision making and empowers our team to execute and enables us to drive new growth by making strategic investment in the area such as marketing supply chain and technology i'm pleased to share that we made significant progress here during the year perhaps the most important improvement we are made this past year was to continue to strengthen our management team with the capabilities needed to translate are pvh plus plan to impact from my experience the strength of the leadership team is the single most important factor in successfully translating of value creating plan into action and impact i'm proud to share that we made significant progress in this critical area back coghlan joined us our cfl david seven as our chief supply chain officer a sarah bland as our chief strategy officer all three bring highly relevant experience and we are already seeing the positive him back from their leadership and then us of this month eva serrano joined us calvin klein global precedent having spent twenty years as one of the key layers behind the growth of sarraj and inditex and donald kohler joined us calvin klein america as president having spent a big part of his career on the team that turned around burberry both from global roles and thus head of north america for them with these appointments complimenting our strong existing leadership team we have the capability his experiences and the competitive mindset needed to deliver on our long term pvh plus growth commitments finally i spent a big part of my time in twenty twenty two traveling to experience our markets or stores from the consumers perspective and i continue to be impressed by our people and teams around the world i want to thank all of our associates for their hard work during twenty twenty two and give a special a recognition to our store managers they're incredible work ethic expertise and their passion to everyday go out there when with a consumer is an inspiration to all of us now turning to our regional performance and how we are connecting al bronze and executing the pvh plus plan across each region nodding with europe our europe team continued to drive very strong performance reflecting the power our brands have with consumers in the region despite macro headwinds we really leaned into the business of finish the year strong we delivered double digits year over year growth for the fourth quarter and had another record quarter exceeding one billion euros in revenue for the year europe also delivered double digit the underlying revenue growth adjusted for fx and i'll rush exit including growth in every quarter of twenty twenty two wrote in the fourth quarter was led by our retail stores which generated very strong performance during the holidays selling period we also saw strong early wholesale ship so spring twenty twenty three collections which have been very well received by our partners growth was enabled by better product of ability increased operational efficiency as and fast a product delivers our tommy product strategy continues to be driven by product elevation winning assortments and product store is true to the tommy dna all with a focus on reaching than ration of consumer this was supported by our hero product strategy which was a strong and they brought growth in twenty twenty two any twenty twenty three we are further increasing our category authors and with that amplifying our iconic products or calvin we continue to leverage are proven playbook from tommy to further build out calvin as a lifestyle brand across product categories we see strong growth momentum in footwear assessor next door established calvin klein underwear and james businesses we have seen favorable demand from consumers for our spring connection with on plan early seltzer at wholesale looking ahead adjusting for russia and improved delivery performance compared to last year's supply chain disruptions are shipped order book for form is expect it to be up low single digits while our wholesale partners are taking a conservative approach given the potential for macroeconomic volatility we are well positioned to capitalize she's stronger demand continue through our best thing class operating model and strong never out of stock for olga moving on to asia pacific our asia team continue to deliver a solid growth in constant currency in the fourth quarter outside or greater china in greater china we generate a stronger than expected eleven eleven performance which was offset by the widespread covert impact for the year the region generated strong double digit constant currency growth and both cabin and tommy continue to increase their brand awareness focus on key growth categories and hero products an ongoing efforts to refine the products assortment through region the relevant products with skew rationalization on driving results in the fourth quarter our hero products outperformed would hire a yours and lower discounts we continued to lean in and when keep consumer moments such as lunar new year by driving engagement and performance about plan fueled by successful product capsule launches and consumer activations both brands continue to move up the rankings on t mall underscoring the strength of our rounds and product in the market and how well they're resonating with consumers for the holiday we launched a tommy me feet capsule collection which featured iconic cartoon character murphy the only channel campaign and capsule launch was brought to life for cross retail social media inflows for collaborationist and ecommerce partnerships fueling strong brand heat charming also lost the dedicated capsule and consumers have the opportunity to dress virtual avatars in the collection cold ready player me as we look to or twenty twenty three we are working to further expand the of digital capabilities and to enable a single consumer view across channels as well as fast a digital execution we continue to make investments in new channel such as though you live streaming and collaborate patients with the team all innovation center which leverage as big data and consumer insights to offer a customised thoughts we also laying the foundation for new and then house capabilities in our supply chain through a show frazier sourcing as well as improving our demand planning to focus increasing the encore replenishment and a read and react model to naval shorter leave times with higher in see some by i looking ahead are rather have a clear premium brand and product positioning with opportunity to grow farther in all markets we continue to lean into further increasing overall brand awareness especially in china were both calvin and tommy are under penetrated lastly shifting gears to our business in north america that by step we are getting early traction in growing the business in a brand a creative way underpinned by your clear category and products focus to deliver a sustainable profitable growth with an increased focus on the domestic consumer our tommy and calvin businesses delivered mid single digit growth in the fourth quarter lead by our d to see stores we delivered strong performance despite a very promotion on holiday period given elevated inventory levels across the market for the year are tommy and businesses increased hi single digits our d to see stores delivered high single digit positive comes in the fourth quarter driven by improved product assortments and in stock levels most importantly we continue to drive improved domestic consumer comps our assortment and product improvements continue to yield results for tommy our global best seller initiative which focuses on combining global winning design scaled quickly to seventy percent of our d to see business this initiative is generating hire a yours stronger seltzer is and higher gross margins compared to the balance of the assortment one great example that was shared with you last quarter of pertain to are expanding polo business building on the prior quarter success in the key category in the fourth quarter hour three biggest polo product franchises were up plus twenty one percent versus two thousand and ninety we also saw significant progress with on time delivers in the region with over and ninety percent of our spring season on time compared to year ago where we were just thirty two percent on time at the start of the year diff improvement if a direct result of our improved supply chain leadership looking ahead to twenty twenty three we are focused on applying are learning is from twenty twenty two a further scale our growth initiatives in north america we're doubling down on the performance drivers in our d to see stores through rigorous assortment building and the editing even better match to demand with a focus on in the stock improvements in key categories for tommy were expanding the tommy global best seller initiative to the wholesale channel and for calvin were building market share and ck underwear by improving replenishment execution and in stock levels across all channels coupled with our impact for marketing execution at the same time we're making investments in store upgrades to ensure our stores deliver an elevated consumer experience next i'll share a few global brand highlights and how we are bringing both brands to live for the consumer beginning with calvin klein jonathan bottom the are global calvin klein cml and hour calvin marketing team have done a fantastic job in going back to the iconic dna of callings nine and made it highly relevant to today during the past few months we have been able to see this were attempt to live under the campaign umbrella of calvin's or nothing in january the campaign launched we global tennis star carlos our careers in our signature cotton underwear styles wearing our classic straight james and he drove strong results more recently the spring chapter of the campaign was launched globally starring ambassadors and friends of the brand including michael be jordan janney kim kendall jenner fk a twigs and the aaron taylor johnson dressed in the latest underwear enjoy james the full cast introduced a wide range of news dies for the season the campaign launched with michael be jordan time to the release of he's highly anticipated film creed three the campaign images quickly went viral across social media and generated very high engagement the cola post between calvin and might you be jordan is now one of our highest performing posts to date with a total reach of eight million on own social we so incredibly strong organic broadcast and digital coverage across entertainment pop culture and fashion outlets including on jimmy kimmel live for a total reach of one point three billion in the twenty four hours after launch and the campaign pick out didn't stop there the browns cola post with kendall jenner is now the highest reaching post of the year with thirteen point four million the reach again a testament to the power of the right image tree and the right talent to cut through also launching this week jong kook a member of the extremely popular south korean boy band bts will join the brand as global ambassador of for calvin klein jeans and calvin klein underwear moving on to tommy hilfiger tommy with it's unique classic american cool dna continue to drive strong brand visibility and relevance among our target consumers the brand generated approximately four billion impressions from november two january tapping into a moment of strong consumer relevance the brand smithy collaboration which i just spoke to although developed for the lunar new year celebrations was leveraged globally and he was one of our strongest performing capsules looking ahead are tom it's bring campaign classics reborn with sean mendez recently launched globally and as part of that tommy and sean just hosted a tour of immersive events in london where lean milan and mexico city selected flagship stores held in store activations sustainability stance at the heart of this collaboration with a collection incorporating a broad range of recycled and others sustainable materials the tommy genes label a source of fostering new consumer connections through the upcoming tommy areas collaboration which features a bold and creative play on all things tommy genes the collection is inspired by archival tommy pieces and will in the coming days be available for early access on line in our own stores in any key three to a retailer's globally
spk_4: or both brands we're looking forward to an exciting twenty twenty three it would be a year to take another big step forward in delivering on our pvh plus commitments towards our long term vision of building tommy and calvin into the most desirable lifestyle runs in the world all while becoming one of the highest performing brand groups in our sector i recognize the macro economic environment will likely continue to be tough so we will be relentless in executing are five pvh class growths drivers across both brands and all regions in winning with product we will advance our account agree office and create the best here rural products in the market and winning will consumer engagement we will deliver seasonal cut through campaigns charge by an increasingly strong network of aspiration on top you'll also see us improved aspiration presence of all consumer touch points ranging from social media e commerce to in store will seem vesting more into marketing as a share of sales to make sure we continue to cut through with our initiatives in winning in the digital marketplace we will continue to drive de to see fans across both the of stores would you improve productivity all why we strengthen our partnership and business without key wholesale partners and increasing our full price penetration we are continuing to drive ecommerce strength both owned and operated and we'd keep partners
spk_5: we're only in the beginning of developing our demand driven supply chain and this year we will make progress in cost of goods delivery accuracy and leveraging our scale across both brands
spk_4: all while we take baby steps to become cost competitive going after efficiencies while investing behind our girls drivers i look forward to building on the strong momentum we started in twenty twenty two to win in twenty twenty three and beyond we are starting to get real traction around addition to plan the execution and most importantly the team and the mindset needed to get it done
spk_2: over time the recent norm as power in the compound an effect on being consistent in direction and value creating focus through the pvh plus plan
spk_4: i'll now turn the call over to sack to discuss the financials in more detail thanks define a good morning
spk_2: my comments are based on non gap results and are reconciled and our press release as defined as last we're extremely pleased with our results for the fourth quarter in the four year would significantly exceeded both our top and bottom line guidance driven by strengthen our european business and continued cost discipline globally twenty one the to was he of unprecedented macro economic volatility and it is tough environment we fought hard to win by focusing on what is within our control
spk_24: our ability to drive underlying revenue growth of nine percent for twenty twenty two and earnings per share of a dollars and ninety seven cents in line with our initial expectations at the start of the year approximately nine dollars per share is a testament to a disciplined execution of our strategic priorities and the power of our to global brands
spk_4: calvin klein and tommy hilfiger
spk_2: we are encouraged by the positive momentum we drove in the fourth quarter and are confident that we can deliver solid top line growth and twenty twenty three while driving increasingly improve profitability
spk_5: i will now discuss or twenty twenty two results in more detail and then we'll move on to our outlook for twenty twenty three
spk_4: our shown fourth quarter results delivered underlying revenue growth of nine percent versus last year exceeding our top line guidance by four percent on a constant currency basis and we delivered earnings per share of two hours and thirty eight cents significantly exceeding earnings guidance by seventy three cents
spk_2: our underlying revenue growth was driven by both are tommy hilfiger and calvin klein brands we delivered strong revenue growth in europe and continued growth in north america driven by the direct to consumer business we continued to experience negative impacts in china from the coven pandemic but the rest of asia pacific continue to drive growth in constant currency
spk_4: on a reported basis fourth quarter revenue was up two percent which reflected a six percent negative impact from exchange and a one percent negative impact from the war in ukraine
spk_5: we continue to focus on driving performance in a direct to consumer business where we have the closest connection to our consumer and dtc was a double digits on an underlying basis driven by strong hi single digit growth in north america and mid teens growth in europe in euros
spk_4: i reported basis did you see revenue was up four percent compared to last year which was like a six percent negative impact from exchange in a one percent negative impact from the war in ukraine
spk_5: dumb original perspective fourth quarter revenue for international business was up eleven percent versus last year on a constant currency basis
spk_4: continuing to significantly exceed twenty nineteen pre pandemic levels within international business or european business had another record quarter following the first one billion euro quarter in the company's history in the third quarter or age of us have a bit as was down a percent on a reported basis a good a nine percent negative image packed of exchange
spk_2: fourth quarter results in asia pacific were severely impacted as covered cases in china rose following the lifting of restrictions their butts are improvement at the end of the quarter and into the first quarter of twenty twenty three
spk_5: in north america revenue in the fourth quarter was up five percent overall for tommy hilfiger and calvin klein with our retail store business up high single digits vs last year as we drove sequential improvement versus the third quarter in sales to domestic consumers our domestic comp sales are now up mid single digit
spk_2: compared to twenty nineteen levels
spk_4: our global brands also continued strong underlying grow balance across both brands with tommy hilfiger revenues up ten percent under constant currency basis and calvin klein revenues up eight percent on a consequence you basis reported revenues were up three percent for both tommy hilfiger and calvin klein
spk_5: in the fourth quarter we deliver gross margin of fifty five point nine percent up approximately one hundred and ninety basis points compared to prevent damage levels but down approximately two hundred and forty basis points compared to last year gross margin reflected favorable region and channel next compared to last year as well as planned price increase
spk_4: his those benefits were more than offset by higher product cost elevated ocean freight rates and increase commercial selling compared to last year as inventory levels are elevated across the industry
spk_2: later our discuss our some of these headwinds transition into tailwind for twenty twenty three
spk_4: sg in a expense as a percentage of revenue for the fourth quarter it was forty seven point two percent down nearly four hundred basis points from last year and better across all dimensions of the business we continue to take a disciplined approach to managing expenses driving cost efficiencies while making targeted investments in
spk_2: strategic areas to fuel growth in line with the fifth growth driver of the pvh plus plan in total even for the quarter was two hundred and fifteen million dollars exceeding expectations due to strong revenue performance and lower expenses operating margin was eight point six percent as reported and nine percent excluding a negative impact of approximately forty basis points due to exchange
spk_4: earnings per share was two thousand and thirty eight cents compared to two dollars and eighty four cents in last year's fourth quarter and exceeded our guidance by seventy three cents almost entirely driven by the improvement in either earnings per share for the quarter also include a twenty three said negative impact compared to the prior year related to exchange a thirteen percent negative impact to the war in ukraine excluding these to external factors earnings per share was almost flat to prior year
spk_6: our tax rate was approximately twenty two percent as a reminder in last year's fourth quarter we benefited from noncash tax rate relief tied to our purchase of the calvin klein brand back in two thousand and three this benefit ran out and twenty twenty one as a result attacks are in the fourth quarter of last year was a benefit of approximate
spk_4: thirty three percent
spk_5: inventory was up thirty four percent at the end of the quarter compared to the prior year period you to a combination of factors as we've discussed inventory levels were abnormally low and twenty twenty one do to supply chain and logistics disruptions which intensified in the second half of twenty twenty one
spk_4: we have seen steady progress over the course of twenty twenty two towards pre pandemic production capacity and significantly improved delivery times and in the fourth quarter this year we experience much earlier receipts at him and tory as the supply chain and logistics disruptions had east this enabled us to capitalize on incremental top line opportunities and wholesale for the quarter but also contributed to the higher ending inventory levels
spk_2: absent the elevation due to timing of receipts we have normalize back to inventory levels that support or plan growth we also felt the full impact this quarter of higher product costs compared to last year looking into twenty twenty three weeks back cost to improve as we move to the year particularly in a second half
spk_4: we ended the for your twenty twenty two with revenue of nine billion dollars and underlying revenue growth of high single digits aligned to our long term financial algorithm and driven by growth in all regions and in both are tommy hilfiger and calvin klein brands
spk_5: or for your reported revenue was down one percent versus prior year and referred a negative impact of seven percent from exchange and three percent from the exit of heritage brands and the war in ukraine
spk_2: operating margin was nine point five percent and our tax rate for the year was twenty three point three percent overall we deliver earnings per share of eight dollars and ninety seven cents delivering our initial start of your guidance of approximately nine dollars per share additionally we delivered on our commitment under the pvh plus plan to return excess cash or shareholders were turning over four hundred million dollars to shareholders during the year to the repurchase of six point two million pvh shares and our dividend including approximately seventy three million dollars for the reproach
spk_4: just have one point one million shares in the fourth quarter moving on to our outlook
spk_2: in twenty twenty three we expect to continue to execute our strategic priorities to unlock the full potential of our to global brands tommy hilfiger and calvin klein and as a result drive strong financial performance across all regions we ended twenty twenty two strongly in are entering twenty twenty three with momentum behind the
spk_4: pv it first plan
spk_5: with that said we knowledge that macro economic uncertainty is still exist with consumer sentiment tempered by inflationary concerns particularly in north america into a lesser extent in europe and retailers planning cautiously due to elevated inventory levels industry wide as such we have approach our plans for twenty two
spk_4: three with a healthy balance of optimism and prudence
spk_5: we're projecting revenue growth in all regions with operating margin expanding to approximately ten percent and earnings growing eleven percent to approximately ten dollars per share
spk_2: for the full year or overall revenue is projected to grow approximately three to four percent as reported and approximately two to three percent on a consequence he basis compared to twenty twenty two
spk_4: this reflects a benefit of less than one percent from the fifty third week of twenty twenty three europe and north america are planned to grow low single digits were strong growth and are direct to consumer channel tempered by wholesale as retailers remain cautious on buys in asia pacific plan to grow by low double digits as china has eat
spk_2: zeid covered restrictions
spk_4: we expect a for your gross margin rate increase over one hundred basis points compared to twenty twenty two despite approximately one hundred basis points of higher cost you to exchange which we have previously discussed the a prominent are gross margin is supported by a favorable shift in channel and regional next compared to twenty twenty two as we accelerate growth and are higher margin dtc business in line with our pvh plus strategies and are dtc and international business as make of a larger portion of total revenue additionally we are seeing ocean freight rates coming down rapidly we are using significantly less airfreight and abnormally high raw material cost will ease as he moved to twenty twenty three particularly in the second half of the year sg in a expanses a percentage of revenue for the full year is expected to increase approximately seventy basis points compared to twenty twenty two we continue to drive cost efficiencies across the business while targeting our investment focus on key areas that drive growth especially marketing
spk_5: we expect to generate increasing savings as we move through the are related to our plan to reduce people cost in our global officers by approximately ten percent but and twenty twenty three but these benefits are more than offset by the impact of regional and channel next which other favorable to are gross margin carry higher expenses
spk_0: we expect our for your operating margin will increase to approximately ten percent reflecting hi single digit you but growth interest expense is projected to be approximately one hundred million dollars and our tax rate for the year is estimated at approximately twenty four percent
spk_7: for the for your twenty twenty three we're projecting earnings per share to be approximately ten dollars up eleven percent versus twenty twenty two
spk_5: looking at the balance sheet we expect to build cash with a significant increase in cash from operations reflecting an improvement and working capital due to lower inventories compared to twenty twenty two as receipt below normalizes we're projecting capital spending of three hundred fifty million dollars which is approximately four
spk_8: four percent of sales as we invest our stores supply chain and technology and in line with our previous plus plan priorities
spk_9: we're also currently planning at least two hundred million dollars of share repurchases and will continue to review opportunities for capital deployments as we move through twenty twenty three to zero in on the first quarter specifically we expect to continue to be challenge by residual inflationary pressures and lingering macroeconomic uncertainties how overall revenue is projected to be relatively flat as reported in to increase by approximately three percent on a constant currency as compared to the prior year first quarter earnings per share a project to the be approximately one dollar ninety cents which reflects a negative impact of approximately ten cents due to exchange translation
spk_8: our tax rate for the first quarter is estimated at approximately twenty four percent interest expense is projected to be approximately twenty three million
spk_2: before you open up for questions i just want to reiterate that we remain confident in our ability to win in a tough environment as evidenced by or performance in twenty twenty two and while we expect the macro environment will continue to be volatile and twenty twenty three we are continuing to focus on executing our strategies and drive top line grow
spk_8: improve profitability and strong double digit abs were the twenty twenty three
spk_2: and with that operator we were like to open it up to questions
spk_8: yes
spk_9: up climate he would like to ask the question please press the star and one keep on your touched on phone if at any time you find the your question has been addressed you may have i'm not your stop and look here by pressing start hill
spk_2: i first question will come from optical with guggenheim your like the help and
spk_10: i am good morning i'm a couple questions i have actually i'm on the first one can you to talk about your what surprised you the most in the fourth quarter and acme nick the results would just while had what we expect and then the second piece of it is a when you think about that pvh plus plan
spk_0: what elements didn't get much traction on that give you the coffin and that you've portrayed in a for f y twenty three packs
spk_11: well thank you and anger mind bob levy it's it isn't so first of all hundred surprised i think you for i would say what what if the laptop surprise us because we sat out the pvh plus plan almost a year ago and we started leaning into our i call it grabs of set goals are absolutely unique props there are a handful of those grass globally and we have two of them calvin and tommy and the pvh plus plop it's about leaning and to each of the iconic bras
spk_2: main product categories and we were able to get traction on that there lead time so we set out to do that for year ago and what you can see in in the fourth quarter was that we were starting to get traction so starting to get early traction on the product category focus starting to get traction in cure for on developing some of the best hero products in the market the most important in the consumers wardrobe and then we were able to really deliver a capture campaigns with work last topic so we were able to tap into the iconic strength of the brand they were able to increase the product strike
spk_8: and then bring that to market and compete to win in fact mentioned a much tougher macro wait
spk_12: a cultural campaigning calvin and a cultural campaigning tommy that look at it as a complain umbrella that will continue to go because it's really combining the category of the hero products the world class talent and and that's what we can see you for consumer facing that
spk_2: on the underlying business and just side we were able to drive better much better supply chain execution so we were sixty percent on time delivery last year heavily affected by by the kobe and disruption today where and ninety five kills two hundred percent on time and then we were able
spk_5: to drive cost efficiency is why the investing more in growth see you will hear such good
spk_4: the take your through a hobby hobby invest more in marketing and and then as as the final part is the leadership team and getting dirt their capabilities on the leadership team we needed to execute their so this this is some of the highlights so what what i see drop for fourth call
spk_5: moderate and also how it will continue that this is just the beginning and that drives to confidence for doubt like this year
spk_4: thank you thank you
spk_5: our next question will come from michael bennett a with credit carolina us open
spk_25: hey guys thanks for taking a question for me i add something rats on a on a great corner am
spk_5: i guess against i have to on for the on the finance that that can you give a little more color on citing the buckets you listed to drive the two hundred basis points underlying gross margin expansion of it would help us get a little bit of an idea of of the that magnitude of a different buckets there to see how your seen it and then you mention north america direct to consumer sales to domestic consumers are now i think
spk_4: said mid single digits above twenty nineteen and are you talk previously that almost thirty percent of sales in the doors are from tourists before covered can you offer any specific quantitative examples where north america dc stores are in terms of total productivity levels and profitability levels compared to pre coven and and what you think is the right pace investors can think about the recaps
spk_2: or some of that opportunity
spk_11: well thank you michael college stuff also let me just start from from the business side in terms of the gross margin
spk_13: strengthening in the outlook because i'm i'm encouraged by a lotta what i see on the gross margin side first cost of goods are coming down faith good straight if coming down
spk_10: the and and also the supply chain strengthening so that we are getting better at leveraging our scale with vendors so that's all favorable versus last year and then on the gross margin side we also have a shift in the business a regional and shannon make shift so international grows faster deep to see
spk_0: he grows faster
spk_14: so that's when the highest level from a business perspective suck if you don't mind going through more in detail and the putting some numbers around that room i go i think that first of was with said gross margin we expect to grow by over a hundred basis points this shivers is less fear and keeping in mind that includes
spk_2: i'm approximately one hundred basis points and transactional exchange head when the we thought were previously to your said your question the two hundred basis points of underlying improvement
spk_26: come as the by mention first we are planning for a significant increase in dtc penetration the line of the pbs plus plan and that drives almost a hundred basis points of gross margin improvement
spk_8: and then second you expect that several of the macro headwinds that we experience were increasingly transition to tear wins but as you work through twenty twenty three so included in that are significant reductions in ocean freight rates and a decrease in utilization airfreight as the supply chains of normalized
spk_2: those two changes alone or were of approximate hundred basis points of gross margin improvements ah the those the two main drivers though he expect to see who the in our favorite again starting with both of you know the exchange more the first half story and then increasingly these other measures taking a more powerful impact in the second half of the year melanie taught us a little bit i think about
spk_4: in terms of the international stores
spk_5: at this point in time our outlook
spk_14: does not count on a return to twenty nine few levels of international tourists were still assuming a significant decrease vs twenty nineteen we're seeing the beginnings of some of that start to come back this year and as the coming back in they're buying strongly but i think we've learned of the last couple years and not count on that
spk_10: focus were made on the on really satisfy in the domestic consumer and that a bit area from there and if international tourists come in that to be a source a growth later in the year that's not currently planned for
spk_0: thank you
spk_15: but and like a one one part that was exciting into for was to see the domestic also made a focus we have had over the last year on when a more with a domestic also or in north america to really see that we started to get traction there and that's something that we will continue to lean into at we haven't heard many other north america outlets improving says i see her think thanks for this the color summer
spk_2: thank you might thank you
spk_9: our next question will come from it safe go with u p s your line open great thank you so much and i can imagine for the for your guidance to expect revenue growth in all regions maybe to labrie a little bit of you give us idea of the pie thinking about growth in north america versus your purses asia and you yes absolutely of thank your j so
spk_2: in europe
spk_5: if let me just take it a step back to cure for that we were able to drive a very strong holiday performance in a in in a very tough back where in europe and we see the momentum continue and we see d to see to sacks point at as he mentioned with the d to see being the the the me
spk_4: main driver with see that being true for both europe and north america and asia ah when we look at north america it's continuing to build strength without domestic consumer in a brand a creative way and then when it highlights on a shave to come back of a
spk_5: of china and the chinese consumers and and we are very encouraged by what you're seeing early days they're coming out of it and i think just to put some numbers behind that we've talked about it is sort of the middle single digit range growth for the overall businessman's comprised of
spk_2: low single digit expectations and both north america and europe and then low double digits nature i think both in north america and europe we want to make sure what the uncertain consumer backdrop that were planning prudently for the year and i think we see some of that own terms the work we have with their accounts of a bit more cautious approach or they considering the volunteer
spk_5: the we're experiencing in a we think that that is a pretty way to plan for the or focus on those things in our control and then depending on how the or evolves if they're stronger consumer demand that we're ready to address that both in the us in europe is that comes
spk_4: okay great thank you so much
spk_15: thanks to
spk_16: thank you
spk_2: our next question will come from been a coffee with t to five hours your of open the morning of the wanting congratulations on the nice progress as you think about europe and the border but going forward and what you're saying and wholesale global a what trends are you saying how you saying audiobooks moving forward and the fall expression of your new collection being distributed balancing that let's define what certainly he see how you thinking about the growth both by ecommerce and your own stores as he moved to twenty three thank you
spk_9: well thank you day now so when we look out for twenty twenty three in europe we see strong consumer demand if we look at you one we see strong consumer demand continuing from to for last year so start of the year strong consumer demand in both to see channels and in wholesale cell service so consumers response was ring product is strong the for the back half of the year a wholesale partners are taking a more cautious approach and he comes back to the the volatile macro what what really makes us have a unique a strong position in this situation is that in europe in particular we have a very very strong ability to react into and force field in seats and demand though
spk_2: both indeed to see and in wholesale so continuing to see the consumer strength that we see now for the rest of the year we will be able to react and fold fit into that beyond the preplanned order books
spk_5: yep and i think just to sort of talk a bit more sports the numbers around at dinner on the european order books just a reminder for spring twenty three we had order books in at high single digits
spk_17: and you know we're happy to say that that is actualize fully as product supply chains normalize and products are showing up earlier than expected now giving a mind that's about in line with were pre pandemic was but earlier than us or the accounts are planning the accounts been very eager to take their products away but a ship
spk_10: i'm in partially in fourth quarter and the rest early here in the first quarter and were saved from the flows for such as are setting is strong consumer response or the with a great about the spring order book as stuff i mention the followed or books have come in and the numbers are low single digits from a growth perspective which is no not aligned with or see
spk_0: from consumer a sponsor days with believe they're they're taking a cautious outlook and they were lining our overall expectations of the year to that but i do think it's important highlight what's the fun and mention that a we saw specifically do the covert period know that volatility our european operating model the team is built the never stopped for film a model
spk_18: best in class way but cheese quickly into demand that showed itself then and i think is in consumer trend stay where they are we believe we well positioned to do that as well heading into the year
spk_8: bought it and then to flashy to start marketing having you see marketing progress to the yeah and what percentage of sales dc marketing becoming thank you
spk_2: thanks ten are so under marketing side as i mentioned in my prepared remarks calvin jonathan under calvin team has done a fantastic job to start with calvin in calvin's or nothing is to campaign umbrella is very much connecting backed to die tonic beloved dna and
spk_16: making it super relevant for today whether it's like a be jordan kendall jenner and most recently jong kook from from bts the bts star for is now becoming a calvin global ambassador and if he was remarkable yesterday we tested on instagram at fact and i were following
spk_2: the reaction hour by hour seen in a few hours we got a million and a half likes we got hundred and fifty seven thousand comments like from our customers our consumers saying things like our dream have come true i'm dying my life if complete i'm ready to die
spk_16: i'm crying right now said that you'd get you can old you'd you'd you'd you can only do that if you have an iconic beloved round like calvin and tommy and then connect dot with incredible products and incredible talent than then something i saw a late last night a team member sent through
spk_5: through tommy and shawn mendez are doing the classics reborn campaign also focusing on the dna the classic american cool the style icons and making them relevant for today and fantastic response to that them what i received last night was a video clip from one of the it is called the arts one of the premier shopping centers in mexico city shawn mendes were there and did an immersive a appearance and thousands of people screaming going wind surfing if if this fantastic balance between in dipole next time this dna of the brand and then making it current so these campaign umbrella would just continue and it's it's for us it's about systematically repeatedly executing better and better and better so that's that's from a marketing perspective and then we then as i mentioned we are investing more in marketing so sacked will you be able to share more of the details of what what that means in numbers yeah we're making a commitment this year to increase markings them both and dollars and adding importantly as well in percentage of revenue to the presenters or revenue increased thirty to forty basis point
spk_27: this year to almost six percent and that's just the first step on a journey
spk_18: the t v investments priority for us as he was we work on delivering the pb it was planned so a big step forward almost six percent this year
spk_2: thank you
spk_9: like them
spk_19: on no i'm not question will come from chris knock down with bank of america you're gonna open
spk_16: the guys the morning
spk_0: scott got the underlying some around your north america wholesale business will be very helpful if you could describe how out trends are faring for both brands giving your healthier and been to a position and then whether do you think you're in a position that face of retailers begin the turned more positive as you move to the year
spk_20: thanks
spk_14: yeah thanks chris so he made in north america as we mentioned that the out the form is in north america was driven by first of all our the to see business but there is an underlying driver of improvement in north america that i really want to mention which is we with and it connects to wholesale which is how we strengthen our performance in the full price wholesale channel with mazes surreal seeing improved sell true trends for both covenant told me and and wifi tremendous potential here and in and in in in working with mazes and and and expressing our full price
spk_2: the presses in north america stronger for both calvin and tommy with we're seeing so much potential there and and the exciting part in two for and start of this year is that we'll see we're seeing a translate to to grow a high growth and and and improved shelters app with that said there is a cautious outlook in north america as well from from all our hopes and partners coming back to the
spk_9: the macro economics the volatility yeah i figure we expect as we'd said btc to be our big focus in north america and then but closely behind that stuff i mentioned sort of our our full price execution with our key partners like macy's you know beyond that we do expect the the broader or some firemen to remain sort of i would city council
spk_4: cautious
spk_5: and with our focus increasingly on those global best sellers and that course at a products i think you know when we see the improves sell out were able to work closely with those partners and they're eager to follow back in with inventory as were buildings you know something closer towards a nevada stock model with them to go through so they were optimistic that you know to those trends continue with senior year that will be able to continue to fulfill that demand regardless of where the consumer demand goes
spk_16: okay great and then pumped
spk_22: i'm the banks me one way and different sign that need to talk about how that reopening is going man what level of recovery assuming in the backlog to get to your little close our god
spk_2: yes absolutely so so china as i mentioned before us well china as a market is a very important growth market for us and seeing the reopening of seen the cancerous combat spin really strong positive trend so that's why we are planning asia
spk_23: for twenty twenty three
spk_0: as the highest scrolls region so what we see is very encouraging
Disclaimer