PVH Corp.

Please stand by. Your meeting is about to begin. Good morning, everyone, and welcome to today's PVH fourth quarter 2025 and full year earnings conference call. At this time, all participants are in a listen-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 the star and one keys on your touchtone phone. Please note this call may be recorded and that I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Cheryl Freeman, Senior Vice President of Investor Relations.

Thank you, Operator. Good morning, everyone, and welcome to the PVH Corp. Fourth Quarter and Full Year 2025 Earnings Conference Call. Leading the call today will be Stefan Larson, Chief Executive Officer, and Melissa Stone, Interim Chief Financial Officer and Executive Vice President, Global Financial Planning and Analysis. 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's written permission. Your participation constitutes your consent to having anything you say appear in any transcript or replay of this call. The information to be discussed includes forward-looking statements that reflect PVH's view as of March 31, 2026, of future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's SEC filings and the safe harbor statement included in the press release that is the subject of this call. These include PVH's right to change its strategies, objectives, expectations, and intentions, and the company's ability to realize anticipated benefits and savings from divestitures, restructurings, and similar plans, such as the actions undertaken to focus principally on its Calvin Klein and Tommy Hilfiger businesses and its initiatives to drive more efficient and cost-effective ways of working across the organization. PBH does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimates regarding revenue or earnings. Generally, the financial information projections to be discussed will be on a non-GAAP basis as defined under SEC rules. Reconciliations to GAAP amounts are included in PVH's fourth quarter 2025 earnings release, which can be found on www.pvh.com and in the company's current report on Form 8K, Furnished to the SEC in Connection with the Release. At this time, I am pleased to turn the conference over to Stephan Larson.

Thank you, Cheryl. Good morning, everyone, and thank you for joining our call today. I want to start by thanking our teams around the world for delivering a strong fourth quarter and finish to the year on our multi-year journey to build Calvin Klein and Tommy Hilfiger into their full potential and make PVH one of the highest performing brand groups in our sector. While there is, of course, more work to do, we have made important progress on this journey, and I will discuss this more in a moment. In the fourth quarter, we exceeded our guidance across revenue, operating profit and EPS. Total revenue for the company was up mid single digits on a reported basis above our guidance and flat in constant currency. Importantly, we drove better than expected gross margin performance in the quarter with sequential improvement across all regions. We continue to manage our operating expenses thoughtfully. while strategically increasing marketing spend behind our two iconic brands. And we drove a 10% non-GAAP operating margin, which would have been 11.7% without the gross tariff impact. For the full year, we delivered on our financial guidance across both the top and bottom line. And as planned, we returned to revenue growth for the year. Despite the choppy consumer and macroeconomic environment, we delivered a non-GAAP operating margin of 8.8% for the full year, above our guidance, including the impact of tariffs. When excluding the impact of gross tariffs, operating margin was 9.6%. We continue to simplify our operating model and drive more efficient ways of working, generating over 200 basis points of analyzed cost savings. We further strengthened our supply chain, ending the year with a good inventory position, up 5% versus last year, or up 1% when adjusted for tariffs, positioning us well for spring 2026. Finally, we returned over $560 million of capital to shareholders through our share repurchases, representing 15% of our shares outstanding. Looking ahead, while the macroeconomic environment remains uncertain, we have started 2026 with positive momentum and higher spring season sell-through trends across both brands and all three regions. While wholesalers remain cautious and the consumer macro environment continues to be uneven, our fall 2026 order books for Europe are positive. As we speak, we're in the middle of some of the most important weeks of the quarter, with Easter this coming weekend, which falls three weeks earlier than last year. For Calvin Klein, we have strengthened our global product capabilities and have addressed the transitory operational challenges we faced in 2025. Our deliveries are now on time, and our going margins are back on plan. This year, we will strategically increase marketing spend and further invest in the shopping experience across digital, shopping shops, and store concepts. For fiscal 2026, we expect to grow total revenue slightly on a reported basis and be flat to up slightly in constant currency with planned growth in direct-to-consumer across both brands and all three regions. We expect our non-GAAP operating margins to hold steady at 8.8% or 11% excluding the gross impact from tariffs. Additionally, we intend to continue to return capital to shareholders with a target of at least 300 million this year. Now, let me share a brief update on what drove our performance for the fourth quarter and full year 2025. Starting with Calvin Klein. In 2025, we continued to drive strong brand relevance for Calvin in both product and marketing. We sharpened our focus on our core categories, strategically infusing innovation and newness in the worlds of underwear and denim, supported by full funnel 360 marketing. We reinvented our biggest underwear franchises with the launch of the Icon Cotton Stretch, amplified with Bad Bunny and Rosalia, which grew 20% in men's and 13% in women's, driving our broader underwear business up low single digits versus last year. We also grew our fashion denim category, which represents over 50% of our denim business, with high single digits. In addition, Calvin returned to the runway, creating a strong halo for the brand, And during the year, we opened new Calvin Klein flagship stores in both Tokyo and New York City. In the fourth quarter, we leveraged key consumer moments and delivered strong engagement and results, generating higher full-price sales versus last year and sequential improvements in gross margin. Turning to Tommy Hilfiger. Throughout the year, we took Tommy's iconic DNA of classic American cool and cut through in major cultural moments, from the Met Gala to F1 the movie. We also launched our new partnership with Cadillac Formula One in Q4 with a positive consumer response. In addition, we announced one of the most significant new global partnerships for Tommy, our first football partnership with Liverpool Football Club. This news was the number one most engaged post ever to go out on Tommy's social channels, with strong resonance across Europe and driving immediate spikes in e-commerce traffic. In the marketplace, we further improved our e-commerce experience, opened new stores globally, and in wholesale, we unveiled our new shop-in-shop concept at the iconic Galerie Lafayette in Paris. And finally, in the fourth quarter, just like in Calvin, we leaned into our best product categories where we drove strong growth for our iconic cable knit sweater franchise with sales up over 50%. Overall, when I look at our global business for the holiday, we navigated an uneven macro environment across both brands, And I was particularly pleased to see that where we brought newness into key product categories, we were able to drive growth with higher full price sell through. Now, I will turn to our regional performance, starting with Europe. For the full year, the region declined 1% in constant currency, with two quarters of strong D2C growth in the first half, followed by a more muted consumer in the second half. In wholesale, we delivered sequentially improving order books each season in Europe, returning to growth beginning with our fall 25 season. In the fourth quarter, revenue was down low single digits in constant currency, in line with guidance and against the muted backdrop. In constant currency, wholesale was down 1% as positive order book growth was offset by lower in-season replenishment, and D2C was down mid-single digits. For both Calvin and Tommy, the areas where we have introduced the most product innovation into key categories continue to drive growth, and our focus continues to be on scaling that innovation across bigger parts of the assortment. We also continue to work more closely than ever with our wholesale partners, And in January, we held our second annual Global Partner Day to kick off the Fall 26 market launch. We had over 500 key partners in attendance and received the strongest and most positive feedback yet. Next, turning to the Americas. For the full year, we delivered mid-single-digit growth driven by our wholesale channel and strength in our e-commerce business. The consumer backdrop has been uneven, and in stores, industry traffic trends were increasingly challenged, resulting in our total D2C business down low single digits for the year. In the fourth quarter, we grew overall revenue by 4%, driven by wholesale as well as continued growth in digital. D2C declined mid-single digits due to lower store traffic, partially offset by AUR growth. Product-wise, we saw strength in denim for both men and women. Our wholesale business increased high teens, partly driven by the take-back of our women's sportswear and jeans business, with underlying growth in wholesale up mid-single digits. Despite lower traffic, we drove greater full-price selling for the region and over 200 basis points in sequential year-over-year gross margin improvements. Moving to Asia Pacific, for the full year, revenue declined mid single digits in constant currency or down low single digits, excluding the timing impact from the Lunar New Year calendar shift. But importantly, we delivered sequential improvements in our top line performance each quarter over the course of the year. In the fourth quarter, excluding the Lunar New Year calendar shift, our APAC revenue returned to growth and was up low single digits in constant currency. In digital, we delivered the second consecutive quarter of high single digit growth as we successfully concluded double 11 and the holiday period. Overall, we are seeing good conversion and positive traffic improvements across key markets, including China and Japan. We continue to execute with discipline in the region, driving gross margin improvements and reinvesting into marketing with key local talent. Both brands were proud to participate as first-time exhibitors at the China International Import Expo, building on our long-standing presence and commitment to the market. Before we turn to 2026, I would like to take a moment to reflect on the progress we have made through our multi-year PVH Plus plan journey to date. While we have important work still ahead of us, since 2022, we have navigated a series of external headwinds, including exiting our Russia business, the introduction of tariffs, and we have also navigated specific geopolitical dynamics. Throughout this period, we have remained steadfastly focused on executing our plan and delivering significant operational progress across all five critical areas of the PBH Plus plan. Winning with our hero products and categories, driving strong consumer engagement, strengthening our distribution in the marketplace by deepening our partnerships with key wholesale partners and expanding our D2C business, building a global demand-driven operating model, and driving operational efficiencies to power our investments in growth and in marketing. Through this work, we have built a more systematic, repeatable approach, which is a powerful foundation as part of our continued journey to build Calvin Klein and Tommy Hilfiger into their full potential. As we said we would, we divested profit-deluded non-core businesses, putting 100% of our attention behind our two globally iconic brands, Calvin and Tommy. And on an underlying basis, ex divestitures, we have grown those brands at 2% CAGR in constant currency since 2021. At the same time, we have built a strong leadership team with experience to unlock our brand's full potential. Across our regions, we increased our America's profitability to double digits, X tariffs. We drove higher quality of sales through our initiative in Europe, and in APAC, drove a 5% growth taker in constant currency over the period. And as our important work continues, one of the biggest accomplishments is how we have driven brand relevance with the consumers who matters the most going forward. Our most recent consumer research not only confirms that Calvin Klein and Tommy Hilfiger are two of the most recognized and loved brands globally, both brands also outperform with the Gen Z and younger millennial consumers. And within these, both brands are performing strongly with the highest value consumer segments, the status-oriented shoppers and style enthusiasts. This is important because these consumers shop more often have higher order values, and are more loyal. This is a direct result of our multi-year work to ignite Calvin's and Tommy's brand DNA and make them even more relevant for today. A key part in our consumer engagement is the strength we have built on social, where Calvin has the most followers and the highest engagement of our competitive set, with 44 million followers across our four biggest platforms. Tommy has the third largest following in the industry with 31 million and the same leading engagement levels as Calvin, approximately four times higher than most of our competitors. In addition, our consumer insights confirm clear product authority in some of the biggest and growing categories in the market. For Calvin, this means the right to play and win in underwear, denim, outerwear, and knits. And for Tommy, it means the right to play and win in outerwear, sweaters, shirts, and knits. The strength we have built with the consumer guides our path forward. We are increasingly targeting the best consumer segments for each brand. As we expand our product strength across the top five categories, we put innovation and newness into creating the best product franchises and we drive our consumer engagement with a full funnel 360 approach. To make this possible, we are leveraging the strong global product and marketing capabilities for both brands that we have worked to establish. We are also well underway to successfully transitioning the licensed women's sportswear business in the US wholesale channel for both brands. to ensure that our product creation across both men's and women's are brand right and positioned to drive sustainable, profitable growth. In the marketplace, we have both increased our focus on our key wholesale partners and have meaningfully strengthened our D2C execution, which now represents approximately half of our sales, up from 44% in 2021. We have done this while elevating the brand experience across digital and stores, delivering digital penetration that is nearly doubled pre-COVID levels. We have also made significant operational progress in our journey to become a more data and demand-driven company, improving inventory management and building new capabilities, including in AI. Our new collaboration with OpenAI, which we announced in January, will accelerate that progress. Importantly, we drove over 300 basis points of cost savings, including 200 basis points of annualized cost savings from our cost efficiency initiative. Over the past few years, through the discipline PVH Plus execution, and despite the multiple external headwinds, we have built a strong foundation in both Calvin Klein and Tommy Hilfiger to be able to drive sustainable, profitable growth with increasing pricing power across our three regions. As I've said before, every season you will see us expand on this further. Now, as we look ahead, I want to share our actions for 2026 that will help us do just that. Let me start with Calvin Klein. We can't talk about Calvin Klein today without referencing Love Story, the TV show. The cultural resonance of Love Story reinforces the timeless power of the Calvin Klein brand and its authentic place in American fashion, with a premiere driving a surge in online interest in Calvin. We're capitalizing on the love story effect in multiple ways that are true to the brand, leveraging the 90s focus in our product assortment and marketing and supercharging it in e-commerce and stores. With a spring 90s edit on calvinklein.com that is driving above average social engagement and click-through rates. We're also styling key talent, including actress Sarah Pidgeon, who placed Carolyn Bessette Kennedy at the recent Vanity Fair Oscar party. And we hosted a New York Magazine pop-up collaboration at our new Soho store, achieving our highest daily sales and visitors to date. We're continuing to lead the 90 style conversations globally, a look that we helped define by leaning into the styles driving the trend today across our platform. You will see this across our spring campaign featuring Global Ambassador John Cook, which pairs cultural influence with hero product storytelling to drive consumer demand. Here, strong social engagement is driving fantastic sell-throughs, with sales of campaign items up over 50% after launch, and the Jackets John Cook wore reaching 60% sell-through in just two weeks. In March, we launched a new spring campaign featuring FC Barcelona and Brazilian national team soccer star Rafinha. Debuting our most recent underwear innovations, Icon Active Mesh and Icon Cotton Stretch with a stitch-free Infinity Bond waistband, we drove social engagement up 62% and sales of featured products were up 11% versus a similar campaign last year. Our most recent runway show at New York Fashion Week once again placed Calvin Klein at the center of the cultural conversation, supported by top global talent, including Jenny, Dakota Johnson, Brooke Shields, and Lily Collins. The fall 2026 show was once again the number one in share of voice and number one in earned media value from all of New York Fashion Week. Finally, we just unveiled Calvin's latest spring campaign, starring actor Dakota Johnson, styled in new underwear and denim styles. Since the campaign launch, website traffic has been up double digits versus last year in Europe. Sell-through has also been strong. Sales in key featured items shot up four times versus the time prior. For Tommy in 2026, we are doubling down on our core product categories and set out to create the best product franchises in the market. Moving forward, you'll see us expand our category acceleration across sweaters, outerwear, knits, and shirts. We have started the new fiscal year with a healthy momentum with the launch of the Brand Spring 2026 campaign, which features an invitation to Tommy's aspirational world. The campaign has been very well received across markets, serving as both a brand beacon and amplifying our 2026 product priorities. We will continue to leverage our partnerships with Liverpool Football Club and Cadillac F1 throughout the year with a steady drumbeat of consumer engagement. As part of our new multi-year Liverpool partnership, Tommy Hilfiger will dress the full team for match arrivals six to eight times per season, and each tunnel walk represents an opportunity to drive scaled brand visibility and product sales as we style players in our most aspirational Tommy icons and offer shop-to-look access. In our first tunnel walk, we drove a 200% increase in sales for these products in Europe compared to the prior week. For Cadillac Formula One, we're activating the partnership with store pop-ups, driver appearances, and local influencer styling. Following the first two races of the season in Melbourne and Shanghai, where we activated with Valtteri Bottas and Chinese driver Zhou Guangyou, together with local Tommy ambassadors, our China Tommy D2C sales were up double digits in March versus last year. Our expanded partnership with Sergio Checo Perez also continues to drive a consistent uplift in traffic. And in the US, the Tommy icons Checo has worn so far this season, such as our cable knit polo, have seen double-digit sales increases. Overall, our exclusive Tommy partnerships are driving scaled global engagement with our consumers, generating over 700 million impressions and an increase of over 300% in media value versus prior campaigns. And earlier this week, Tommy announced Travis Kelsey, American football icon, three-time Super Bowl champion, as a global brand ambassador and creative collaborator. One of sports' biggest stars on and off the field, Kelsey will bring his unique perspective to Tommy Hilfiger as part of a series of campaigns kicking off in fall 2026. Looking ahead for our regions, we have started fiscal 2026 with momentum, which has continued through quarter to date, where we see spring product season do better than last year same time. In Europe, following a tough second half last year, This year, we are expecting a gradual improvement in top-line trajectory as we progress through the year. You will see our investments in marketing and the consumer experience start to cut through in the marketplace. In wholesale, we closed our fall 2026 order book up low single digit, marking the third consecutive season of growth. When taken all together, we expect our overall revenue for the region to be up slightly in 2026 compared to 2025. In the Americas, we continue to work towards unlocking our full potential and expect to grow across all channels by elevating the brand experience, including targeted remodels, strengthening the marketplace distribution, and driving pricing power. Overall, we expect modest growth for D2C 2026, and we expect continued growth in e-commerce as we continue to further strengthen our digital position. And in wholesale, we expect to see growth driven by the transition of previously licensed Tommy Hilfiger women's sportswear in-house. In Asia Pacific, We're off to a great start with Lunar New Year, where we launched a dedicated capsule featuring brand ambassador and global K-pop superstar Jisoo, exceeding expectations. We expect to continue to drive growth in the region in 2026, up low single digits in constant currency, powered by D2C. The region will continue to be a growth engine for us long term, and we expect to return to growth for the full year. Turning to our licensing business, we continue to build out our already strong licensing business where our licensing partners help bring our vision to life across multiple lifestyle categories, from watches and fragrances to eyewear, and are critically important to how we drive sustainable, profitable growth. In conclusion, our focus is clear. to unlock the full potential of Calvin Klein and Tommy Hilfiger by building on the strong foundation we created and drive next level execution of our PVH Plus plan. While we're seeing early momentum in 2026, we remain conscious of the current macroeconomic environment and we are laser focused on building out further strength in the consumer offerings in both of our brands. And with that, I'll turn the call over to Melissa.