All sites on hold. We do appreciate your patience in holding and ask you to please continue to stand by. The conference should begin in approximately one more minute. Thanks again, everyone. Please standby. Your program is about to begin. Good morning, everyone, and welcome to today's PVH Corp. Fourth Quarter and Full Year 2024 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 key on your touch-tone 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 the program over to Sheryl Freeman, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. Fourth Quarter and Full Year 2024 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer, and Zac Coughlin, Chief Financial Officer. This webcast and conference call is being recorded on behalf of PVH Corp. and consists of copyrighted material. It may not be recorded, rebroadcast, or otherwise transmitted without PVH Corp.'s 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 Corp.'s view as of March 31, 2025, 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 Corp.'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 headcount cost reduction initiative announced in August 2022, the 2021 sale of assets of and exit from its Heritage Brands menswear and retail businesses, the November 2023 sale of the Heritage Brands women's intimate apparel business to focus on its Calvin Klein and Tommy Hilfiger businesses, and its current multiyear initiative to simplify its operating model. PVH Corp. 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 and projections to be discussed will be on a non-GAAP basis as defined under SEC rules. Reconciliations to GAAP amounts are included in PVH Corp.'s Fourth Quarter 2024 earnings release, which can be found on www.pvh.com and the company's current report on Form 8-K furnished to the SEC in connection with the release. At this time, I am pleased to turn the conference over to Stefan Larsson.

Thank you, Sheryl. 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. Through the strength of our two iconic global brands, Calvin Klein and Tommy Hilfiger, and the disciplined execution of our multiyear brand-building growth plan, the PVH+ plan, we over-delivered on both the top and bottom line versus our guidance. With stronger than expected revenue on a constant currency basis and higher than expected non-GAAP EPS. In addition, we increased our gross margin by 120 basis points to a new record, and even with the fixed cost deleveraging from our Europe business, we maintained our double-digit EBIT margins at 10% as we focused on driving cost efficiencies across the company. For the fourth quarter, we delivered a strong holiday performance that beat our expectations. On a constant currency basis, we drove low single-digit revenue growth with growth in both our D2C and wholesale channels, excluding the sale of our heritage business and the 53rd week in 2023, which supports our planned return to growth during 2025. 2024 marks a major step towards our vision to build Calvin and Tommy into the most desirable lifestyle brands in the world and make PVH Corp. one of the highest performing brand groups in our sector. We connected both Calvin and Tommy to the zeitgeist through our marketing, driving record consumer engagement. We improved the relevance and sell-through of our Fall '24 product assortment across both brands. We are turning Europe back to growth, with improved performance in both D2C and wholesale, where we drove two consecutive quarters of growth in our stores, as well as moving our European wholesale order books back to growth. Despite the tough macro,…

Thanks, Stefan, and good morning. My comments are based on non-GAAP results and are reconciled in our press release. As Stefan discussed, we are pleased with our fourth quarter and full year financial results, driven by the strength of our two iconic global brands and disciplined execution of the PVH+ plan. For the fourth quarter, revenue and EPS came in slightly ahead of guidance, with operating margin in line with expectations. Importantly, the start of the year for both revenue and profit. We achieved a record high 59.4% gross margin this year and delivered record high non-GAAP earnings per share of $11.74, up 10% versus 2023 and exceeding our initial start of year guidance range of $10.75 to $11, and we delivered this in spite of an increasingly challenging consumer backdrop in China and North America that began around midyear. In North America, for Calvin Klein and Tommy Hilfiger combined, we delivered an increase in EBIT of over 40% and drove over 350 basis points of operating margin expansion. In Europe, we ended the year with two consecutive quarters of DTC store revenue growth and confirmed positive Fall '25 order books. In Asia Pacific, we delivered yet another year of revenue growth in constant currency in our most profitable region, on top of two consecutive years of double-digit constant currency growth. And across the world, made significant progress in the next phase of Growth Driver 5 of the PVH+ plan, to simplify our operating model and drive SG&A efficiencies. Additionally, we delivered strong cash flow again this year with free cash flow of nearly $600 million, enabling us to return $500 million to shareholders during the year through the repurchase of 4.7 million shares of common stock. I will now discuss our 2024 results in more detail and then move…

We'll take our first question from Jay Sole with UBS. Please go ahead.

Great. Thank you so much. My question is about Europe. Stefan, can you talk about what you've learned from the quality of sales initiative? And how does the PVH+ plan elevate the level of execution that you've shown? How is that really impacting the business? Can you give us a little bit more color on that too? Thank you.

Absolutely. Good morning, Jay, and thank you for your question. It's a story of progress and how we connect PVH+ to high-quality growth, to drive sustainable high-quality growth. So if we go back to how we started 2024, we saw a tougher consumer backdrop in Europe. And we took three very focused quality of sales actions. We stopped third-party sales of our brands on digital platforms. We reduced the number of digital platforms we sold to. We improved inventory in relation to sales overall. So those were the three actions we took. And then in parallel, we leaned into the PVH+ execution in strengthening product relevance, the consumer engagement, our marketing, the marketplace execution across both Tommy and Calvin. And you can really see the effect of the three quality of sales actions with the improvements of the PVH+ execution next level in Tommy and Calvin. You can see that indeed to see Q3 and Q4 coming back to high-quality growth. So high-quality growth, stronger gross margin indeed to see, and then you see season by season how we strengthen forward-looking wholesale order books. And really excited and feeling great job by the team to then translate that into growth for Fall '25, low single-digit growth. And this is our team in Europe doing a great job in connecting, putting more and more relevance and strength into the brands. Really strong market team execution, and really close partnership with our partners. So also connecting back to how we started 2025, and I mentioned in my prepared remarks how we pulled together 300 global most important partners, many of them from Europe, and I was able to engage with many of them one-on-one and really seeing and hearing that they see the progress as well and that that translates into growth.

Yeah. Jay, just to put some financials behind that, as Stefan mentioned, we expect to return to growth. And importantly, we expect Europe profitability in euros to also grow by low double-digit percentage year. So it really does flow through the full P&L.

Got it. Sounds great. Thank you so much.

Thank you. Our next question comes from Michael Binetti with Evercore ISI. Please go ahead.

Thank you for taking my question, and Stefan, it's really nice to see the Europe order books turn positive. I know we talked a lot through that journey. I know it took a lot of work. Very, very nice to see that. You guys worked hard on it. A bit more of a financial question, I guess, for me. Zac, as you look at the, you gave us a big basket of margin drivers here, a fairly complicated year. As you look out past this year, how should we think about the multiyear, the 2026 margin profile? You have SG&A savings coming in, it sounds like, mostly in the back half of the year. I think the run rate was 200 to 300 basis points annualized. About 50 basis points of CK disruption from product this year. Is there any reason that doesn't just mechanically come back in 2026? And then also, so it seems like there's a good basket of margin drivers as you look past this year into 2026. Are there any new headwinds that come online next year that we should be thinking about or any even tailwinds that I didn't mention here yet?

Alright. First, thank you, Michael, for the call out on Europe. Credit goes to the teams and our partners. Great job by them. Coming back to your question now on the value drivers. So let me just start from a business perspective, and then Zac will take you through more in detail. We have big positive value drivers in the second half that are not dependent on a change in the trajectory of the consumer for 2025. So the first is European order books that are coming back to growth in Fall '25. The second is that a big part of our cost efficiency work that we have been on now for a while is taking full hold in the back half. And then you see the Calvin Klein margin, as Zac mentioned, improving already in the back half. So you'll see us exit the year at a leaner, more profitable company. And then to the ASR Accelerators share repurchase, you will see that we do that with a smaller share count. So what this means is that we'll come into 2026, and we're already working and planning for 2026 to come into 2026 with a step up in profit levels. And then through the PVH+ execution, we keep building on that.

Yeah. Thank you, Stefan. I think what's most important, Stefan, I said, is the actions that we're planning throughout the year as we progress from the first quarter to the fourth quarter are really built on things in our control. Stefan laid out what those pieces are. And so that work is either already confirmed for things like the European order books or well underway around much of the cost action, which is really probably the most powerful driver of improvement from the start of the year. So we expect fourth quarter operating margin to be much higher than 2024. And that's really the new starting point as we enter 2026 because the building blocks of stuff I laid out are really foundation building that raise the water level that we would then move forward into 2026 from there.

Okay. Thanks a lot, guys. Appreciate your help.

We'll next go to Dana Telsey with Telsey Group. Please go ahead.

Hi. Good morning, everyone, and nice to see the progress. Congratulations. As you think about the connection, Stefan, between product and engagement, there's a lot going on in each brand. As you think of the timing of it, how do you think of it rolling out this year? How do you think of the different global regions? And what does marketing spend look like to drive this engagement? Thank you.

Yeah. Thank you, Dana. And you know we have been very focused on a systematic and repeatable approach to bring product strength, consumer engagement, marketing strength, and then translating that to impact with the partners and our consumers. But sometimes it's better to describe this with concrete examples. So what you see right now in Calvin Klein with our underwear cut-through underwear campaign with Bad Bunny is really putting these pieces together. So what you will see season, every season going forward, you will see a cut-through campaign from Calvin Klein and a cut-through campaign from Tommy Hilfiger. So going back to the underwear Calvin Klein Bad Bunny, what we're doing there is we're leaning into our key growth categories and the most important category for Calvin Klein underwear. We're putting a lot of we're leaning into the most important hero product, the cotton stretch, and we are putting a lot of innovation into that hero product, creating a new hero product with the most innovation in the industry. And then we build that into a cut-through campaign and we collaborate with somebody like Bad Bunny, who is one of the most streamed artists, one of the most popular acclaimed artists right now. And then you see unlocking the growth category, innovation in the hero product, the talent amplification from Bad Bunny, and then you see it in the impact in the doors and stores. Yes, you see it in the social media impact of reaching almost thirty million on Calvin's Instagram page. The number of views, tens of millions of views within the first few days on the Bad Bunny video, but then you see that translating into traffic and stores and e-commerce sales on the Icon cotton stretch in many of our channels was up 20% to our previous cotton stretch products. So that's an example for Calvin Klein. On Tommy, you see the Tommy season by season bringing the Tommy lifestyle of classic American cool made current come to life. So Tommy and the team just came back from the Caribbean having invited a number of really important talents, partners to the brand, Patrick Schwarzenegger with the White Lotus Connection, Madelyn Cline, Abby Champion, to a Hilfiger resort-themed event, and this will support our summer campaign in our wholesale doors, in our stores, and it launches in May, but it covers the whole summer period. But already prelaunch, we have one hundred and sixty million euros as I mentioned. Social media posts just from the talent posting while they were part of creating this event. So what you will see going forward is season by season, you will see cut-through campaign by cut-through campaign connecting the improved product strength with the improved marketing, with the improved partner and in-store execution. And then we'll be relentless in just keep improving.

And then the marketing spend?

The marketing spend, we continue to invest in growth, and marketing is one of the top priorities there.

Thank you.

Thanks, Dana.

Thank you. Our next question will go to Brooke Roach with Goldman Sachs. Please go ahead.

Good morning, and thank you for taking my question. I was hoping you could elaborate on your relationship with your wholesale partners in North America as you execute the PVH+ plan. What are your conversations trending like today? And what's your outlook for growing in your core and with the business that was just brought back from G3? Thank you.

Yes. So thanks, Brooke. So very strong partnerships with our key wholesale partners in North America and across the world. But specifically in North America, what the team is doing a really good job on is focusing in on each of the brands and driving product strength, product relevance, in optimized spaces with the right marketing support. So Calvin Klein has a great milestone with Macy's this morning. Herald Square for those of you who are in New York today, Macy's flagship, all the windows are taken over by Calvin Klein and the launch of Calvin Klein women's. And marketing support by Lily Collins resonated really well with the Macy's consumer. And you see early first couple of weeks, we are having the collection, putting the shops together. But that's what you will see from us, that consistency in driving product relevance, brand relevance, differentiation, to that North America wholesale consumer. So very excited about seeing the progress season after season.

Great. Thanks so much.

We'll next go to Matthew Boss with JPMorgan. Please go ahead.

Great. Thanks. So Stefan, could you elaborate on the recent change you've seen in North America just how you're planning inventory across DTC at both Calvin and Tommy over the course of the year. And then, Zac, if you could just walk through drivers of first quarter gross margin, the decline, and just the cadence of gross margin beyond the first quarter to consider.

Yeah. Thanks, Matt. So let me start by the North American backdrop. And as we mentioned, we and looks like most everyone in the sector saw a step back from the consumer in February. So there is clearly a challenged backdrop. We saw March slightly improving, stabilizing trends, but as Easter is three weeks later this year than last year, Easter is an important consumer moment in North America. We have to look at March and April together. But our outlook is reflecting the current trends that we see. And then our focus is to be fully on what we can control driving strength in the product, the marketing, the marketplace, etcetera. On the inventory side, we feel really good about our inventory levels and especially the composition inventory we have right now, it's more fresh and less aged than the same time last year. So stock freshness is really important to us as we become more data and demand-driven. Then we have better investments coming into 2025 in core essentials hero products. One example of that is the Icon Cotton Stretch, new hero product with the Bad Bunny cut-through campaign. Then we have inventory backing up transition from G3 on the women's sportswear. So all in all, feeling really good about that.

Yep. And, hi, Matt. For gross margin for the first quarter for the year, we're indicated down around 250 basis points. If you got the drivers that's impacted us in the fourth quarter, you've got an increased promotional environment, especially in the US. Got increased freight costs, and obviously, we've got some wholesale mix that's driving gross margin that doesn't have any impact on profitability. Think then as we come into the first quarter, the only new item in there is really the intake of the G3 women's sportswear. That has around a 50 basis point negative margin and gross margin as we move from a licensing business model into a wholesale business model. So by the full year, we're expecting to be down around 100 basis points. That's around 50 basis points tied to the G3 intake we just talked about, and the rest really the impacts of some of the CK product delays, which will primarily the first half. So we think about that steady progression from that down to 250 landing to a full year 100, you know, the wholesale mix will normalize. We'll work on the freight impacts, so that begins to normalize. We end the year with a number much closer to something really related tied to just the G3 business model transition.

We'll next go to our last question with John Kernan with TD Cowen. Please go ahead.

Good morning. It's Krista Zuber on for John. Thank you for taking our questions. Just one follow-up on the inventory. You've made such tremendous inroads in cleaning up the channels. You know, the focus on the discipline, SKU planning, and the rationalization. How should we think about, you know, given some of the product puts and takes that are happening this year with the transition from the license, how should we think about the opportunity to accelerate your inventory turns given, you know, two years of what now appears to be sort of a stabilization in your turns? Thank you.

Thanks, Krista. It's the way we think about it and the way we work with inventory is to season by season, get better in the planning and the buying of the assortment, better with planning and buying of the inventory connecting to that assortment. So better and better optimized inventory to demand. And then we'll continue to learn. But long term, the goal is to continue to optimize inventory to demand. And then sometimes we learn when we go too lean and then we have to take a step back in specific areas of the assortment like they're never out of stock. Or a new product launch. But long term, you'll see that we'll continue to become more data and demand-driven and step by step, better and better optimize inventory to demand. Okay. Given that that was the last question, just want to thank you for being on this journey with us. We are in the middle of unlocking the full potential of Calvin Klein and Tommy Hilfiger, two of the most globally iconic and beloved brands. And 2024 was a year of significant progress in both brands. Or regions. 2025 you'll see us leaning into the next level execution at pace and building on the execution momentum of 2024. And I'm really very proud of our team's work, our partners, and we are full steam ahead. So looking forward to connecting again a quarter from now. Thank you.

Thank you. Ladies and gentlemen, that does conclude today's program. Thank you for your participation. You may disconnect.