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Friday, January 22, 2021

Highlights from WSJ’s interview with PVH’s incoming and outgoing CEO

  • Shares of PVH are down around 40% since the start of 2020.
  • Incoming CEO Stefan Larsson will be tasked with leading the company through a “new normal.”
  • The executive was interviewed by the WSJ.

Calvin Klein and Tommy Hilfiger parent company PVH Corp (NYSE: PVH) has seen its stock fall around 40% since the start of 2020 and investors are hoping a new CEO can reinvigorate its core brands in a difficult environment. 

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The Wall Street Journal interviewed PVH’s current President Stefan Larsson who was promoted to the CEO title, effective Feb. 1 of 2021.

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Changing of the guards

Outgoing CEO Manny Chirico, 63, is leaving his post after 14 years and will leave behind a favorable legacy, according to WSJ. He transformed PVH from a core men’s clothing company into a global fashion icon.

Here is a summary of how PVH performed in its most recent reported quarter.

Larsson, a 46-year fashion executive, has particular expertise in streamlining supply chains. His main objective would be leading the iconic company through a “new normal” retail environment.

The timing of the CEO change has been planned for 18 months but now is a “perfect time to move forward,” Chirico told WSJ.

The new normal in retail

The COVID-19 pandemic isn’t bringing in new shopping trends, rather it is accelerating existing trends, Larsson said in the interview. Consumers are pivoting to online shopping at a much faster pace than before. Trends that typically take four to five years to materialize are now taking one year. 

Retailers that are late to adapt may miss out. This is why PVH is moving fast to position the company for the new normal.

“We are supercharging e-commerce,” he said. “Last quarter, e-commerce sales grew 50% overall, including an 87% jump in sales on our own websites, compared with a year ago. And we’re focused on global growth.” 

A successful e-commerce business requires management to not only become leaner and more data-driven but increase the speed of its supply chain and reduce lead times to keep up with consumer demand.

Malls and Amazon

Malls across the U.S. have mostly reopened and PVH is seeing conversion rates and average order sizes tick higher. Generally, if a consumer is putting in the effort to come to a store in this environment, they are more serious about making a purchase.

Approximately 10% of PVH’s revenue comes from sales of its products in department stores. Specialty retailers may be under more pressure today but PVH recognizes the need not to oversupply the department store channels with too much inventory. 

Meanwhile, the move to sell on Amazon was an “easy decision” as consumers love to shop online, Chirico said. It “didn’t make any sense” not to be on Amazon as consumers are becoming more comfortable with shopping online.

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