WE ARE PVH, One of the World’s Largest Branded Lifestyle and Apparel Companies Kenneth L. Wyse President, PVH Heritage Licensing
1 PVH Is A Global Leader In The Apparel Industry
With ~$8.2 BN in revenues, PVH is one of the largest global apparel companies in the world
$11.4 2013 Revenue ($ in billions) $8.2 $7.5
$5.1
$3.7 $3.4 $3.3 $3.3 $2.6
VFC PVH RL COH BRBY BOSS KORS FOSL GES
Source: Factset.
2 A World Class Portfolio Of Brands
GLOBAL GROWTH BRANDS
Owned*
(1)
Licensed* CHAPS John Varvatos DKNY Kenneth Cole Reaction Donald J. Trump Signature Kenneth Cole New York Elie Tahari MICHAEL Michael Kors Geoffrey Beene Nautica Ike Behar Sean John
* Partial list (1) The Speedo brand is licensed for North America and the Caribbean in perpetuity from Speedo International, Ltd.
3 Our 2013 Warnaco Acquisition Expands Our Focus on Calvin Klein and Tommy Hilfiger…
Calvin Klein & Tommy Hilfiger currently account for ~75% of PVH’s revenues and ~85% of PVH’s EBIT
(1) Total Revenue by Business EBIT by Business Segment (2013) Segment (2013)
14% 42% 24% 45%
34% 41%
TOMMY HILFIGER CALVIN KLEIN
(1) Figures exclude non-recurring and one-time items and corporate expenses. Refer to Appendix for GAAP reconciliation. HERITAGE BRANDS
4 … and Provides PVH With A Significant Presence in Asia and Latin America
Asia and Latin America now account for ~12% of PVH’s revenues and over 20% of PVH’s EBIT
(1) Total Revenue by Region EBIT by Region (2013) (2013)
2% 9% 5%
61% 15% 28% 56% 24%
NORTH AMERICA EUROPE ASIA Note: North America includes Mexico. LATIN AMERICA Europe includes the Middle East and Africa. Asia includes Australia and New Zealand. Latin America includes South America, the Caribbean and Central America.
(1) Figures exclude non-recurring and one-time items.
5 Role of Licensing Within a Corporation
• Enhance and extend the trademarks in the domestic and international markets with consistent brand image and recognition through strategic partnerships
• Protect and defend the trademarks in domestic and international markets
• Generate royalty income
6 The Licensing Process
7 8 Tommy Hilfiger — Brand Overview
2013 Global Retail Sales: $6.4 BN
7%6% 12%10% North America Latin America (1) 39%41% Asia (2) 42%43% Europe (3)
Classic American Cool/Preppy With A Twist Strong Global Brand Awareness Proven Accessible Designer Lifestyle Brand
(1) Latin America includes South America, the Caribbean and Central America. (2) Asia includes Australia and New Zealand. (3) Europe includes the Middle East and Africa.
9 Tommy Hilfiger Licensing Model
OVERVIEW • Originally a license with Dickson Poon for China & Southeast Asia • Transitioned to joint venture with Apax and PVH Corp. for China only • Dickson Poon is still the licensee for the rest of Southeast Asia & Hong Kong • Over 100 stores currently in operation in China
LOCAL PARTNERS • Operate the retail stores and handle the wholesale business • Do not source locally • Product comes from Europe • No specialized Asian sizing – using mostly European size scale (sized 1 size scale down) • E-commerce business
GLOBAL LICENSED CATEGORY PARTNERS • Fragrance – Estee Lauder • Watches – Movado Group, Inc. • Eyewear – Safilo
10 11 Calvin Klein — Brand Overview
- Calvin Klein Collection offers halo and inspiration to Calvin Klein platinum label (bridge apparel), Calvin Klein white label (better apparel), Calvin Klein Jeans and Calvin Klein Underwear
- Brand leveraged across multiple products, channels & price points
- Significant underperformance of Calvin Klein Jeans in Europe and U.S. impacted global retail sales
2013 Global Retail Sales: $7.8 BN
6% 4% 19% 19% North America (1) Latin America 52% 54%57% (2) 23%20% Asia 23% Europe (3)
(1) Latin America includes South America, the Caribbean and Central America. (2) Asia includes Australia and New Zealand. (3) Europe includes the Middle East and Africa.
12 Calvin Klein Licensing Model
OVERVIEW • Originally Warnaco licensed the business for Jeans & Underwear • After Warnaco acquisition in 2012, PVH Corp. took control of all Jeans and Underwear business • Club 21 (Singapore-based) still licenses Platinum Label for bridge sportswear in China • PVH operates many stores in China • Both PVH and Club 21 have created special Asian sizing
GLOBAL LICENSED CATEGORY PARTNERS
• Watches & Jewelry –Swatch Group • Eyewear – Marchon • Fragrance – Coty
13 14 Heritage Brands — Overview & Financials
Heritage Brands
Wholesale Retail
3Q14 LTM Revenues(1) as % of Total ~80% ~20%
Wholesale sportswear has generally been strong, reflecting initiatives to better position the Van Heusen, IZOD and ARROW brands within department and chain store accounts Warner’s, Olga and Speedo performing well Retail performance has been challenging
(1) Refer to Appendix for reconciliations of LTM figures. LTM EBIT margin excludes non-recurring and one-time items.
15 Our Heritage Brands Categories Have Strong Market Share Positions
(1) Based on percentage of 2013 unit volume in US Department and Chain Stores combined.
16 PVH Heritage Brands – Business By Region
2014 Global Retail Sales: $3.8 billion 1% 3% North America Europe 11% Latin America Asia
85% North America includes U.S. PVH-Owned Businesses: Sportswear, Dress Shirts, Neckwear, Retail Outlet Stores
17 PVH Heritage Brands – Licensed Business By Region
2014 Licensed Global Retail Sales: $900 million 32% North America Europe Latin America Asia
6% 50% North America includes 12% licensed business only
18 LICENSING
19 Case Study: IZOD in China
LICENSEE: DISHANG FASHION BRANDS COMPANY LTD.
• Subsidiary of Weihai-based Dishang Group • Dishang Group CEO: Mr. Lihua Zhu
• Headquartered in Beijing
• Licensee for IZOD apparel and accessories since 2010
• Presently operating 55 stores/shops specializing in men’s apparel
• Goal is to grow to over 100 stores and $100M+ business
• Licensee designs and manufactures a product line Mr. Lihua Zhu that syncs with U.S. brand DNA
• PVH and licensee collaborate across many disciplines: including Product Design, Marketing, Store Design and Special Events
20 Communicating an American Brand in China
21 Communicating an American Brand in China
Examples of Winter 2014 United States Magazine Advertising
22 Case Study: IZOD in China
CHALLENGES WITH A LICENSING ARRANGEMENT:
• Lack of brand understanding
• Lack of advertising nuance
• “Their way” vs. “our way”
• Sizing and color differences
• Youth market vs. mature U.S. customer
• Complications in communication
• 1st generation vs. 2nd generation
23 IZOD China Brand Summit Event, April 2014
Date: April 2nd, 2014
Setting: Conrad Hotel, Beijing
Participants: Mall Owners, Fashion and News Media, VIP’s and Potential Franchisees
Components: • Immersion Summit (Brand Story & Heritage, Business Strategy)
• Product showcase
• 2014 Autumn & Winter Fashion show
• Welcome Cocktail & Gala Dinner
24 IZOD China Brand Summit Event, April 2014
PRODUCT SHOWCASE
25 IZOD China Brand Summit Event, April 2014
FASHION SHOW
26 IZOD China Brand Summit Event, April 2014
SEAN LI PERFORMANCE
27 IZOD China Brand Summit Event, April 2014
28 IZOD China Stores
Beijing, Xizhimen Kaide Chongqing, Nanping Wanda
29 Licensing in China
KEY FACTORS FOR LONG-TERM LICENSING SUCCESS
Quality relationships with outstanding partners • Shared ethics, principles & integrity
Understanding that licensing is a slow-build business:
• It takes 3 full seasons to effectively launch a fashion apparel brand in a new market
• Requires: • Patience • Forebearance • Fortitude
• Evolution of Licensing: Licensing Distribution Joint Venture Ownership
30 Kenneth L. Wyse President, PVH Heritage Licensing
31