PVH announces exit from heritage brands retail business
PVH Corp, the NYC-based owner of Tommy Hilfiger and Calvin Klein, announced on Tuesday that it is closing its heritage brands retail business as part of wider efforts to streamline its operations in North America in the wake of the Covid-19 pandemic.
The fashion group’s heritage brands include Van Heusen, Geoffrey Beene, Izod, Arrow, Warner’s, True & Co. and Olga. The division’s retail business is made up of 162 outlet stores, with Van Heusen constituting the primary owned brick-and-mortar retail channel.
According to PVH, its heritage brands retail stores are expected to remain open through mid-2021.
The company’s streamlining plans in North America also involve the reduction of its office workforce in the region by 450 positions, or 12%. These reductions will be spread across PVH’s three brand businesses and corporate functions, and are expected to result in annual cost savings of around $80 million.
“The structural changes occurring in the North American retail landscape have required us to take a hard look at our North American operations and identify where we can optimize costs across our business model,” explained PVH chairman and CEO Manny Chirico in a release.
“As a result, we are making the incredibly difficult decisions to close our heritage brands retail business and eliminate a significant number of positions throughout our North American organization to align with the lower revenue base. We did not take these decisions lightly, as our heritage brands retail business is our oldest retail business yet no longer met appropriate return metrics,” he continued.
“The Covid-19 crisis is dramatically reshaping the retail landscape in ways that we believe will be long-term in nature and far-reaching in terms of consumer purchasing behavior,” added PVH president Stefan Larsson. “We are adapting our businesses and rebalancing our cost base to improve our competitiveness and financial profile and, where appropriate, are reallocating resources to our businesses that drive greater returns.”
As it carries out these strategic initiatives, PVH expects to incur pre-tax charges of approximately $80 million over the next 12 months, $10 million of which should be noncash. These charges will largely be related to severance, lease terminations and inventory markdowns, as well as noncash asset impairments.
With this announcement, PVH joins a growing list of U.S.-based fashion groups taking drastic actions as they face up to the ongoing financial challenges posed by the coronavirus crisis.
Having already offloaded its Umbro and Starter businesses in China, New York’s Iconix is now considering options including a possible sale or merger. Monday also saw RTW Retailwinds become the latest fashion retailer to file for Chapter 11 bankruptcy since the start of the pandemic, following the likes of J.C. Penney, Brooks Brothers, J.Crew and Neiman Marcus.
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