SEGMENT DATA

The Company manages its operations through its operating divisions, which are presented as six reportable segments: (i) Calvin Klein North America; (ii) Calvin Klein International; (iii) Tommy Hilfiger North America; (iv) Tommy Hilfiger International; (v) Heritage Brands Wholesale; and (vi) Heritage Brands Retail.

Calvin Klein North America Segment - This segment consists of the Company’s Calvin Klein North America division. This segment derives revenue principally from (i) marketing CALVIN KLEIN branded apparel and related products at wholesale in the United States and Canada, primarily to department and specialty stores and digital commerce sites operated by key department store customers and pure play digital commerce retailers; (ii) operating retail stores, which are primarily located in premium outlet centers, and digital commerce sites in the United States and Canada, which sell CALVIN KLEIN branded apparel, accessories and related products; and (iii) licensing and similar arrangements relating to the use by third parties of the CALVIN KLEIN brand names for a broad array of product categories in North America. This segment also includes the Company’s proportionate share of the net income or loss of its investment in its unconsolidated foreign affiliate in Mexico relating to the affiliate’s Calvin Klein business.

Calvin Klein International Segment - This segment consists of the Company’s Calvin Klein International division. This segment derives revenue principally from (i) marketing CALVIN KLEIN branded apparel and related products at wholesale principally in Europe, Asia and Brazil, primarily to department and specialty stores, digital commerce sites operated by key department store customers and pure play digital commerce retailers, distributors and franchisees; (ii) operating retail stores and digital commerce sites in Europe, Asia and Brazil, which sell CALVIN KLEIN branded apparel, accessories and related products; and (iii) licensing and similar arrangements relating to the use by third parties of the CALVIN KLEIN brand names for a broad array of product categories outside of North America. This segment also includes the Company’s proportionate share of the net income or loss of its investments in its unconsolidated foreign affiliate in Australia relating to the affiliate’s Calvin Klein business and its unconsolidated Calvin Klein foreign affiliate in India.

Tommy Hilfiger North America Segment - This segment consists of the Company’s Tommy Hilfiger North America division. This segment derives revenue principally from (i) marketing TOMMY HILFIGER branded apparel and related products at wholesale in the United States and Canada, primarily to department stores, principally Macy’s, Inc. and Hudson’s Bay Company, as well as digital commerce sites operated by these department store customers and pure play digital commerce retailers; (ii) operating retail stores, which are primarily located in premium outlet centers in the United States and Canada, and a digital commerce site in the United States, which sell TOMMY HILFIGER branded apparel, accessories and related products; and (iii) licensing and similar arrangements relating to the use by third parties of the TOMMY HILFIGER brand names for a broad array of product categories in North America. This segment also includes the Company’s proportionate share of the net income or loss of its investment in its unconsolidated foreign affiliate in Mexico relating to the affiliate’s Tommy Hilfiger business.

Tommy Hilfiger International Segment - This segment consists of the Company’s Tommy Hilfiger International division. This segment derives revenue principally from (i) marketing TOMMY HILFIGER branded apparel and related products at wholesale principally in Europe and China, primarily to department and specialty stores, digital commerce sites operated by key department store customers and pure play digital commerce retailers, distributors and franchisees; (ii) operating retail stores in Europe, China and Japan and international digital commerce sites, which sell TOMMY HILFIGER branded apparel, accessories and related products; and (iii) licensing and similar arrangements relating to the use by third parties of the TOMMY HILFIGER brand names for a broad array of product categories outside of North America. This segment also includes the Company’s proportionate share of the net income or loss of its investments in its unconsolidated Tommy Hilfiger foreign affiliates in Brazil and India and its unconsolidated foreign affiliate in Australia relating to the affiliate’s Tommy Hilfiger business.

Heritage Brands Wholesale Segment - This segment consists of the Company’s Heritage Brands Wholesale division. This segment derives revenue primarily from the marketing to department, chain and specialty stores, warehouse clubs and mass market and off-price retailers, as well as digital commerce sites operated by select wholesale partners and pure play digital commerce retailers in North America of (i) dress shirts and neckwear under various owned and licensed brand names, including several private label brands; (ii) men’s sportswear principally under the brand names Van Heusen, IZOD and ARROW; (iii) swimwear, pool and deck footwear, and swim-related products and accessories under the brand name Speedo; and (iv) women’s intimate apparel, shapewear and loungewear under the brand names Warner’s and Olga. Additionally, this segment derives revenue from Company operated digital commerce sites in the United States through SpeedoUSA.com, TrueandCo.com and, since July 2018, VanHeusen.com, IZOD.com and styleBureau.com. This segment also includes the Company’s proportionate share of the net income or loss of its investments in its unconsolidated foreign affiliates in Australia and in Mexico relating to the affiliates’ Heritage Brands businesses.

Heritage Brands Retail Segment - This segment consists of the Company’s Heritage Brands Retail division. This segment derives revenue principally from operating retail stores, primarily located in outlet centers throughout the United States and Canada, which primarily sell apparel, accessories and related products. A majority of the Company’s Heritage Brands stores offer a broad selection of Van Heusen men’s and women’s apparel, along with a limited selection of the Company’s dress shirt and neckwear offerings and IZOD Golf, Warner’s and, to a lesser extent, Speedo products. Approximately half of these stores operate under the Van Heusen name, with the remaining stores featuring multiple brand names on the store signage.

The Company’s revenue by segment was as follows:



	Thirteen Weeks Ended						Twenty-Six Weeks Ended
(In millions)	8/5/18		⁽¹⁾	7/30/17		⁽¹⁾	8/5/18		⁽¹⁾	7/30/17		⁽¹⁾
Revenue – Calvin Klein North America
Net sales	$	425.0		$	348.3		$	792.3		$	678.4
Royalty revenue	32.0			31.6			66.0			66.7
Advertising and other revenue	10.5			12.3			23.7			22.5
Total	467.5			392.2			882.0			767.6

Revenue – Calvin Klein International
Net sales	435.3			370.0			884.1			724.8
Royalty revenue	16.0			17.3			34.5			36.9
Advertising and other revenue	6.3			7.0			14.5			13.0
Total	457.6			394.3			933.1			774.7

Revenue – Tommy Hilfiger North America
Net sales	417.8			380.8			756.7			678.9
Royalty revenue	14.5			15.3			32.9			31.8
Advertising and other revenue	4.3			3.7			8.2			7.6
Total	436.6			399.8			797.8			718.3

Revenue – Tommy Hilfiger International
Net sales	572.3			479.1			1,209.5			986.9
Royalty revenue	13.0			11.7			25.0			21.8
Advertising and other revenue	6.7			1.0			12.1			6.6
Total	592.0			491.8			1,246.6			1,015.3

Revenue – Heritage Brands Wholesale
Net sales	302.0			316.7			642.8			643.5
Royalty revenue	5.0			4.7			10.4			9.7
Advertising and other revenue	1.1			0.9			2.0			1.8
Total	308.1			322.3			655.2			655.0

Revenue – Heritage Brands Retail
Net sales	70.8			68.6			131.3			126.0
Royalty revenue	1.0			0.8			2.1			1.8
Advertising and other revenue	0.1			0.1			0.2			0.2
Total	71.9			69.5			133.6			128.0

Total Revenue
Net sales	2,223.2			1,963.5			4,416.7			3,838.5
Royalty revenue	81.5			81.4			170.9			168.7
Advertising and other revenue	29.0			25.0			60.7			51.7
Total	$	2,333.7		$	2,069.9		$	4,648.3		$	4,058.9


⁽¹⁾	Revenue was impacted by fluctuations of the United States dollar against foreign currencies in which the Company transacts significant levels of business. Please see section entitled “Results of Operations” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2 of this report for further discussion.

The Company’s revenue by distribution channel was as follows:



	Thirteen Weeks Ended				Twenty-Six Weeks Ended
(In millions)	8/5/18		7/30/17		8/5/18		7/30/17
Wholesale net sales	$	1,130.5	$	967.5	$	2,414.6	$	2,076.6
Retail net sales	1,092.7		996.0		2,002.1		1,761.9
Net sales	2,223.2		1,963.5		4,416.7		3,838.5

Royalty revenue	81.5		81.4		170.9		168.7
Advertising and other revenue	29.0		25.0		60.7		51.7
Total	$	2,333.7	$	2,069.9	$	4,648.3	$	4,058.9

The Company’s income before interest and taxes by segment was as follows:



	Thirteen Weeks Ended								Twenty-Six Weeks Ended
(In millions)	8/5/18			⁽¹⁾	7/30/17			⁽¹⁾	8/5/18			⁽¹⁾	7/30/17			⁽¹⁾
Income before interest and taxes – Calvin Klein North America	$	59.8			$	48.0			$	103.3			$	89.9

Income before interest and taxes – Calvin Klein International	45.2				47.5				110.3				99.1

Income before interest and taxes – Tommy Hilfiger North America	74.2				53.2			⁽³⁾	115.0				34.4			⁽³⁾⁽⁴⁾

Income before interest and taxes – Tommy Hilfiger International	59.8				38.2				151.0				90.3			⁽⁴⁾

Income before interest and taxes – Heritage Brands Wholesale	26.5				30.5				66.3				60.8

Income before interest and taxes – Heritage Brands Retail	6.1				4.5				7.9				6.0

Loss before interest and taxes – Corporate ⁽²⁾	(40.2		)		(41.4		)	⁽⁵⁾	(78.1		)		(86.8		)	⁽⁵⁾⁽⁶⁾

Income before interest and taxes	$	231.4			$	180.5			$	475.7			$	293.7


⁽¹⁾	Income (loss) before interest and taxes was impacted by fluctuations of the United States dollar against foreign currencies in which the Company transacts significant levels of business. Please see section entitled “Results of Operations” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2 of this report for further discussion.

⁽²⁾

Includes corporate expenses not allocated to any reportable segments, the Company’s proportionate share of the net income or loss of its investments in Gazal Corporation Limited and Karl Lagerfeld Holding B.V., and the results of PVH Ethiopia. Corporate expenses represent overhead operating expenses and include expenses for senior corporate management, corporate finance, information technology related to corporate infrastructure, certain digital investments, actuarial gains and losses from the Company’s Pension Plans, SERP Plans and Postretirement Plans (which are generally recorded in the fourth quarter) and gains and losses from changes in the fair value of foreign currency option contracts.


⁽³⁾	Income before interest and taxes for the thirteen and twenty-six weeks ended July 30, 2017 included costs of $7.1 million and $14.1 million, respectively, associated with the relocation of the Tommy Hilfiger office in New York, including noncash depreciation expense.

⁽⁴⁾

Income before interest and taxes for the twenty-six weeks ended July 30, 2017 included costs of $54.2 million associated with the agreements to restructure the Company’s supply chain relationship with Li & Fung Trading Limited (“Li & Fung”), under which the Company terminated its non-exclusive buying agency agreement with Li & Fung in 2017. Such costs were included in the Company’s segments as follows: $31.3 million in Tommy Hilfiger North America and $22.9 million in Tommy Hilfiger International.


⁽⁵⁾	Loss before interest and taxes for the thirteen and twenty-six weeks ended July 30, 2017 included costs of $5.5 million and $7.3 million, respectively, associated with the consolidation within the Company’s warehouse and distribution network in North America.

⁽⁶⁾

Loss before interest and taxes for the twenty-six weeks ended July 30, 2017 included costs of $9.4 million related to the noncash settlement of certain of the Company’s benefit obligations related to its Pension Plans as a result of an annuity purchased for certain participants, under which such obligations were transferred to an insurer. Please see Note 8, “Retirement and Benefit Plans,” for further discussion.

Intersegment transactions primarily consist of transfers of inventory principally from the Heritage Brands Wholesale segment to the Heritage Brands Retail segment, the Calvin Klein North America segment and the Tommy Hilfiger North America segment. These transfers are recorded at cost plus a standard markup percentage. Such markup percentage on ending inventory is eliminated principally in the Heritage Brands Retail segment, the Calvin Klein North America segment and the Tommy Hilfiger North America segment.