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SEGMENT DATA

9 Months Ended

Nov. 03, 2019

Notes to Financial Statements [Abstract]

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

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, warehouse clubs, and off-price and independent retailers, as well as digital commerce sites operated by 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, Asia and, since May 31, 2019, Australia, primarily to department and specialty stores, and digital commerce sites operated by department store customers and pure play digital commerce retailers, as well as through distributors and franchisees; (ii) operating retail stores and concession locations in Europe, Asia (including the TH CSAP acquisition) and, since May 31, 2019, Australia, 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. This segment included the Company’s proportionate share of the net income or loss of its investment in PVH Australia relating to its Tommy Hilfiger business until May 31, 2019, on which date the Company completed the Australia acquisition and began to consolidate the operations of PVH Australia into its financial statements. Please see Note 4, “Acquisitions,” for further discussion.

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 warehouse clubs, department and specialty stores, and off-price and independent retailers, as well as digital commerce sites operated by 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, Brazil and, since May 31, 2019, Australia, primarily to department and specialty stores, and digital commerce sites operated by department store customers and pure play digital commerce retailers, as well as through distributors and franchisees; (ii) operating retail stores, concession locations and digital commerce sites in Europe, Asia, Brazil and, since May 31, 2019, Australia, 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 unconsolidated Calvin Klein foreign affiliate in India. This segment included the Company’s proportionate share of the net income or loss of its investment in PVH Australia relating to its Calvin Klein business until May 31, 2019, on which date the Company completed the Australia acquisition and began to consolidate the operations of PVH Australia into its financial statements. Please see Note 4, “Acquisitions,” for further discussion.

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, off-price and independent retailers, as well as digital commerce sites operated by select wholesale partners and pure play digital commerce retailers in North America of (i) men’s 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) men’s, women’s and children’s swimwear, pool and deck footwear, and swim-related products and accessories under the Speedo trademark; and (iv) women’s intimate apparel under the Warner’s, Olga, and True&Co. brands. Additionally, this segment derives revenue from Company-operated digital commerce sites in the United States through SpeedoUSA.com, TrueAndCo.com, VanHeusen.com, IZOD.com and styleBureau.com. In addition, since May 31, 2019, this segment also derives revenue from the Heritage Brands business in Australia. As well, this segment 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 Heritage Brands business. This segment included the Company’s proportionate share of the net income or loss of its investment in PVH Australia relating to its Heritage Brands business until May 31, 2019, on which date the Company completed the Australia acquisition and began to consolidate the operations of PVH Australia into its financial statements. Please see Note 4, “Acquisitions,” for further discussion.

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. All of the Company’s Heritage Brands stores offer a broad selection of Van Heusen men’s and women’s apparel, along with various of the Company’s dress shirt and neckwear offerings, and IZOD and Warner’s products. The majority of these stores feature multiple brand names on the store signage, with the remaining stores operating under the Van Heusen name.

The Company’s revenue by segment was as follows:



	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
(In millions)	11/3/19		⁽¹⁾	11/4/18		⁽¹⁾	11/3/19		⁽¹⁾	11/4/18		⁽¹⁾
Revenue – Tommy Hilfiger North America
Net sales	$	388.8		$	394.9		$	1,126.7		$	1,151.6
Royalty revenue	25.8			23.8			62.6			56.7
Advertising and other revenue	8.2			5.6			18.3			13.8
Total	422.8			424.3			1,207.6			1,222.1

Revenue – Tommy Hilfiger International
Net sales	803.7			688.1			2,145.4			1,897.6
Royalty revenue	12.3			14.4			37.9			39.4
Advertising and other revenue	5.1			5.7			15.3			17.8
Total	821.1			708.2			2,198.6			1,954.8

Revenue – Calvin Klein North America
Net sales	386.1			420.3			1,130.6			1,212.6
Royalty revenue	49.9			45.9			114.8			111.9
Advertising and other revenue	19.3			14.8			42.7			38.5
Total	455.3			481.0			1,288.1			1,363.0

Revenue – Calvin Klein International
Net sales	486.8			452.8			1,368.3			1,336.9
Royalty revenue	19.3			21.7			55.1			56.2
Advertising and other revenue	7.5			7.7			20.3			22.2
Total	513.6			482.2			1,443.7			1,415.3

Revenue – Heritage Brands Wholesale
Net sales	305.7			357.9			960.4			1,000.7
Royalty revenue	4.9			5.4			15.0			15.8
Advertising and other revenue	0.9			1.0			3.1			3.0
Total	311.5			364.3			978.5			1,019.5

Revenue – Heritage Brands Retail
Net sales	62.4			63.4			188.4			194.7
Royalty revenue	0.9			1.0			2.9			3.1
Advertising and other revenue	0.1			0.1			0.4			0.3
Total	63.4			64.5			191.7			198.1

Total Revenue
Net sales	2,433.5			2,377.4			6,919.8			6,794.1
Royalty revenue	113.1			112.2			288.3			283.1
Advertising and other revenue	41.1			34.9			100.1			95.6
Total	$	2,587.7		$	2,524.5		$	7,308.2		$	7,172.8

⁽¹⁾Revenue was impacted by fluctuations of the United States dollar against foreign currencies in which the Company transacts significant levels of business.

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



	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
(In millions)	11/3/19		11/4/18		11/3/19		11/4/18
Wholesale net sales	$	1,431.2	$	1,415.5	$	3,929.7	$	3,830.1
Retail net sales	1,002.3		961.9		2,990.1		2,964.0
Net sales	2,433.5		2,377.4		6,919.8		6,794.1

Royalty revenue	113.1		112.2		288.3		283.1
Advertising and other revenue	41.1		34.9		100.1		95.6
Total	$	2,587.7	$	2,524.5	$	7,308.2	$	7,172.8

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



	Thirteen Weeks Ended								Thirty-Nine Weeks Ended
(In millions)	11/3/19			⁽¹⁾	11/4/18			⁽¹⁾	11/3/19			⁽¹⁾	11/4/18			⁽¹⁾
Income before interest and taxes – Tommy Hilfiger North America	$	39.3			$	64.6			$	72.9		⁽⁷⁾⁽⁹⁾	$	179.6

Income before interest and taxes – Tommy Hilfiger International	137.6			⁽³⁾	112.6			⁽¹¹⁾	344.2			⁽⁴⁾	263.6			⁽¹¹⁾

Income before interest and taxes – Calvin Klein North America	64.6			⁽⁵⁾	51.2				77.3			⁽⁶⁾⁽⁷⁾	154.5

Income before interest and taxes – Calvin Klein International	58.7			⁽³⁾⁽⁵⁾	69.7				112.2			^(4)(6)(7)	180.0

Income before interest and taxes – Heritage Brands Wholesale	14.5			⁽³⁾	23.8				67.5			⁽⁴⁾	90.1

(Loss) Income before interest and taxes – Heritage Brands Retail	(0.8		)		0.4				3.3				8.3

Loss before interest and taxes – Corporate ⁽²⁾	(44.4		)		(40.0		)		(23.0		)	^(4)(8)(10)	(118.1		)

Income before interest and taxes	$	269.5			$	282.3			$	654.4			$	758.0


⁽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.

⁽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 (prior to the Australia acquisition closing) and Karl Lagerfeld Holding B.V., and the results of PVH Ethiopia. Please see Note 4, “Acquisitions,” for further discussion. 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 on 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 weeks ended November 3, 2019 included costs of $8.6 million in connection with the Australia and TH CSAP acquisitions, primarily consisting of noncash valuation adjustments. Such costs were included in the Company’s segments as follows: $5.4 million in Tommy Hilfiger International, $2.4 million in Calvin Klein International and $0.8 million in Heritage Brands Wholesale. Please see Note 4, “Acquisitions,” for further discussion.

⁽⁴⁾

Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $13.4 million in connection with the Australia and TH CSAP acquisitions, primarily consisting of noncash valuation adjustments, and one-time costs of $2.1 million recorded on the Company’s equity investments in Gazal and PVH Australia prior to the Australia acquisition closing. Such costs were included in the Company’s segments as follows: $7.9 million in Tommy Hilfiger

International, $3.9 million in Calvin Klein International, $1.2 million in Heritage Brands Wholesale and $2.5 million in corporate expenses not allocated to any reportable segments. Please see Note 4, “Acquisitions,” for further discussion.


⁽⁵⁾	Income before interest and taxes for the thirteen weeks ended November 3, 2019 included costs of $3.5 million incurred in connection with the Calvin Klein restructuring. Such costs were included in the Company’s segments as follows: $0.9 million in Calvin Klein North America and $2.6 million in Calvin Klein International. Please see Note 17, “Exit Activity Costs,” for further discussion.

⁽⁶⁾

Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $102.9 million incurred in connection with the Calvin Klein restructuring. Such costs were included in the Company’s segments as follows: $66.0 million in Calvin Klein North America and $36.9 million in Calvin Klein International. Please see Note 17, “Exit Activity Costs,” for further discussion.

⁽⁷⁾

Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $59.8 million in connection with agreements the Company entered into in the second quarter of 2019 to terminate early the licenses for the global Calvin Klein and Tommy Hilfiger North America socks and hosiery businesses in conjunction with the Company’s plan to consolidate the socks and hosiery business for all Company brands in North America in a newly formed joint venture, which began operations in December 2019, and to bring in-house the international Calvin Klein socks and hosiery wholesale businesses. Such costs were included in the Company’s segments as follows: $7.5 million in Tommy Hilfiger North America, $25.5 million in Calvin Klein North America and $26.8 million in Calvin Klein International.


⁽⁸⁾	Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included a noncash gain of $113.1 million to write up the Company’s equity investments in Gazal and PVH Australia to fair value in connection with the Australia acquisition. Please see Note 4, “Acquisitions,” for further discussion.


⁽⁹⁾	Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $54.9 million incurred in connection with the TH U.S. store closures, primarily consisting of noncash lease asset impairments. Please see Note 12, “Fair Value Measurements,” for further discussion.


⁽¹⁰⁾	Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $6.2 million related to the refinancing of the Company’s senior credit facilities. Please see Note 9, “Debt,” for further discussion.

⁽¹¹⁾

Income before interest and taxes for the thirteen and thirty-nine weeks ended November 4, 2018 included costs of $6.3 million and $19.9 million, respectively, associated with the acquisition of the 55% ownership interests in TH Asia, Ltd., the Company’s former joint venture for TOMMY HILFIGER in China, that the Company did not already own, consisting of noncash amortization of short-lived assets.

Intersegment transactions primarily consist of transfers of inventory principally from the Heritage Brands Wholesale segment to the Heritage Brands Retail segment, the Tommy Hilfiger North America segment and the Calvin Klein 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 Tommy Hilfiger North America segment and the Calvin Klein North America segment.