XML 43 R29.htm IDEA: XBRL DOCUMENT

SEGMENT DATA

12 Months Ended

Feb. 02, 2020

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 and, since December 2019, the Company’s proportionate share of the net income or loss of its investment in its unconsolidated PVH Legwear affiliate 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, concession locations and digital commerce sites in Europe, Asia (including the TH CSAP acquisition) and, since May 31, 2019, Australia, 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 3, “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 and, since December 2019, the Company’s proportionate share of the net income or loss of its investment in its unconsolidated PVH Legwear affiliate 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 3, “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 (in stores and online), as well as 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) women’s intimate apparel under the Warner’s, Olga and True&Co. brand; and (iv) men’s, women’s and children’s swimwear, pool and deck footwear, and swim-related products and accessories under the Speedo trademark. On January 9, 2020, the Company entered into a definitive agreement to sell its Speedo North America business to Pentland. The Speedo transaction is expected to close in the first quarter of 2020, subject to customary closing conditions. This segment also derives revenue from Company operated digital commerce sites in the United States for Speedo, True&Co., Van Heusen, and IZOD, as well as the Company’s styleBureau.com site. In addition, since May 31, 2019, this segment 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 and, since December 2019, the Company’s proportionate share of the net income or loss of its investment in its unconsolidated PVH Legwear affiliate 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 3, “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:



(In millions)	2019		⁽¹⁾	2018		⁽¹⁾	2017		⁽¹⁾
Revenue – Tommy Hilfiger North America
Net sales	$	1,540.2		$	1,574.3		$	1,482.2
Royalty revenue	84.1			76.2			68.9
Advertising and other revenue	23.6			18.7			16.7
Total	1,647.9			1,669.2			1,567.8

Revenue – Tommy Hilfiger International
Net sales	2,994.2			2,599.7			2,268.0
Royalty revenue	49.8			52.7			47.8
Advertising and other revenue	19.8			22.9			9.6
Total	3,063.8			2,675.3			2,325.4

Revenue – Calvin Klein North America
Net sales	1,467.0			1,599.9			1,511.3
Royalty revenue	148.9			143.6			146.4
Advertising and other revenue	53.8			49.8			50.1
Total	1,669.7			1,793.3			1,707.8

Revenue – Calvin Klein International
Net sales	1,896.7			1,827.9			1,645.0
Royalty revenue	74.1			78.9			80.0
Advertising and other revenue	27.3			31.1			28.8
Total	1,998.1			1,937.9			1,753.8

Revenue – Heritage Brands Wholesale
Net sales	1,248.5			1,293.2			1,274.4
Royalty revenue	19.2			20.5			19.5
Advertising and other revenue	4.2			3.7			3.5
Total	1,271.9			1,317.4			1,297.4

Revenue – Heritage Brands Retail
Net sales	253.4			259.2			258.5
Royalty revenue	3.8			4.0			3.7
Advertising and other revenue	0.4			0.5			0.4
Total	257.6			263.7			262.6

Total Revenue
Net sales	9,400.0			9,154.2			8,439.4
Royalty revenue	379.9			375.9			366.3
Advertising and other revenue	129.1			126.7			109.1
Total⁽²⁾	$	9,909.0		$	9,656.8		$	8,914.8


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


⁽²⁾	No single customer accounted for more than 10% of the Company’s revenue in 2019, 2018 or 2017.

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



(In millions)	2019		2018		2017
Wholesale net sales	$	5,066.9	$	4,969.6	$	4,504.3
Retail net sales	4,333.1		4,184.6		3,935.1
Net sales	9,400.0		9,154.2		8,439.4

Royalty revenue	379.9		375.9		366.3
Advertising and other revenue	129.1		126.7		109.1
Total	$	9,909.0	$	9,656.8	$	8,914.8

The Company has not disclosed net sales by product category as it is impracticable to do so.

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



(In millions)	2019			⁽¹⁾	2018			⁽¹⁾	2017			⁽¹⁾
Income before interest and taxes – Tommy Hilfiger North America	$	93.5		⁽³⁾⁽⁴⁾	$	233.8			$	97.0		^(12)(13)(14)

Income before interest and taxes – Tommy Hilfiger International	468.2			⁽⁵⁾	377.1			⁽¹⁰⁾	221.5			^(10)(12)(13)

Income before interest and taxes – Calvin Klein North America	99.8			⁽³⁾⁽⁶⁾	166.7			⁽¹¹⁾	184.0

Income before interest and taxes – Calvin Klein International	153.3			^(3)(5)(6)	211.5			⁽¹¹⁾	226.5

(Loss) Income before interest and taxes – Heritage Brands Wholesale	(84.9		)	⁽⁵⁾⁽⁷⁾	83.3				96.7

Income before interest and taxes – Heritage Brands Retail	3.0				7.4				7.6

Loss before interest and taxes – Corporate⁽²⁾	(174.2		)	^(5)(8)(9)	(188.1		)		(200.9		)	^(15)(16)

Income before interest and taxes	$	558.7			$	891.7			$	632.4


⁽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, 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, certain corporate responsibility initiatives, actuarial gains and losses on the Company’s Pension Plans, SERP Plans and Postretirement Plans, and gains and losses from changes in the fair value of foreign currency option contracts. Actuarial losses on the Company’s Pension Plans, SERP Plans and Postretirement Plans totaled $97.8 million, $15.0 million and $2.5 million in 2019, 2018 and 2017, respectively.

⁽³⁾

Income before interest and taxes for 2019 included costs of $59.8 million in connection with agreements the Company entered into in 2019 to terminate early the licenses for the global Calvin Klein and Tommy Hilfiger North America socks and hosiery businesses (the “Socks and Hosiery transaction”) in order to consolidate the socks and hosiery businesses for all Company brands in North America in a newly formed joint venture, PVH Legwear, 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.


⁽⁴⁾	Income before interest and taxes for 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.

⁽⁵⁾

Income (loss) before interest and taxes for 2019 included costs of $19.3 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: $11.1 million in Tommy Hilfiger International, $6.0 million in Calvin Klein International, $1.8 million in Heritage Brands Wholesale and $2.5 million in corporate expenses not allocated to any reportable segments. Please see Note 3, “Acquisitions,” for further discussion.


⁽⁶⁾	Income before interest and taxes for 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 18, “Exit Activity Costs,” for further discussion.


⁽⁷⁾	Loss before interest and taxes for 2019 included a noncash loss of $142.0 million in connection with the Speedo transaction. Please see Note 4, “Assets Held For Sale,” for further discussion.


⁽⁸⁾	Loss before interest and taxes for 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 3, “Acquisitions,” for further discussion.


⁽⁹⁾	Loss before interest and taxes for 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.


⁽¹⁰⁾	Income before interest and taxes for 2018 and 2017 included costs of $23.6 million and $26.9 million, respectively, associated with the TH China acquisition, primarily consisting of noncash amortization of short-lived assets.


⁽¹¹⁾	Income before interest and taxes for 2018 included costs of $40.7 million incurred in connection with the Calvin Klein restructuring. Such costs were included in the Company’s segments as follows: $18.9 million in Calvin Klein North America and $21.8 million in Calvin Klein International. Please see Note 18, “Exit Activity Costs,” for further discussion.

⁽¹²⁾

Income before interest and taxes for 2017 included costs of $82.9 million incurred in connection with an amendment to Mr. Tommy Hilfiger’s employment agreement pursuant to which the Company made a cash buyout of a portion of the future payments to Mr. Hilfiger (the “Mr. Hilfiger amendment”). Such costs were included in the Company’s segments as follows: $34.7 million in Tommy Hilfiger North America and $48.2 million in Tommy Hilfiger International.

⁽¹³⁾

Income before interest and taxes for 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 (the “Li & Fung termination”). 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.


⁽¹⁴⁾	Income before interest and taxes for 2017 included costs of $19.2 million associated with the relocation of the Tommy Hilfiger office in New York, including noncash depreciation expense.


⁽¹⁵⁾	Loss before interest and taxes for 2017 included costs of $23.9 million related to the early redemption of the Company’s $700 million 4 1/2% senior notes due 2022. Please see Note 9, “Debt,” for further discussion.


⁽¹⁶⁾	Loss before interest and taxes for 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 13, “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 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.

The Company’s identifiable assets, depreciation and amortization, and identifiable capital expenditures by segment were as follows:



(In millions)	2019		2018		2017
Identifiable Assets^(1)(2)(3)
Tommy Hilfiger North America	$	1,599.0	$	1,330.5	$	1,276.5
Tommy Hilfiger International	4,888.6		3,949.3		4,047.3
Calvin Klein North America	1,932.3		1,817.9		1,836.9
Calvin Klein International	3,428.9		3,114.9		3,138.0
Heritage Brands Wholesale	1,075.3		1,178.1		1,123.5
Heritage Brands Retail	128.4		86.6		81.6
Corporate	578.5		386.4		381.9
Total	$	13,631.0	$	11,863.7	$	11,885.7
Depreciation and Amortization
Tommy Hilfiger North America	$	40.6	$	37.9	$	45.1
Tommy Hilfiger International⁽⁴⁾	119.7		133.9		124.5
Calvin Klein North America	38.6		41.5		43.8
Calvin Klein International	91.9		90.6		83.1
Heritage Brands Wholesale	15.1		14.9		14.3
Heritage Brands Retail	6.2		5.6		5.3
Corporate	11.7		10.4		8.8
Total	$	323.8	$	334.8	$	324.9
Identifiable Capital Expenditures⁽⁵⁾
Tommy Hilfiger North America ⁽⁶⁾	$	41.7	$	56.1	$	82.0
Tommy Hilfiger International	139.6		143.9		126.7
Calvin Klein North America	30.3		36.0		36.8
Calvin Klein International	83.3		102.7		96.6
Heritage Brands Wholesale	18.6		15.8		8.0
Heritage Brands Retail	6.5		8.5		4.2
Corporate	21.0		18.3		10.1
Total	$	341.0	$	381.3	$	364.4


⁽¹⁾	Identifiable assets included the impact of changes in foreign currency exchange rates.

⁽²⁾

Identifiable assets include the impact related to the adoption of accounting guidance for leases in 2019 using the modified retrospective approach applied as of the period of adoption with a cumulative-effect adjustment to opening retained earnings and as such, prior periods have not been restated. Upon adoption, the Company (i) recognized operating lease right-of-use assets of $1.7 billion and lease liabilities of $1.9 billion, (ii) recorded a cumulative-effect adjustment to retained earnings of $3.1 million and (iii) recorded other reclassification adjustments within its Consolidated Balance Sheet related to, among other things, deferred rent. Please see Note 17, “Leases,” for further discussion.


⁽³⁾	Identifiable assets in 2019 included the impact of the Australia acquisition. Please see Note 3, “Acquisitions,” for a further discussion.


⁽⁴⁾	Depreciation and amortization in 2018 and 2017 included $24.6 million and $26.8 million, respectively, related to the amortization of intangible assets recorded in connection with the TH China acquisition, which became fully amortized in 2018.


⁽⁵⁾	Capital expenditures in 2019 included $39.5 million of accruals that will not be paid until 2020. Capital expenditures in 2018 included $43.7 million of accruals that were not paid until 2019. Capital expenditures in 2017 included $41.9 million of accruals that were not paid until 2018.


⁽⁶⁾	Capital expenditures in 2017 included expenditures related to the relocation of the Company’s Tommy Hilfiger office in New York, New York.

Property, plant and equipment, net based on the location where such assets are held, was as follows:



(In millions)	2019 ⁽¹⁾		2018 ⁽¹⁾		2017 ⁽¹⁾
Domestic	$	525.8	$	500.5	$	449.2
Canada	25.3		28.8		30.0
Europe	375.6		362.7		325.5
Asia-Pacific⁽²⁾	87.6		73.4		73.8
Other foreign	12.5		19.1		21.3
Total	$	1,026.8	$	984.5	$	899.8


⁽¹⁾	Property, plant and equipment, net included the impact of changes in foreign currency exchange rates.


⁽²⁾	The Company completed the Australia acquisition in the second quarter of 2019. Please see Note 3, “Acquisitions,” for further discussion.

Revenue, based on location of origin, was as follows:



(In millions)	2019 ⁽¹⁾		2018 ⁽¹⁾		2017 ⁽¹⁾
Domestic	$	4,275.0	$	4,481.3	$	4,290.1
Canada	505.5		528.8		512.2
Europe	3,657.3		3,362.1		2,907.2
Asia-Pacific⁽²⁾	1,353.4		1,163.7		1,059.3
Other foreign	117.8		120.9		146.0
Total	$	9,909.0	$	9,656.8	$	8,914.8


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

⁽²⁾

The Company completed the Australia acquisition in the second quarter of 2019. Please see Note 3, “Acquisitions,” for further discussion.