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Good morning, everyone, and welcome to today's PVH Corp. First Quarter 2025 Earnings Conference Call. At this time, participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one keys on your touch-tone phone. Please note this call may be recorded, and I will be standing by should you require any assistance. It is now my pleasure to turn today's program over to Sheryl Freeman, Senior Vice President of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. First Quarter 2025 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer, and

Thank you, Sheryl, and good morning, everyone. Thank you for joining our call today. I want to start by thanking our Calvin, Tommy, and PVH teams around the world for their hard work this quarter as we delivered on our plan. Driven by our disciplined execution of the PVH+ plan, we grew revenue 2% above our guidance, and we delivered stronger than expected non-GAAP EPS, also above our guidance. We remain on track to drive revenue growth for the full year in line with guidance. Total direct-to-consumer revenue was down approximately 3%, with e-commerce up 3%. We grew wholesale revenue mid-single digits and benefited from earlier shipments, as well as the intake and relaunch of the Calvin Klein women's sportswear and jeans businesses in North America. Since we last spoke, we have seen an increasingly tough environment. While we have to recognize this evolved backdrop, all our focus is on what's within our control to strengthen and expand the impact of our own PVH+ actions. In moments like this, when the external factors get worse, it's time to sharpen our focus, get even closer to the consumers, and expand our execution. Based on this, I'll directly go into sharing the concrete examples of what actions we took that drove our performance in Q1 and then briefly cover our outlook. I'll then finish with covering the specific actions we will drive in the back half that are fully in our control and are geared to move the needle. For Q1 drivers, I'll start with Calvin Klein. The world of underwear and jeans is a significant portion of Calvin's global revenues. When we spoke last, we had just launched our most innovative product franchise so far, the Icon Cotton Stretch Underwear for Men, with a viral cut-through campaign featuring Bad Bunny. It was built on a unique product innovation, rooted in our biggest product category, and was complemented by very strong product marketing activations that drove traffic to stores and boosted conversion. This full-funnel approach drove a 25% increase in combined sales of Icon Cotton Stretch and Cotton Stretch styles globally. It's one very powerful example of where we are leaning into our core strengths, aligning all the pieces of the PVH+ plan, from brand, product, and marketing, all the way to marketplace execution, then we really cut through. Another key product category for Calvin is denim. In Q1, we put a lot of innovation into our iconic fashion denim offering, expanding fits, washes, and designs to be hyper-relevant. Through these actions, we grew that part of the assortment 14% in the quarter. Today, we see a big difference in performance between where we have strategically leaned in to innovate and where we have yet to do so. In the back half of this year, we will accelerate the impact of these kinds of initiatives to cover a bigger part of the total assortment. In addition to the strategic growth initiatives in the main lines, we kicked off the year with Calvin Klein's return to runway, which dominated the New York Fashion Week conversations and plays an important role in creating a strong halo for the brand. Top-tier talent, Dua Lipa, Alexander Skarsgard, and Pedro Pascal, were styling collection looks at cultural defining moments in the season, like most recently at the Cannes Film Festival. Turning to Tommy. Similar to Calvin, what we see in Tommy from a product perspective is that where we innovate and put fashion into our iconic styles, whether it's garment-dyed linen shirts, or an evolution of our monogram t-shirts, or when we add seasonal relevance to our iconic cable knit sweaters for men's and women's, we drive much stronger performance. We built our most recent summer lifestyle campaign, Hilfiger Resort, on this learning, where the product is iconic Tommy made current through an infusion of seasonal relevance, amplified by some of our best-performing talent, including Patrick Schwarzenegger and Madeline Klein. Earlier this spring, Tommy also launched two new collections, a women's collection with Sofia Richie Grange, and the Hilfiger Sailing Collection, as part of our partnership with Sail GP. Both collections were showcased across all key platforms and channels. Going forward, you will continue to see these kinds of seasonal collections and new takes on Tommy's iconic style always playing back to our biggest businesses and biggest categories, and activated in our key wholesale doors and stores globally. Finally, on the brand side, Tommy delivered breakthrough fashiontainment at the Met Gala. Actor Damson Idris drove up to the Met steps in the race car from the highly anticipated film F1, wearing a custom Tommy Hilfiger race suit, before dramatically revealing a red Tommy tuxedo to walk the red carpet. It became one of the most talked-about entrances both in global headlines and in social media, and it captured Tommy's iconic style and cultural relevance. Now, let me turn to our regional performance. Starting with Europe, we kept strengthening our strong brand position in the region, with overall revenue increasing mid-single digits in line with our plan, and driven by growth in both D2C and wholesale. Importantly, as planned, total D2C turned to growth in the quarter, increasing low single digits, and we delivered our third consecutive quarter of store growth. Despite the continued muted consumer backdrop, we drove better conversion across the region, with particular strength in the big consumer moments. At wholesale, we delivered mid-single digit growth driven by the sequential improvements in order books for the spring 2025 season compared to fall 2024. We also benefited from earlier spring and summer product shipments compared to the same quarter last year. As we shared previously, our full order book in Europe finalized up low single digits versus the prior year, reflecting the strong execution from our teams to improve the overall assortment and the successful quality of sales initiatives we took last year. In The Americas, our team continued to lean into the next level execution of the PVH+ plan. As we work to unlock the full growth potential of both brands, we once again delivered a double-digit EBIT margin. This is a big improvement from when we first launched the PVH+ plan. Overall revenue increased high single digits, above our plan driven by earlier wholesale shipments and supported by the relaunch of the women's sportswear and jeans business at U.S. Wholesale, following the take back of this license. D2C store revenue in the quarter declined on lower traffic, although conversion continued to improve, and we grew e-commerce mid-teens. Where we delivered strong spring fashion newness, we drove strong growth, which for Tommy was led by newness in sweaters, linen fabrications, and fashion tees, and in Calvin, the men's new Icon cotton stretch underwear and fashion denim. Across both brands, we continue to drive strong performance in e-commerce with higher traffic and higher average order value. Within wholesale, we launched Calvin Klein women's sportswear in Macy's in over 150 doors, supported by a special marketing campaign, and we invested in building out a new shopping experience. Moving on to Asia Pacific. Revenues declined low teens on a reported basis and low double digits in constant currency, due to weaker consumer confidence and the earlier timing shift of Lunar New Year into the last quarter. While we delivered e-commerce growth in constant currency, overall performance was more than offset by declines in stores and sales. As we shared last quarter, starting in February, we began to face incrementally tougher headwinds in China, which have since continued. While we are optimistic about the opportunities to grow our brands in the regions, we are realistic about the continued headwinds from a challenged backdrop, particularly in China. In this backdrop, we continue to drive product innovation across outerwear, sweaters, polos, and denim. Our strong brand ambassadors, Min Yu, Jisoo, and Stray Kids, demonstrated our continued ability to amplify with global talent to excite consumers and remain strong in key consumer shopping moments. Turning to inventory and the build-out of our demand-driven supply chain. For the start of the year, we built up and evolved our never-out-of-stock program of core essentials. We did this as a deliberate effort after multiple seasons of being too low in these products and often missing sales. At the same time, Q1 started with lower than expected demand for basics and essentials, which has led to us leaving the first quarter with higher levels of inventory. As part of our demand-driven supply chain, we have adjusted future buys, which will align inventory levels to current demand trends in the back half of the year. This is high-quality, fresh inventory of core essentials that we will keep adjusting over time based on demand. On the licensing front, as we discussed last quarter, we have a large and diversified global licensing business, which is a key competitive advantage for us. Our licensing partners help bring our vision to life across multiple complementary categories where they are experts, from watches and fragrance to eyewear, and they are critically important to how we drive sustainable profitable growth through the PVH+ plan. In the first quarter for Women's North America wholesale, as planned, we took back the Calvin Klein sportswear and jeans licenses, which are key to our lifestyle expression. For spring 2026, we will take back our Tommy Sportswear license. Included in the licenses we are taking back are specialized wholesale category businesses like outerwear, which are presented outside of our brand-specific lifestyle paths, often on a dedicated section of the store. This week, for one of these specialized categories, we entered into a new licensing agreement for men's and women's outerwear, with an expected launch in spring 2026. As I mentioned, any new licensing partner will complement our assortment with their specific expertise and be fully aligned with our brand directions. As a reminder, the overall contribution to our total global licensing business from the G3 license take back is only 20% of our expected licensing revenues for 2025, and 80% of our licensing revenues are from long-term brand-building partnerships that we are growing together. Now let me switch gears and talk about our overall outlook. Across the industry, as I mentioned earlier, we are navigating a very uncertain consumer and macro environment that has become increasingly challenged over the past three months. The tougher retail trends we saw in February continued, with consumer sentiment further weakening to some of its lowest recorded levels since the 1950s. This has translated into traffic trends coming down in The U.S. and around the world, and this backdrop has led to increased promotional levels. We are also navigating the impact of tariffs. Based on our latest assessment, we estimate that the unmitigated impact of tariffs creates a headwind of approximately $65 million to our full-year EBIT, weighted predominantly in the second half of the year. We are taking a variety of steps to mitigate this impact, which

Thanks, Stefan, and good morning. My comments are based on non-GAAP results and are reconciled in our press release. As Stefan discussed, we were able to deliver our first-quarter results within the backdrop of a highly dynamic and uncertain macro environment, driven by the strength of our two iconic global brands and disciplined execution of the PVH+ plan. For the first quarter, we delivered revenue above our guidance largely due to the timing of wholesale shipments in The Americas, with an operating margin of 8.1% within our guidance range as we navigated an increasingly promotional environment. EPS came in slightly ahead of guidance driven by lower tax and interest expense. Additionally, we returned over $550 million to shareholders with the repurchase of 5.4 million shares of our common stock through previously announced accelerated share repurchase agreements and open market purchases. I will now discuss our first-quarter results in more detail and then move on to our outlook. As a reminder, as I mentioned during our Q4 2024 earnings call, beginning this quarter, we have evolved our reportable segments to be one, EMEA, two, The Americas, three, Asia Pacific, and four, a new standalone licensing segment. We filed an 8-K yesterday with the recast quarterly and annual segment data for 2023 and 2024. Revenue for the first quarter was up 2% on both the reported and constant currency basis. Starting from a regional perspective, our EMEA business returned to growth during the quarter with revenue up 4% in constant currency, including mid-single-digit growth in the wholesale business and a low single-digit increase in the direct-to-consumer business. Wholesale growth for the quarter was impacted by a shift in timing of shipments with Q2. Revenue for our European business was up 5% on a reported basis. In our Americas business, revenue was up 7% driven by high teens growth in the wholesale business, including the impact of Calvin Klein Women's Sportswear and Jeans wholesale transition in-house, and a shift in timing of shipments from the second half into the first half of the year. This year, wholesale shipments are planned to reflect a more balanced first half, second half weighting versus last year when shipments were more heavily weighted to the back half. In direct-to-consumer, mid-teens growth in our owned and operated digital commerce business was more than offset by a mid-single-digit decline in our retail stores due to the challenging consumer environment. Traffic trends ended the quarter lower than planned, leading to a more promotional environment. Aligned with our outlook, revenue in our Asia Pacific business was down 11% on a constant currency basis, which included a 3% decrease due to the earlier timing of the Lunar New Year shopping period that I discussed last quarter. The decrease also reflects the challenging consumer environment in the region, particularly in China. Revenue for the Asia Pacific business was down 13% on a reported basis. Licensing revenue was down 2% versus last year, with the decrease more than explained by the previously mentioned transition of Calvin Klein women's sportswear and jeans in-house during the quarter. In our global brands, Tommy Hilfiger revenues were up 3% on both the reported and the constant currency basis driven by growth in EMEA and The Americas. Calvin Klein revenues were flat. From an overall PVH channel perspective, our direct-to-consumer revenue was down 3% both reported and in constant currency. Sales in our retail stores were down 5% as low single-digit growth in EMEA was offset by the declines I mentioned in The Americas and APAC. Sales in our owned and operated e-commerce business were up 3%, with strong growth in The Americas. Total wholesale revenue was up 7% on a constant currency basis and 6% on a reported basis, driven by increases in EMEA and The Americas due in part to the shifts in timing that I mentioned earlier. In the first quarter, our gross margin was 58.6%, a decrease of 280 basis points compared to a record high in Q1 last year. As we've discussed previously, approximately 50 basis points of the decrease was the impact of our North America license transitions. The remaining 230 basis point decrease was a result of three main factors in the quarter. First, a higher mix of wholesale revenue in the first quarter than last year and a change in the mix of shipments within the wholesale channel, which has a negative impact on gross margin, but not on our overall profitability. Second, the impact of weakening consumer sentiment and lower retail traffic, which led to higher promotions. And third, incremental freight cost and customer discounts to address the impact of the Calvin Klein product shipment delays. SG&A as a percent of revenue was 50.5%, a 90 basis point improvement versus last year, reflecting our growth driver five cost savings actions. We are making progress, and we expect the benefit of these actions to grow in impact as we progress through the year. EBIT for the quarter was $160 million, and operating margin was 8.1%. Earnings per share was $2.30. Interest expense was $17 million, and our tax rate for the quarter was approximately 17%. On a GAAP basis, we also took a non-cash goodwill and other intangible asset impairment charge of $480 million, which was primarily due to an increase in discount rates. Inventory at quarter-end was up 19% compared to Q1 last year. The increase was primarily due to one, as Stefan mentioned, a purposeful investment in best-selling core product categories, two, an increase to support our projected sales growth in the second quarter, and three, earlier receipts of summer season product to improve in-season stock availability. Importantly, the vast majority of our inventory is core and current season. As we progress through the year, we expect inventory will be impacted by tariffs, but otherwise begin to largely align with projected sales growth by the end of Q3. Now moving on to our outlook. I'd like to start by reiterating what Stefan mentioned earlier. We are operating in a highly dynamic and fluid consumer and macroeconomic environment globally. There is significant uncertainty around global trade policies and the impact on the broader macroeconomic environment and consumer spending behavior. As such, our outlook is based on our best assessment of current conditions and assumes no material worsening. Overall, we are reaffirming our full-year revenue outlook, but we are updating our earnings outlook to reflect our revised expectations for the remainder of the year, with three main changes versus our prior guidance. The first is the impact of the recently announced tariffs on goods coming into The U.S. We expect the tariffs currently in place will have an overall net negative impact on our earnings in 2025, including an approximately $65 million unmitigated impact to EBIT, or approximately $1.50 per share, some of which we will be able to mitigate through strategic actions in the second half of the year, and some we will need to absorb. The net impact of the tariffs and these actions are embedded within our guidance. We believe we are relatively well-positioned to face tariff headwinds. We have a strong globally diversified revenue base, with U.S. revenues accounting for approximately 30% of our total revenue. We have a strong and established network of global sourcing partners across more than 30 countries and are leveraging these deep long-standing relationships to identify ways we can further optimize our sourcing and production costs, sharing the impact with our partners wherever possible. We will evaluate strategic discounts to mitigate the potential tariff impact. While we are focused on delivering price value for the consumer, we are also ready to take calibrated targeted pricing actions where we have pricing power. As a normal course of business, we continually assess our prices based on a number of factors. In addition to the newly enacted tariffs, the existing macro pressures have created an increasingly challenging consumer environment, particularly in The U.S. The tougher retail trends that emerged beginning in early February have continued. As such, we are already experiencing a more promotional environment across the market, and we have had to increase our promotional levels across both brands. We are now forecasting a more promotional environment to continue for the remainder of the year. Similarly, our business in China continues to face a challenging consumer environment, which is driving more promotional activity there as well. As Stefan mentioned, we remain on MOFCOM's unreliable entity list. Finally, as Stefan discussed, with the first globally created product season for Calvin Klein now in the markets, the full extent of the transitory operational challenges that we discussed last quarter are now apparent, further contributing to our margin headwinds this year. The outcome of these factors is leading us to the following financial outlook. We are reaffirming our overall full-year revenue guidance of flat to a slight increase on both a reported and constant currency basis. Exchange has improved since we last spoke and is driving some favorability to our top line. As such, we now expect our reported revenue is more likely to land at the higher end of that range. Our revenue outlook for EMEA and The Americas remains unchanged with planned growth in both regions in 2025. In Asia Pacific, our outlook for the region overall also remains unchanged with revenue planned down mid-single digits in constant currency. Gross margin is now expected to decrease approximately 250 basis points versus last year. Our previous guidance was a decrease of approximately 100 basis points, of which approximately half is due to the impact of the G3 Transition In North America from license to wholesale, and the rest largely explained by the transitory impacts from centralizing the Calvin Klein Global Product Kitchen. The incremental 150 basis points decline is attributable to higher discounts as a result of the significantly more promotional environments, the impact of the incremental Calvin Klein operational issues, and the net negative impact related to tariffs. This includes an unmitigated impact of approximately 80 basis points, partially offset by the impact of planned mitigation actions, which will primarily take effect in the second half. While we expect the promotional environment to continue all year, within that backdrop, we are planning improvement in the second half related to what is within our control. Specifically, we continue to expect the transitory Calvin Klein issues to have a greater impact on first-half gross margins, with the impact lessening in the second half. On SG&A, we expect expense to be lower in constant currency in 2025 compared to 2024. As we previously saw macro headwinds gathering, our SG&A plans for 2025 already included a decrease of approximately 100 basis points as a percentage of revenue. As I discussed last quarter, we expect to drive significant cost savings connected to our Growth Driver five actions, with savings showing up more powerfully as we progress through the year. These actions will simplify our operating model to drive more efficient ways of working, focus on our global technology stack, our global distribution network, our operating model in Europe, and our support functions. We expect these actions to deliver 200 basis to 300 basis points of operating margin expansion over time, and expect to exit 2025 with approximately 200 basis points of this savings realized. As a result of the increased gross margin pressures, our full-year operating margin is now projected to be approximately 8.5%, and EPS is projected to be in the range of $10.75 to $11. While operating margins are lower than last year, we expect to exit 2025 back at double-digit operating margins, with both gross margin and SG&A actions contributing to improvements compared to the first half. Our expectations for interest expense and our tax rate are unchanged from our prior guidance. Turning to the second quarter, we are projecting revenue to be up low single digits on a reported basis and flat to up slightly on a constant currency basis compared to 2024. In EMEA, we expect continued growth in DTC to be offset by a low single-digit decline in wholesale, reflecting the timing shifts with Q1 I mentioned earlier. In The Americas, we are planning revenue up high single digits and relatively in line with Q1, driven by an increase in wholesale revenue partially offset by lower DTC sales. In Asia Pacific, we expect revenue to decline by mid-single digits, with the improvement versus Q1 primarily due to the timing of the Lunar New Year shopping period that negatively impacted Q1. We are expecting our second-quarter gross margin to decline 300 basis points, with the Q1 trends largely continuing into Q2 and an approximately 60 basis point impact of tariffs. We don't expect our mitigation strategies to have any substantial impact until the second half of the year. For SG&A, growth driver five savings will continue to deliver efficiencies, and as such, our SG&A expense as a percent of revenue is expected to decrease approximately 100 basis points compared to last year. Overall, we are expecting our second-quarter operating margin to be approximately 6.5% to 7%, down approximately 200 basis to 250 basis points compared to last year. Earnings per share is expected to be in a range of $1.85 to $2. Our tax rate for the second quarter is estimated at approximately 20%, and interest expense is projected to be approximately $25 million. Before we open up for questions, I just want to conclude by saying we're navigating a highly dynamic and uncertain macroeconomic environment. We are facing increased pressures from the significantly more promotional environment, tariffs in The U.S., the challenging consumer environment in China, and transitory operational challenges at Calvin Klein. While operating margins are lower than last year and our previous expectations, as Stefan mentioned, our focus is on taking proactive measures on what is in our control, including specific actions focused on supercharging our trajectory in the second half. With this focus, we expect to exit 2025 back at double-digit operating margins, and we are setting up for a stronger spring 2026 with higher on-time deliveries, increased product go-in margins, and stronger commercial plans amplified by increased marketing investments, all building momentum into 2026 to deliver sustainable and increasingly profitable growth. With that, operator, we would like to open it up for questions.

Certainly. Thank you, Mr. Coughlin. Ladies and gentlemen, at this time, if you do have any questions or comments, please press 1. You can always remove yourself from the queue if your question has been addressed by pressing 2. Additionally, to get to as many questions as time permits, we do ask that you please limit yourself to one question. We'll go first this morning to Jay Sole of UBS. Jay, please go ahead.

Great. Thank you so much. Stefan, you mentioned that you've seen decreased traffic across many regions in the world and increased promotional levels. You also mentioned that your brands have strong product assortments and exciting commercial plans, but what gives you confidence that both brands, both Calvin and Tommy, still have good momentum with consumers, that they haven't lost momentum? That part of what maybe is explaining the change in the guide isn't something of that nature. Thank you.

Yes. Thanks, Jay, and good morning. What is so clear to us, and especially when the consumer backdrop and the macro gets worse, is everywhere where we lean in and tap into the consumer love for Calvin Klein and Tommy Hilfiger, and then we line up through the PVH+ focus, increase newness and innovation in product, cut-through marketing, stronger wholesale and in-store execution, we really win, and we win big despite that macro. So take the biggest product innovation in Q1 in Calvin Klein, one of the most promising proof points is the new product innovation in underwear. So if you look at what we did there, we leaned into the biggest category in Calvin Klein, men's underwear. We leaned into one of the biggest product franchises, and then we put unprecedented newness and innovation into it. Innovation that's not in the markets, we were first. Then we amplify that with one of the most streamed artists on Spotify, Bad Bunny, and yes, it becomes viral. But what's really interesting is in this backdrop, it drove 25% growth within that big franchise. So in one move, we moved one of the top three product franchises for the biggest category and drove 25% growth. Then what might be missed by some, but not by the consumer, is we also increasingly start to introduce denim next to underwear because that's a really big iconic category for Calvin Klein as well. The improved and innovated fashion denim in Q1 drove growth of 14%. So what you see in the back half, what you see us doing, what our focus is 100%, is expanding and scaling this across bigger and bigger parts of the business. We are moving from this investor call to an all-hands call with our 20,000 associates, and my focus there is about not yet. We are not yet in a position to fully mitigate the macro headwinds, but look at where we lean in and execute. 25% growth in the biggest franchise, 14% growth on the fashion denim, and then you will see in fall how these actions continue with more product innovation and product franchise introduction for men's. Then we do exactly the same for women's. So one of the biggest underwear franchises for women's for fall is completely reinvented, backed up with one again, once again, one of the biggest artists in the world. Then we continue, biggest artists in the world, biggest sports, K-pop, and then we continue to build on that. For Tommy, we see the same thing in Tommy. So when we lean into the iconic strength of the Tommy lifestyle, the key growth categories, and then we infuse newness into those, we win big. So it's all about going back to the iconic DNA, making it current. Then for Tommy, it's the lifestyle. So what's really exciting is the Formula One partnership that some of you might have seen the launch of that yesterday. So we're coming back big in Formula One. Formula One is one of the biggest, if not the biggest growing sport from a viewership in the world, especially with a young consumer, and there we are combining two American icons, Cadillac, the first U.S. team coming back on the grid, with another American icon, Tommy Hilfiger, who was 20 years earlier than most other lifestyle brands in Formula One. So we have the proof points. It's 100% correlated to where we lean in and execute. Coming back to the town hall right after this is talking about the action, the sharpening actions, and the scale that we grow this for the back half.

Got it. Thank you so much.

Thank you. We go next now to Michael Binetti of Evercore.

Hey, guys. Thanks for taking our questions here. Nice job with the relaunch of the Formula One business this week. I was wondering,

Yes. So let's start. Hi, Michael. Good morning. So let's start with the Calvin Klein operational challenges that we experienced from bringing the Calvin Klein global product capabilities together, which is an absolutely critical needed move to unlock the full value of the brand going forward and win with this kind of product newness and innovation we just talked about. What's exciting to see is that the team has worked through it in a way that the biggest effect is soon behind us. We are improving for fall 2025 already in the back half of this year, which starts now basically. We are improving it significantly. For spring, another really big step up. Then very soon, we start the product season from scratch for fall 2026. Then we start from strength. So, very clear, and the way we see that we are making this progress is that we see that for spring 2026, we see that we are on time on both brands. We see that the go-in margin is improved versus last year significantly. So see the KPIs, we see that yes, they had to take too much time in the first season to sort out the go-to-market process, but now I'm very much encouraged by also amplified by David coming in with deep operational and brand experience to connect both the creative strength that we already have to scale that, but also secure a systematic repeatable operating model.

Yes. Good morning, Michael. Yes, I think maybe on the cost piece, maybe I'll try to put that into the context of the bigger financial picture first. So in the first half, as we take a look at the financial outlook, as we said, it's really a gross margin story. I say that because in the first half, we are growing revenue, which is a big commitment for us this year. We are seeing SG&A percent of revenue coming down. So that's a good strong foundation. I described in the prepared remarks what's happening around gross margins. So we have that picture. The second quarter is largely going to be consistent with that. So that sets up the baseline. I think for us, and this is where the cost actions come in and what's important is the bridge to the double-digit operating margins in Q4. That's actually pretty simple and very much in our control. The first and most obvious is the general seasonality of our business. Due to holiday sales, last year, for example, Q4 revenue was 14% higher than February. With that, we get really powerful leverage. Beyond that, though, it comes to the value driver five, our cost actions that we've been talking about for a couple of quarters now. We've made very good progress. No slides on timing. I think to remind everybody the pillars, a couple of them that are directly in our control and we're already seeing significant progress on. So a decentralized technology mapping into a single global tech stack, taking advantage of both our scale, getting cost out, and coming out with significantly better outcomes. Also around the global logistics network with a big focus on increasing capacity utilization in The U.S. We're already seeing some progress on those in the first half. That is why you're seeing the SG&A deleverage even in the first half. As we move into the back end of the year, the totality of all of the actions we're still on track to deliver between 200 and 300 basis points of SG&A leverage reductions out of that. 200 basis points of that delivered by the fourth quarter of this year compared to the fourth quarter of last year. So the combination of those two leaves us feeling very good about the work we're doing around cost and where that points us to from a trajectory for the second half and leaving the year with double-digit operating margin again.

Okay. Thanks for the detail, guys. Appreciate it.

Thanks.

Thank you. We go next now to Dana Telsey of The Telsey Group.

Hi. Good morning, everyone. I wanted to dial in on tariffs and how you're thinking about tariff impact as we go through the year. On the mitigation strategies, believing in that $65 million of unmitigated impact, how are you thinking about it? What are you seeing in terms of price increases for each brand in The U.S.? And impact on margins? Thank you.

Thank you, Dana. Good morning. Let me start by creating some context around what the tariff situation means for PVH Corp. It's important to just note that 30% of our business is in The U.S., 70% of our business is international. We have a much higher international share than most of our competitors. As

Yes. Stefan mentioned our two biggest mitigation advantages are the globally diversified revenue base and our strong global supply base. Beyond that, we are working through several other specific strategies. First, we're leveraging these deep long-standing supply chain relationships to identify ways we can further optimize sourcing and production costs, sharing the impact of tariffs with partners where possible. Beyond that, Stefan mentioned, we remain laser-focused on perceived value for our consumers. We will evaluate strategic discount reductions to mitigate potential tariff impact. Lastly, consistent with our normal course of business, we're also ready to take calibrated and targeted pricing actions where we have particular pricing power.

Thank you. We'll go next now to Brooke Roach of Goldman Sachs.

Good morning, and thank you for taking our question. Stefan, you've talked about the acceleration of some of the innovative and creative product into the back half and also the opportunity to take some strategic pricing reductions, pricing increases, whether that's a reduction of discounting or otherwise. Can you help us square that with the outsized levels of promotions that you're expecting in the near term? What do you have to do to make the brand more resilient from a pricing perspective as macro impacts start to weigh on the consumer? Thank you.

Yeah. Thanks, Brooke. It comes back to doing more and scaling the impact of the PVH+ execution in how we build strength in the product in the key growth categories, in putting innovation into the hero products. If you look at Tommy, I took a Calvin example before, which is quite powerful with the biggest product introduction in a decade with plus 25%. That's a great example, plus the 14% increase in denim. We're strategically sharpening our focus to do more and more of that, which has a bigger and bigger impact on the total business. But also for Tommy, we see it in key categories like sweaters, where we lean into our iconic cable knits. We expand that, and we put new better fabrication. We innovate in colors. We connect that then to the lifestyle of Tommy, and as Formula One is a great lifestyle, a great anchoring point for the lifestyle, because then we take the Tommy love for the brand and we connect it to those innovations in key product categories, and then we connect it to the sport of Formula One. Then we follow-up, and that's something that's worth saying as well. For the back half, we are putting more marketing spend in a more focused way to drive traffic to do what you just asked, Brooke, which is to mitigate more and more of those tougher headwinds, because it's the way we operate the business is that it's 100% almost fully in our control and expanding that impact.

Thanks so much.

Thank you. We'll go next now to Matthew Boss of JPMorgan.

Great. Thanks for all the color. So, Stefan, maybe to break down the step down in top-line trends that I know you cited to start the year? And then the leg lower that you cited here in May in The Americas, or the need for additional promotional activity to hold the trend line. I guess, how much of this do you attribute to the macro backdrop relative to execution? What's the pace of improvement that you see as reasonable? And then,

Yes. Thank you, Matt. What we have seen over the past three months, as we mentioned, is a tougher consumer and macro backdrop, especially in North America. We see the consumer sentiment coming down, translating into tougher traffic trends to the sector, and then impacting us and impacting us in-store traffic more than e-commerce. What we also see is that the China backdrop from a consumer sentiment perspective is continuing to be tough and coming down. Even though we are able to execute with strength in the big consumer moments. When we look at today, how much the North America consumer sentiment and the tariff effect plus China, we are not yet in a place where we can fully offset that. But why I say not yet is because one, the actions we're taking in the back half are stronger and are expanding the PVH+ impact. It also connects to what

Alright. Thank you, Matt, to the second part of your question. Maybe I'll answer it looking at our gross margin percent for the full year. So the original plan for the full year gross margin is down around 100 basis points. Half of that was tied to the G3 business model transition, and about half of that original decrease was tied to the mandatory Calvin Klein issues we've talked about here. Now as we look to the full year being approximately 250 basis points down, that extra 150 basis points has two main drivers. 50 basis points is due to the mitigated impact of tariffs. The other 100 basis points is an increase in the promotionality that we were just talking about. Just to put that in context, that 100 basis points includes all three of those components Stefan's mentioned here. So there is an increase tied to The U.S. declining macro consumer sentiment and lower traffic. There is a tougher consumer backdrop in Asia, in our particular situation in China. Then third is the sort of a bigger impact than we were planning initially around the CK operational challenges. So I think that as we take a look there in the second half, the progression, we do expect to see sequential improvement in the CK operational issues. So that's carrying longer than the second half and will improve significantly, especially in 2026. But we do expect in the second half. We are planning for that promotional activity to maintain through the rest of 2025. So no sequential opportunity there.

Then exiting '25 into '26, we do expect to be putting the Calvin Klein challenges fully behind us during 2026. So that's another step forward that we'll see. Beyond that, with tariffs, over time, we do expect that we'll be able to work towards full mitigation of the unmitigated impact. So that will be improving over time as well. Then we'll adjust to whatever the broader macro environment is just like we've done this year.

Great color. Best of luck.

Thank you, Matt. We have time for one more question.

Yes, sir. We'll take that question now from John Kernan of TD Cowen.

Great. Thanks for taking my question.

Yeah. Thank you for the question. I would say consistent with what we talked about a little bit. We've got the impact for the full year we've put in is around 100 basis points tied to the increased promotional environment. That impact is sort of what we saw through the first quarter. We planned through into the second quarter, and we've assumed that level remains for the rest of this year. We have overall over the last couple of years been quite consistent with the uncertainty of potential outcomes. We maintained where we are, call the broader macros there, and that includes assumptions around the promotional environment. So I think we are planning for that to continue the trend that we've seen so far this year through the rest of the year.

Understood. Thank you.

Alright. With that, we want to thank you for following along on the multiyear journey that we are on to tap into the full potential of Calvin Klein and Tommy Hilfiger. We want you to know that we are responding to the moment, we're leaning in to sharpen and expand our very strong PVH+ impact, because when we tap into that iconic brand love for Calvin and Tommy, and then we do it super focused with connecting innovation in product, cut-through marketing campaign, investing behind it, driving efficiencies behind the scenes, but then letting the consumer feel that we really cut through, and that's what we are continuing to do. Thank you.