PVH Corp., whose brands include Calvin Klein and Tommy Hilfiger, is streamlining its North American operations.
The company plans to shut down its 162-outlet-store Heritage Brands Retail business. (Heritage Brands include Van Heusen, Izod, Arrow, Warner’s, Olga and Geoffrey Beene.) The stores are expected to stay open through mid-2021.
.In addition, PVH said it will reduce its North American office workforce by approximately 450 positions or 12%.
The workforce reductions, which are across all three brand businesses (Tommy Hilfiger, Calvin Klein and Heritage Brands) and corporate functions, are expected to result in annual cost savings of approximately $80 million.
“The structural changes occurring in the North American retail landscape have required us to take a hard look at our North American operations and identify where we can optimize costs across our business model,” said Manny Chirico, chairman and CEO, PVH. “As a result, we are making the incredibly difficult decisions to close our Heritage Brands Retail business and eliminate a significant number of positions throughout our North American organization to align with the lower revenue base. We did not take these decisions lightly, as our Heritage Brands Retail business is our oldest retail business yet no longer met appropriate return metrics.”
PVH expects to incur pre-tax charges of approximately $80 million during the next 12 months in connection with its actions, of which approximately $10 million is expected to be non-cash. The remaining cash outflows are expected to occur over the next 12 months. The charges primarily consist of severance, lease termination costs, inventory markdowns and non-cash asset impairments.
“While these decisions are always challenging, they are strategically important for the long-term health of PVH, commented Stefan Larsson, president, PVH. “The COVID-19 crisis is dramatically reshaping the retail landscape in ways that we believe will be long-term in nature and far-reaching in terms of consumer purchasing behavior. We are adapting our businesses and rebalancing our cost base to improve our competitiveness and financial profile and, where appropriate, are reallocating resources to our businesses that drive greater returns.”