Tommy Hilfiger andCalvin Klein parent company PVH Corp. plans to exit its 162-outlet-store Heritage Brands Retail business (Heritage Brands include Van Heusen, Izod, Arrow, Warner’s, Olga and Geoffrey Beene) and reduce its office workforce by 12%.
“While these decisions are always challenging, they are strategically important for the long-term health of PVH,” Stefan Larsson, president, PVH commented. “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.”
Approximately 450 positions in its North America office workforce will be cut across all three brand businesses and corporate functions and are expected to result in annual cost savings of approximately $80 million. The Heritage Brands Retail stores are expected to operate through mid-2021.
“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. We would like to express our deepest gratitude to all of our impacted associates for their support, loyalty and contributions over the years.”
The company expects to incur pre-tax charges of approximately $80 million over the next 12 months in connection with these actions, of which approximately $10 million is expected to be noncash. 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 noncash asset impairments.