PVH Corp. (PVH) Earnings Call Transcript & Summary

Welcome to the PVH Corp. Annual Meeting of Stockholders. I will now turn the meeting over to Mark Fischer, General Counsel and Secretary of PVH Corp.

Thank you, Michelle. Good morning. As Michelle said, I'm Mark Fischer, Executive Vice President, General Counsel and Secretary of PVH Corp. As a result of the COVID-19 pandemic and with concern for the health and safety of our stockholders, directors and associates, we decided in March to hold this annual meeting in this virtual format. It is being conducted exclusively online via webcast. We intend to return to in-person meetings in 2021. Stockholders who have signed on with their control number are able to vote, comment on the proposals to be voted upon and submit questions. We ask you to submit your questions and comments now as we will be reading the proposals shortly. The opportunity to comment and submit questions will end once the proposals are read. Manny Chirico, our Chairman and CEO; Michelle ODonnell, our Assistant Secretary; and I will be speakers. Additionally, Henry Nasella, our Presiding Director; and Amanda Sourry, the Chair of our Compensation Committee; as well as Becky Burke and David Verderami of Ernst & Young LLP, our outside auditors, are available to respond to any appropriate questions. [Operator Instructions] There will be no formal business presentation. Mr. Chirico will give opening remarks, and Mr. Chirico and representatives of the Board and our auditors will respond to appropriate questions. Responses to questions may include market and industry data from research, surveys, studies and publications issued by third parties and information from customers. While we believe that any such information is reliable, we have not verified it and do not represent its accuracy. Mr. Chirico's comments as well as responses to any questions from stockholders may contain forward-looking statements that reflect our view as of June 11, 2020, of future events and performance. These statements are subject to risks and uncertainties, including those identified in our SEC filings. As such, our future results could differ materially from previous results or current expectations. These risks include our right to change our strategies, objectives and intentions; our need to use significant cash flow to service our debt obligations; our business' vulnerability to weather, economic conditions, fuel prices, fashion trends, loss of retail accounts, epidemics, including the ongoing impacts of the current COVID-19 pandemic, war, terrorism, scarcity of raw materials and other factors; our reliance on the sales of our business partners; our exposure to the behavior of our associates, business partners and the celebrities and designers whose names we own or license; and the impact of new or revised legislation and regulation, such as the potential for increased tariffs on the goods we import from China for sale in the United States. We do not undertake any obligation to update publicly any forward-looking statement, including statements regarding future revenue and earnings. The comments and responses also may include non-GAAP financial measures as defined by the SEC. Reconciliations of these measures are included in our current reports on Form 8-K. The 8-Ks are available on pvh.com and the SEC's website. And now I'd like to introduce Manny Chirico, Chairman and CEO of PVH. Please move to Slide 2.

Good morning. I would like to officially call to order the 2020 Annual Meeting of Stockholders of PVH Corp. I welcome you on behalf of the members of our Board of Directors, all of whom are participating in this virtual meeting. One of our directors, Juan Figuereo, is retiring at the end of this meeting. I would like to thank Juan on behalf of myself and the other directors and on behalf of the management team for all his years of excellent service and his strong leadership over the Audit & Risk Management Committee for the past 5 years. I would also like to acknowledge that Stefan Larsson, our President and my named successor as CEO, is also participating in this meeting. Before I go into the agenda for the annual meeting, I would also like to address the challenging backdrop that we are navigating. The confluence of events from the disturbing recent instances we have seen of systemic racism and social injustice to the current pandemic that we are living through are deeply unsettling, and we know that many of our stakeholders have been negatively impacted, in one way or another, by the events unfolding. We pride ourselves on our inclusivity at PVH, and we view our 40,000-plus associates as our PVH family. We do everything we can to drive the connectivity of our associate base, especially in a backdrop like this that can feel so isolating. Our purpose as a corporation is to drive fashion forward for good, and one of the best ways we can do this is to fight for racial equality within the walls of our company, throughout our industry and in society at large. We know that we can do more. We are making changes in our processes to increase the representation of people of color with a focus on Black and Hispanic associates across all levels and to position them for success in attaining leadership positions across our company. For the last several years, we have also felt that -- for the last several months, excuse me, we have also felt the devastating effects of the coronavirus across our business in every region of the world. We immediately responded with an action plan that prioritized the health, safety and well-being of our associates across our offices, stores and warehouses. We have also implemented measures to preserve the health and financial wherewithal of our company, from securing new financing to cutting every expense line possible, proactively managing our inventory levels and redirecting resources to our digital channels, which are experiencing very strong growth. I am confident that the actions we have undertaken will help us successfully navigate the crisis and emerge as a stronger company. In the midst of these challenges, ironically in March, PVH celebrated 100-year anniversary trading on the New York Stock Exchange. This is truly an incredible achievement as we are the first apparel company and 1 of only 30 companies to reach this milestone. What has made us stand the test of time are our unique competitive advantages, our strong financial discipline, our healthy balance sheet, our iconic brands and our talented associates across the world. Our diversification has always been one of our strong suits, and now more than ever, we have benefited from this, particularly our regional diversification. Furthermore, sustainability has always been at the heart of our organization, and we believe that our practices make us stronger and sharper as an organization while also positioning us to better meet consumer needs. Last year, we launched Forward Fashion, our ambitious sustainability strategy that sets a new level of ambition and transparency for sustainable business, along with 15 time-bound targets that provide a clear path of action to achieve this. As a leader in our industry, we believe that we could help set the industry standard to create a more sustainable future. As we plan our businesses, we view 2020 as a year about our financial balance sheet, financial positioning of the company and our ability to capture market share as we come out of COVID-19. While the current backdrop is certainly challenging, I believe that Calvin Klein and Tommy Hilfiger have exceptional brand power. And together with our business model and our talented associates, we will have the ability to navigate this environment. As we execute on our key value drivers over the next few years, I believe that we are well positioned to deliver sustainable, profitable, long-term growth for our stockholders, in addition to leading the fashion industry towards a more sustainable and responsible future. I now turn the formal business of the meeting to Mark. Would you please continue?

Thank you, Manny. We have an affidavit certifying the mailing of the notice regarding the availability of proxy materials for this meeting. It will be annexed to the meeting -- minutes of this meeting, along with the proxy statement, the form of the proxy and the 2019 Annual Report. [ Cynthia Gezmi ] of EQ Shareowner Services, our transfer agent, has been appointed as the inspector of election and sworn to an oath of inspector that will be annexed to the minutes. She is present online. The number of outstanding shares of our common stock eligible to vote as of April 22, 2020, was 70,937,099. We have approximately 64 million votes or 90% of the eligible votes represented at the meeting, constituting a quorum. Please move to Slide 3. As indicated in the proxy statement, we have 4 matters to vote upon. The first proposal is the election as directors of Mary Baglivo, Brent Callinicos, Emanuel Chirico, Joseph B. Fuller, V. James Marino, G. Penny McIntyre, Amy McPherson, Henry Nasella, Edward R. Rosenfeld, Craig Rydin and Judith Amanda Sourry Knox to serve for a term of 1 year expiring at the Annual Meeting of Stockholders in 2021. The second proposal is the approval on an advisory basis of the compensation paid to our named executive officers as disclosed in the proxy statement pursuant to the rules of the Securities and Exchange Commission. The third proposal is the amendment of the company's Stock Incentive Plan, including, but not limited to, extending the term of the plan to April 29, 2030, and adding 3 million additional shares of common stock to the pool of shares available for issuance under the plan as set forth in the proxy statement. The fourth proposal is the ratification of the appointment of Ernst & Young LLP as independent auditors of the company for the fiscal year ending January 31, 2021. Having received no comments on the proposals, I declare the polls closed. We also have received no questions from stockholders. We will now move to the report of the inspector of elections on voting and the conclusion of the meeting. Michelle, will you please read the report of the results of the vote?

Thank you, Mark. The inspector of election has certified to the results of the matters voted upon. The certification, which will be appended to the minutes of this meeting, provides in part that: the annual meeting was held pursuant to notice duly given; a quorum for all purposes was present at the meeting; each of the 11 nominees for director received at least 92% of the votes cast and was declared to be duly elected for a term of 1 year; the advisory proposal to approve the compensation paid to our named executive officers was approved by 91% of the votes cast and was declared to have been duly adopted; the vote on the proposal to approve amendments to the company's Stock Incentive Plan was approved by 92% of the votes cast and was declared to have been duly adopted; the resolution ratifying the appointment of Ernst & Young LLP as auditors for the fiscal year ending January 31, 2021, received the majority of the votes cast and was declared to have been duly adopted.

Thank you, Michelle. I'd like to thank all our stockholders and friends for joining us at the meeting today. We hope to be able to see you in person next year. Please be safe and stay well. The meeting is now adjourned. Thank you very much.

Everyone, have a great day. Speakers, please stand by.