PVH Corp. (PVH) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to PVH's Investor Day 2022. Thank you for taking the time with us this morning. We are beyond excited to share our multiyear growth plan, the PVH+ Plan. And I'm especially excited that I'm able to do it partly in person and with my team here, having navigated through COVID the past 2 years -- [Audio Gap] This is a special location. So this is Calvin Klein's first building and where we sit today is where Calvin had his runway shows. So introducing a brand-led growth strategy, we couldn't be in a better place. Little over a year ago, I had the opportunity -- great opportunity to come into the CEO role for PVH. And I did it, always having to looked at PVH from the outside and being impressed by the underlying strength and being attracted to the underlying strength because what I saw was 2 of the most iconic brands in the world -- in Calvin Klein and Tommy Hilfiger. We own both those brands. And those type of brands are not made anymore. They are beloved by the consumer globally and they are true lifestyle brands, and they have unique staying power. What I also saw was the strength in our international business, where we have had market-leading performance for many years. Thirdly, what I also saw was that we have real underlying brand strength with both Calvin and Tommy in the North American market. So one of the first strategic initiatives that I took when I came in as a CEO was to focus in intensely on our core strength, Tommy Hilfiger and Calvin Klein and divest the focus from non-core. So we divested the Heritage Branded business, which over time had become a lower growth rate, lower profitability business. And when we share our growth plan today, we do it with a clarity and a focus of PVH being the global growth platform for Tommy Hilfiger and Calvin Klein. That's what we are, and that's what we're going to share today, the plan behind what that means. Before I take you through the plan, I first want to give you some background in the current business and where we see the consumer and the market are going, because all those factors are influencing the plan you will hear from us today. So looking at where we are today, we are $9 billion in revenue, global revenues. We have over 60% of our business coming from international. It's the fastest and most consistent growth segment at PVH. We are 40% direct-to-consumer, which puts us as close to the consumer as you need to win going forward. And we are 25% digital, where digital having the highest growth rate of all channels. So that's our starting point. And when we look at 2021, we drove an accelerated recovery. We drove an accelerated recovery above what we set out to do. And it was driven by the increased focus on Calvin and Tommy. It was driven by supercharging digital, and it was driven by product strength and pricing power. So we grew revenues in international about above pre-pandemic levels, 2021. We also drove record gross margins through increased pricing power in every region and every brand. And we doubled our digital penetration versus 2019. And we achieved an EBIT rate above 2019 pre-pandemic levels and record EPS. And we -- as a result, we came out of the year with an even stronger balance sheet than we had coming into the pandemic. So while we are pleased that we're delivering such a strong 2021, for us that's just the first step, because our focus has always been to position ourselves to win in the new normal. And the reason why that is so important to us is that we are convinced that we are already in the new normal. And we are convinced that COVID just accelerated underlying consumer and market trends. And here are some of the trends that we see being part of what we see as the new normal and what we see we have to compete and win in already now. Starting with that, the barriers of entry are down. So anybody can start a fashion brand. You can start a fashion brand in just a few hours, social media, third-party everything, and you're up and running. And a lot of people do. But what most realize after doing that is that the noise level has come up. So building the next Calvin Klein and the next Tommy Hilfiger has probably never been more difficult. As a result of the barriers of entry coming down, the consumer has infinite choice. The consumer has never had more choice. So when -- you compete today, if you compete with anything generic, generic products, generic experience, generic brand, you're going to get crushed. The next-generation consumers are already here; Gen Z, millennial, they're already leading the market. And we have to follow them. And as a result, they are digitally first. And as a result, the market is digitally first. So this is the new normal that we see we are facing already now. And that means that the formula to win has changed. And we see 3 ways that it has changed. The first one is coming back to the importance to be relevant, to have brand strength and brand relevance with the consumer and with the next-generation consumer. The second insight is that scale can be an incredible advantage. And I often feel like scale as an advantage is not very talked about. It's not very much talked about. It's probably the least recognized insight into what's needed to win in the new normal. Because if you have scale, you have -- as in our example, we have 2 global brands that are almost impossible to build today. We have the strength of that. We have the global consumer base that we don't have to acquire that. We have a consumer globally in all markets that love our brands. We have the strength of a marketplace where we have an omnichannel presence in the marketplace, digital stores, relationships and we have the investment capabilities to invest in technology, supply chain, sustainability, people. But scale will only be important. The reason why we say it can be an incredible advantage, it's only important when you connect it to brand relevance. And then thirdly, the third insight we have from competing to win in the new normal is to get as close to the consumer as you need to really leverage the strength of scale. You have to have a demand and data-driven operating model that drives speed that enables you to continuously change and that gives you resilience, something we have all seen firsthand over the importance of that over the past 2 years. But -- so when we are building our PVH+ Plan, it's about connecting these 3 and having a plan that builds on our core strength and connects to these 3 insights. So let's take a look at the PVH+ Plan. So to start with the PVH+ Plan is a brand, digital and D2C led plan, where we are taking the core strength of Calvin and Tommy and connecting them closer to where the consumer is going than any time before. And the way we do that is underpinned by 5 growth drivers: Win with product; win with consumer engagement; win in the digitally led marketplace; develop a demand and data-driven operating model; and the fifth one, to drive efficiencies and invest in these initiatives. It's a growth plan. You will hear that more from Zac in his financial part. These 5 growth drivers come to life in our 3 regions, where we will fuel the market-leading strength we have in Europe. We will accelerate from strength in Asia, and we will unlock our real opportunity in North America. So let me now take you through each of the growth drivers a little bit more in detail, starting with product, where we have set out to create the best hero products in the market. And most of you have heard me talk about hero products since I came into the company. And let me share what we mean when we say hero products. Hero products to us are the most essential products in the consumers' wardrobe. So think about the sea of generic stuff on one hand and then think about the 10 most important products in your wardrobe. And think about it from a consumer perspective, that it's spring. Spring, even if it's still cold in New York, it is spring officially. We are moving into spring. You're, as a consumer, starting to shop your wardrobe. Increasingly today, the consumer is informed and knows what are the 10 most important essential products and then build the assortment from there. Those are our hero products. And thus we build those hero products increasingly focused on playing in the biggest and most growing demand spaces, whether it's casual, whether it's athletics, whether it's street, we are very focused on the right demand spaces and within those, focusing on the key growth categories. And coming back to the strength of our 2 brands, we have the right to play across the lifestyle. And you will hear it from our brands, how we do that, how we take category by category, that's important to the consumer and we build out strength through hero products. And once we have those hero products, there are several benefits with that. The first is, it creates the platform and a canvas for seasonal newness. So the consumer knows, and I'm sure you're all consumers. So you know when you have found your favorite pair of denim, your favorite shirt, your favorite outerwear silhouette, your favorite -- and then we play with that silhouette with seasonal newness, seasonal fabrics, limited edition, collaborations. So you combine being the most trusted source, go-to source for the most essential products, and then you add, we add the newness and the reason to come back all the time. And we need hero products to then connect them to a responsive demand-driven supply chain. I'll take you through more in detail how we will do that. And then it's increasingly important as well. And you will hear it mostly from Martijn and Avery when they go through Europe that how the hero product platforms become -- enables us to win more sustainable. And we just see that. With the Gen Z, with the -- we just see with the consumer that more sustainable products are going to be key to compete to win going forward. The second growth driver we have is taking those hero products and win with consumer engagement. And the way we will do it is digital first. Why? Because the consumer is digital first, then build it around the hero products and then connect those hero products to the biggest consumer moments. And one thing that we see, perhaps the strongest in Asia and China, but we see it everywhere is that the big consumer moments just keep getting bigger. So the best hero products, leaning in even more to the big consumer moments. And then we partner increasingly, we utilize our brands as platforms for creative partnerships. And 2 examples I want to share with you today, and the brands will take you through it more in detail. But they are really good examples for how we tie it all together. One is Tommy's collaboration with A BATHING APE, sold out within 1 week. Second one is Calvin Klein's collaboration with Palace, we just launched on Friday and my 15-year-old daughter texted me saying dad your website crashed, try to fix it. So -- and I texted back saying, shouldn't you be in school where there is a no-cell-phone policy. But what happened, why the website crashed, and we got back up and Palace is the most successful collaboration we have done so far is because the consumer loves when we play in the demand spaces that they care about in the right categories with hero products, invite creators like the BATHING APE or Palace crew in London and add their creativity. And we show up digital, we show up physical, we had lines everywhere. And so that's just a really good illustration of how we will work across the whole company internally and increasingly open our platform for creative partnerships and that you will see the inside and outside being less important and more of an open platform. And again, most importantly, the consumer loves it. Let's move to the third growth driver. So when we have the best hero products and we have the best consumer engagement, then it's about winning in the digital marketplace, digitally led marketplace. And I often get the question, Stefan, what's PVH, what's your brand's distribution strategy? And I always tend to answer it really simply, which is it is to follow the consumer where they want to shop our brands. And the way we are doing that is to lead with digital and D2C because there, we have the ability to get closely connected with the consumer and create the pinnacle experience of the brand. But the consumer is also telling us, we love shopping third-party e-commerce. We love shopping your brands. We might get inspired in your brand world, and then we shop on the third party and move in between. And we also love to shop in brick-and-mortar, in your own stores and in wholesale experience. And what our job is, is to make sure that we focus the distribution strategy on the consumer. We look at each geography cross-channel. We can't look at distribution in silos anymore. We look at the geography, put the consumer in the middle and then our job is to be where the consumer wants to shop and balance the distribution between channels so that we drive brand strength and pricing power. And you will see that from the regional presentations how when we do that, how we increasingly win and in many places, market-leading performance. When we put all of that together, the best product, the best engagement and then meet the consumer where they want to shop us. The enabler for all of that, again, is to develop a demand and data-driven operating model. And here is where we have most work to do. Because we come from a traditional place where you plan, you buy, you sell your inventory in one way. I have the benefit of having been a part of the team that grew H&M from $3 billion to $17 billion and 23% operating profit. And I firsthand worked with the operating model behind that. And when I left H&M and came to the U.S. to lead companies, all the Board members asked me, "Tell us about speed, how can we do things faster?" But what struck me when I really understood the difference between a real speed model and a more traditional model is that it doesn't start with speed. It starts with a systematic, repeatable product engine that every single product has an intent, tying back to the hero products. Is it a hero product? Is it a test that could be a hero product? Is it a hero product that we are phasing out, and we are growing another? It starts with that kind of discipline. And then the way you get there is cross-functionally bringing design, merchandising, sourcing planning together, Because -- then you cut most of the lead times. Because what struck me coming from a short lead time speed model to a traditional model was almost all of the lead times is internally created. So working with supply chain, say, it takes 5, 6 weeks to produce this order. Everything else is internal lead times. The fastest way I've been able to cut lead times is to bring the teams together. Instead of handing over to each other, we are together cross-functionally creating the best hero products, and then we can go from 1, 2 long lead times to multiple lead times with a lot of speed options. So again, early days, we're starting to lean in, and you will hear examples and in the Q&A, we can share where we are the furthest. But a lot of value to unlock here. And in essence, it looks so simple, but it takes quite a lot of work to especially work differently and change the mindset. Okay. The fifth and final value driver that you will hear about today in our plan is to drive efficiencies. And in an organization like ours, it's easy to do things that we have always done and do things the way we have always done it. When in reality, we know we're in the new normal, we know we navigate constant change. So we need to get simpler in how we work, how we are organized. We have to empower the doers. We are starting to do that work, and we are committed to continuously find efficiencies. And we need those efficiencies because of 2 reasons; we need to invest in growth. This is a growth plan, we need to invest in growth; and secondly, we need to become cost competitive. So what we are setting out and Zac will take you through more in detail is to, over time, drive down SG&A as a share of revenues. So all the parts of the PVH+ Plan come to life in our regions. That's where we are the closest to the consumer. That's where the business happens. So let me start with Europe. For many years, Europe has executed both Tommy and Calvin in a market-leading way. When Martijn takes you through how, I encourage you to really listen to the how and the underlying approach and value drivers. We have a systematic, repeatable approach to win with the consumer and create value. And perhaps best seen during the pandemic when we were able to fully leverage all those strengths and outcompete almost everybody in the market. And you will see why we in the PVH+ Plan are so confident in continuing to fuel that market-leading strength. When you hear from Tom in Asia, he will take you through how we accelerate from underlying strength. We have had a lot of COVID disturbance system we still have in Asia, big markets. And underneath there, we are seeing a lot of strength. And Tom will take you through how he unlocks that strength, and you will see the connection to how we work in Europe. It's the same underlying drivers. And then, yes, each consumer and each market, each region has their own specific traits. But underneath there, the way we win with product, the way we win with consumer engagement, the way we win with digitally led marketplace, it's the same value drivers. So when you hear from Trish, you will hear how we are leaning into North America with the same value drivers. And we know that our job in Americas is to unlock the business strength that should reflect the brand strength. We know that there a lot of your questions are around Americas. And today, we're going to share where we see our strength, where we have work to do and how we do it. Just wanted you to hear it directly from me. We have incredible strength and Trish will take you through it in brands for both Calvin and Tommy. And pre-pandemic, that made it almost too easy to do business in North America because we could rely on 30% to 40% tourism. And then COVID hit, and all of that tourism-driven sales went away, and it exposed the lack of focus that we have had on the domestic consumer. And it exposed that we had taken our eyes off winning with the domestic consumer in a brand accretive way in the market. And as a result, we had become too exposed to the value channel. And not enough focus on driving product strength, pricing power, consumer engagement with the domestic consumer and winning in the channels, investing and winning in the channels where the consumer is growing the most -- digital -- it's the most obvious one. And why I want you to hear it from me is through my own experience having turned around Old Navy, having helped reposition Ralph Lauren for much more profitable, sustainable growth, I've seen this movie before. The good news is that it's fixable. There is a proven way to do this, and that's the way we will follow. It will just take time. When Trish goes through the step-by-step approach, it's an approach that almost every other of our best competitors have done already in North America. So when we look at Levi's, when we look at Ralph, even Nike has had to rebalance their distribution and lean in to win more disciplined with the domestic consumer. What will come out from that work, though, is a big value unlock. It's a big value unlock in North America that will come out. So our growth plan enables every region to drive growth with an accelerated financial performance. And I'll take you through on the highest level what that financial performance looks like in terms of targets and goals. Starting with our growth algorithm, target algorithm. We are setting out to drive high single-digit revenue growth. We are setting out to expand our operating margins. We are setting out to drive EPS growth ahead of EBIT growth. We are setting out to drive strong free cash flow. By 2025, we are targeting to be $12.5 billion in revenues. We are targeting an approximate 15% operating margin, and we are targeting a cash flow beyond $1 billion. So what you see here coming out of the PVH+ Plan through the brands, through the regions is an accelerated financial performance. This is how the different parts come together. So from a brand perspective, from a Calvin and Tommy perspective, we are planning to drive balanced, high single-digit growth for both brands globally. From a regional perspective, we are planning to drive high single-digit growth in Europe and North America, and we are planning to drive mid-teens growth in Asia. And from a channel driving perspective, you will see that the strongest growth will come out of digital, plus 20% -- 20% plus growth rate, high-quality growth rate, D2C growth rate will outpace wholesale. So in parallel to driving the financial performance and accelerating that, we have, as a company, for a long time, leaned into having a positive impact. And we do that through our initiative called the forward fashion initiative. We have 3 -- we have 3 groups of targets that we are driving. The first one is to increase our positive impact with 100%. The second one is to decrease our negative impacts to 0. And the third one is to improve over a billion -- over a million lives in the value chain. And I'm pleased to share that we are making progress. We have hard targets, 2025 and 2030 for all these areas. Let me give you a few examples. When it comes to increasing our positive impact to 100%, we have set out to sustainably source 100% of our [ Cotton ] by end of 2025. And we are over halfway there already. When it comes to reducing our negative impact to 0, I want to give you the example of that we have set out to use 100% renewable energy by 2030, and we are 50% there. And when it comes to impacting over 1 million lives in our value chain, we are working with USAID and today, engaging 100,000 women in Bangladesh and help them with their professional development. And we are working on expanding that to 500,000. In addition to these examples, last year, we importantly launched our inclusion and diversity commitments where we have set out to make a real and lasting positive difference. And we are backing up these commitments with a $10 million investment. So when we sum it up, the introduction to the PVH+ growth plan, brand-led, digital, D2C, unlocking Calvin and Tommy closer to the consumer, the 5 value drivers, driving strength and growth in our 3 regions, it all comes to life through our people. Plans are only as good as the execution. And people first has always been at the core of what PVH is about. So I want to share just a little bit of how we have developed this plan because it's a different approach. We have, over the last few months, and past 12 months, engaged the team, the top 100 leaders to co-create this plan. So what this means is that when we share it with you now, we already have the engagement in our top 100 leaders all across the company, starting to execute, starting to share learnings, starting to improve. So you will see our approach over the coming years. It's very much built on empowering our teams and our leaders to work as one team with one vision and one plan. So with that introduction, I'm excited to -- I believe, for the first time for you to be able to hear directly from our brand and regional leaders. And it will start with Tommy, the global brand, where Martijn and Avery will take you through that. Trish will take you through our growth plan for Calvin Klein. Then we'll have a break. Then we'll go through the growth plan for Europe. We will take you through the growth plan for Asia Pacific, and we will take you through the growth plan for Americas. Then Zac will wrap all that up in more detail of what it means from a financial target and delivery perspective. Then I will come back for closing remarks. And after that, we'll have a 45-minute Q&A. So with that I'm handing it over to the Tommy team. [Presentation]

All right. Good morning. My name is Martijn Hagman, CEO, Tommy Hilfiger Global and PVH Europe. The first part of this presentation will be done by myself and then afterwards, I hand it over to Avery Baker, President and Chief Brand Officer of Tommy Hilfiger. So "Embracing the past, conscious of your roots, but with a clear enthusiastic view to the future. That's the true spirit of Tommy Hilfiger." And I really love this quote because it so much captures the unique DNA and purpose of our brand. Because from the onset, Tommy Hilfiger has been all about relevance, has been all about bold innovation, constant momentum and a track record of outperformance. So that gives us the perfect springboard to future growth. And our 35-year rich brand history is anchored in our heritage and in iconic American style. Now what makes our brand American is not just the colors of our flag, but the values that are the essence of the true American Spirit. Our unique DNA of reinventing the classics, playing bravely, welcoming differences and pioneering together are at the core of what we do and how we do it. And we've seen consistent global growth over the last 10 years with a high single-digit CAGR of plus 10% -- 7%. And 2021, we recovered to pre-pandemic sales levels, driven by the international businesses in Europe and Asia Pacific. Now there are 3 key core drivers behind this decade of growth. The first one being the brand's control over distribution across all the regions. And in the most recent years, we did strategic acquisitions in Asia Pacific to take control over high-growth, high-potential markets like China, Australia and the Far East -- Far East Asia countries. The second growth driver has been the expansion of our lifestyle portfolio, the product offer within that, and gaining market share in key product categories like outerwear, jeans, footwear and accessories and underwear. And last but not least, the digitalization of our value chain truly unlocked speed and efficiency and, of course, the accelerated growth in our digital sales channels. So the brand evolved and has taken a strong market share positioning across multiple product categories and multiple regions. And I think that's one of the differences, looking at the Tommy Hilfiger brand versus other brands who are perhaps leading in one single category or in one specific region. I think the strength of the Tommy brand is the diversity of its offer and the diversity of its market share, leading market share positioning across the globe. And that gives us a competitive advantage. We can be agile, flexible, responsive to changes in consumer demand and changes in consumer behavior and capitalize on those trends. Now we benefit a high brand awareness across the globe with acceleration opportunity in mainly Asia -- in China, I have to say. And that's an important takeaway from this slide, but what I think is even more important is how we drive consumers to the purchase funnel and are able to translate and convert that high brand awareness into purchases in each market that we operate in. Now consumers are at the heart of everything we do. And every year, we welcome more than 200 million unique visitors to our stores and our online platforms. Our brand really resonates with the global consumer. Our DNA really resonates with the global consumer. And we reach a wide audience because we have 2 distinct labels, Tommy Hilfiger and Tommy Jeans. And through those labels, we reach a wide audience in age group as well between the core target group of the 18 to 45-year-old. And from a gender perspective, we have high awareness, both with male and female consumers. But when it comes to conversion of the female consumers, we see opportunity to grow through being relevant in the key female product categories and drive elevation within those. Now that brings us to the next chapter of growth. Light Up The Future is our strategic framework towards 2025. And we unlock the full potential of the brand by focusing on the 3 strategic pillars: Product, consumer engagement and consumer experience. While doing that, we continue to future-proof our brand and our operations through our Waste Nothing, Welcome All sustainability philosophy. And looking at it from a regional perspective, there is the growth opportunity within each of the regions. There is perhaps a different momentum, but we see strong growth opportunities within all. And everything we're doing, we're doing through the lens of those 2 lifestyles, Tommy Hilfiger and Tommy Jeans. And with that, I hand it over to Avery. We will walk you through the first growth pillar, Win With Product.

Good morning, everyone. Really happy to be sharing with you today some of our key strategies around how we're going to win with product, consumer engagement and experience because, first and foremost, we are super passionate about product. And we know that Tommy is really at its best when we are at the intersection of aspiration and accessibility. And we're always very focused on maintaining the balance between these 2 components. Our key product strategies are really oriented around elevation, how we're going to continue to effectively manage marketplace growth through segmentation and through the expansion of our 2 brand labels. Because we really are aiming and know that we can continue to grow consumer desire for our products and ultimately, strengthen the premium positioning of Tommy Hilfiger. The good news is, is that we're well underway on these key strategies, and we see that it is adding significant improvements to our global brand cohesion and strengthening our overall elevated positioning. So to start with, we've got 2 labels in which we engage with 2 quite different consumer groups, and we see a lot of opportunity to continue to grow with these consumer audiences. So sharpening the differentiation of how we bring our Tommy Hilfiger label and consumers to life and how we speak to a different consumer group through our Tommy Jeans label is really critical for our future success. We know that we have a very, very wide fan base of audiences who resonate and love the heritage of the classic American aspects of Tommy Hilfiger, and the Tommy Jeans business really taps into the nostalgic and modern American street aspect of Tommy. Today, that accounts for about 25% of our business. And it's very, very strong today in the European region. We've had significant growth with this Tommy Jeans business, but we see major opportunities, especially with young consumers who continue to be really passionate about the streetwear aspect of our heritage in North America and also in the Asia regions. Within each of these labels, we not only offer apparel, we've got a full lifestyle product offering, including footwear, accessories and clothes [ to body ]. And as we sharpen the differentiation of how we bring these labels to life, we are certain that we're going to continue to bring completely relevant product and consumers' experiences to life for these important audiences. So talking about elevation and segmentation, these are really critical aspects of our Win With Product strategy. Number one for us is product elevation and our teams have spent an incredible amount of time and continue to do every day to ensure that we are modernizing our silhouettes, that we're elevating our fabrics and our fits and that every garment represents that signature Tommy detail and DNA that we know our consumers love and expect from our brand. The Fall '22 collections, which have yet to hit the market are a big step forward in these areas of elevation. And we've seen a phenomenal response from global retailers with sales up 21% versus prior year and up 60% for Fall '22 versus Fall 2020. Segmenting this growth to ensure that we strengthen the presence of the brand in better and best level accounts in Europe and Asia is a critical opportunity. And we believe that as we continue this segmentation, we can unlock more premium distribution opportunities in the North American region. And as Martijn said, we've got a highly diversified offer of products across many categories as well as the gender opportunity. For example, apparel, of course, is our strength. But footwear and accessories are one of our most high-performing businesses. Footwear in the global collections is the #3 performing category for the brand. And also women's. I want to emphasize the fact that we believe there is significant growth opportunity to continue to be had with women's consumers. We're seeing really great response and traction on sell-through as we introduce more new products and silhouettes to the market, especially softer silhouettes, like dresses and skirts and more trend-oriented items. So we really believe that this will continue to be a big growth driver in all of our future efforts. Underpinning all of this is an incredibly strong foundation for the brand in these iconic, American-inspired essentials that actually have global appeal. We are obsessed with making sure that our classics are constantly refreshed, that they're relevant, that they feel current. And we know that actually quality is the #1 attribute recognized by consumers around the world for the brand. That's an amazing anchor point to continue to grow the core foundation of our business. And when we refresh our most important core programs, which we do frequently, such as the men's 1985 program of polos and chinos, which is now offered in fully sustainable materials, we see a major uplift with consumers. Sales for that franchise alone were up 20% year-over-year. Of course, seasonal newness is super important, so we always have monthly drops that bring that newness and that freshness to the consumer. And at the top of our pyramid, we continue to believe that pinnacle selective, strategic, limited-edition product drops, often done in collaborative partnerships, drive that brand heat and relevance that we need to really cut through to consumers today. As Stefan mentioned, hero products is a super critical opportunity and strategy for how we're going to win with product. And we know that as we continue to really build relevance and refresh and add sustainability around our most iconic products and put them at the forefront of our communications that consumers really respond. I think the Tommy Jeans Alaska puffer program that I'm showing on the slide here is a great example of how we've done that recently, where we've refreshed one of our core styles and tiered that throughout the assortment offer so that from core all the way through to pinnacle and a style that was part of our Tommy-Timberland collaboration, all of which have been made in 100% recycled materials. The consumer is loving it. One silhouette alone actually drove $20 million worth of wholesale value. So we have an astounding opportunity to continue to build on this strength. And of course, at the heart of everything is our commitment to light up the future and our vision to be a brand that actually can and must drive positive impact in our industry and for our consumers. At the value and the heart of Tommy Hilfiger is always a belief in inclusivity. We've always championed that, and we endeavor in our efforts to be a brand that wastes nothing and welcome all. And not only are we living our values, but we're acting on them more and more each day because we know that it's table stakes today for consumers to be part of a brand and to want to be in a part of a brand world where they're taking responsibility for making this world a better place. And we will continue to champion equality and opportunity, both for our associates and for our consumers on a global basis. But it doesn't stop, of course, with our efforts around inclusivity. What we're doing in the areas of sustainable innovation is also absolutely essential to drive fashion forward for good. And we're really proud of the progress that we've made at Tommy Hilfiger on our sustainability efforts, which we have not been very public about yet with consumers. So there's not a lot of recognition today, and that's about to change because in about 2 weeks' time, we're about to launch a new global brand partnership long term with an ambassador who will help to put the spotlight on our sustainability efforts for the first time with consumers. We will, by 2025, have 100% of our products made more sustainably. And in fact, we're making an amazing progress already today. In our Tommy Jeans global collection today, 99% of the styles are made with sustainable materials. And by 2025, 100% of our styles will be designed within 3D. So we see a lot of exciting acceleration in this area. But let's jump now to consumer engagement because one of the hallmarks of the Tommy brand and the fact that we've been around for almost 4 decades is that we've remained constantly refreshed and we have an ability to evolve and to stay relevant for consumers in large part because of the relationship that the brand has always had with pop culture. And you heard it from Martijn, and we're very inspired by Tommy himself because we don't look back, we always look ahead. And part of that is our incredible focus now on connecting with what we call future makers. Future makers are the people that are shaping culture. They are the leaders in their communities. They are the pioneers and they're the ones who influence the masses and our key target consumer groups. So as we focus on engaging with a wide group of consumers and doing this through the lens and the voices of future makers, the brand is increasingly present in cultural moments that really matter to our consumers. So we're offering more and more exclusive capsules and drops and programs around important moments such as Chinese New Year and Pride. We're spotlighting the voices of today's heroes, such as Indya Moore and Anthony Ramos and Halima Aden in our marketing and engagement efforts. And our brand campaigns, which drive global cohesion and relevance are also adapted, which is super important, given the regional differences today of consumers and cultures so that we remain relevant for local audiences. And I would be remiss if I didn't mention future makers and the Metaverse in the same sentence. And who knows where it's all going to go, but what we know is that we need to be where consumers are and where they are going. And as a brand, we have always pioneered to be early adopters into these new spaces. Recently, we've done a lot of testing and learning, and we were part of the Decentraland's Fashion Week just a couple of weeks ago. And we saw that actually within 1 hour, our digital wearable NFTs sold out. So lots of interesting things to explore as we continue to connect with these new audiences. Collaborations are one of the trademarks I think that's been at the hallmark of the Tommy Hilfiger brand. Because from the very early days of the brand origin, we have been partnering with individuals and brands in pop culture from Coca-Cola to Gigi Hadid to David Bowie to [indiscernible] you name it. But one of the hallmarks of these partnerships has always been the deeply authentic aspect of the collaboration. And we know that, that matters more than ever before to today's very savvy consumers. So we will continue to highlight our iconic products and allow them to be reinterpreted by creative voices that are really relevant in culture today. We believe that the newness and the storytelling around this will be important as we drive our business forward. For example, the APE program that Stefan mentioned, had 87% sellout before we even launched to the public on tommy.com, which also shows the power of exclusive offers for our future membership community. And all of these stories are great, but we really need to make sure that they are amplified, that we are cutting through in that crowded landscape. And we're doing that through, first and foremost, an increased investment in the area of consumer-facing media. So in 2022 alone, we're increasing our media investments in the European region by 49%, in the U.S. by 19% and on a global average, by 25%. A second key area of amplification for us is membership. We see amazing traction with member opportunities in Europe that our members are driving 35% more business, that they spend between 20% and 60% more per transaction and that they have doubled the retention rate of our average consumer. So we are doubling down on membership as a key strategic proposition on the go forward. And lastly, amplification is enhanced by our really strong cross-channel presence, which is incredibly healthy and strong in Europe, in Asia, and we're excited to be diversifying that by strengthening the digital opportunities in North America in the years ahead. And speaking of that, coming to consumer experience, you've heard it from Stefan that leading with digital is our #1 priority. And in today's world, we know that actually experience is everything for our target consumer. So we're focusing our energy and our investments to make sure that we keep up with how the technology is developing and with where consumers are going. And we are very oriented on making sure that at every consumer touch point, we truly deliver on the premium proposition that is and must be the Tommy Hilfiger brand. So leading with digital starts, first and foremost, with DTC. That is our #1 priority. And today, DTC accounts for 26% of the Tommy Hilfiger business globally. Of course, a key driver of that is e-commerce. And we've seen amazing growth, particularly in the European region on our e-commerce site during the last few years on COVID. So significant investments to grow the scale and the sizability of that business will be happening going forward. We're very oriented around elevating content, user experience, increasing exclusive offers for our consumers and getting that consumer data flywheel going. Additionally, the strong strategic partnerships that we have on a global basis with wholesale -- excuse me, with pure players in the digital space are a real key driver for leading in digital. And we see amazing consumer response in programs that we've done with dedicated marketing and product drops for Zalando, for ASOS, for Tmall, for example, when we partner with them in their innovation center. On a recent pilot around our Polo program we leveraged their speed and their capabilities and their data to make the Tommy Hilfiger Polo in China on Tmall, the #1 Polo on their entire site during the pilot program. But connecting with consumers through digital is not the only way. And of course, we have an incredibly powerful retail footprint and physical presence for the brand around the world. And hopefully, one of these days, you'll all be able to go out and see this and physically experience it. We've got over 2,000 retail doors and flagships that are amazingly strong and compelling in many of the energy cities globally around the world. And we're constantly refreshing these store networks and refreshing these store concepts so that we're delivering on the expectations of next-generation consumers. And the brand visibility is enhanced not only through our controlled retail presence, but also through the strength and positioning of our key wholesale partnerships. And we're very focused on strengthening that presence and that presentation in better and best level doors on a global basis. And we've made great progress through both the Tommy Jeans and the Tommy Hilfiger label. And lastly, leading with digital, of course, is also about leading throughout the entire value chain. Tommy Hilfiger has always been quite an early adopter in the digital space. In fact, we started selling our collections completely digitally well before we even knew what a pandemic was. And now, today, we sell almost all of our collections globally completely virtually to customers around the world. We're also leveraging digital innovations in our retail experiences in how we engage with our consumers in our channels, in our stores with things such as live shopping and constantly testing new areas. And 3D design, as I've mentioned, is a critical driver to continue to accelerate our speed to offset and mitigate a lot of the global supply issues that we see and challenges and to help us achieve our important sustainability goals. So I'm going to turn it back over now to Martijn to wrap up the story for the Tommy Hilfiger brand.

Thank you. Yes. Thanks, Avery. To conclude, with this strategic plan, we are confident we can drive the global business to $6.4 billion net sales by 2025, which represents a high single-digit growth CAGR similar as we have seen over the past decade. And we're confident to execute on this and unlock the full potential and drive that elevation strategy while leveraging our unique brand DNA. So here on this slide, I've just summarized below these 3 strategic pillars, the key initiatives of our strategy. So we will win with product through that label differentiation, through the expanded lifestyle offering, building those iconics while having the positive impact through sustainability, inclusivity of values and behaviors. And we will win by owning that consumer relationship, making those relevant connections with the future makers, those that shape culture through exciting new collaborations and amplifying our visibility and impact. And finally, we will win with experience, mainly through supercharging, digital and D2C, but also in brick-and-mortar with those elevated store experiences and having our stores connected to our online platforms. And finally, in the true spirit of the brand, we pioneer innovation. We've always done so. We will continue to do so. And whether it's in the digital area, for 3D product development or whether it's in the area of sustainability, we will continue to innovate. And with that keep stretching the brand to be the best version of itself. Thank you very much. And then I almost forgot, but now I have to introduce Trish, who's going to present Calvin Klein. Thank you. [Presentation]

Hello. Good morning. I'm Trish Donnelly, the CEO of PVH Americas and Calvin Klein Global. I've been in role a little over a year. Prior to joining PVH, I was global CEO of Urban Outfitters Group. And during my 7 years with Urban, we were hyper focused on creating consumer-centric environment and building a best-in-class digital experience. And then prior to that, I was at J. Crew, elevating their e-commerce experience. And I spent over a decade at Ralph Lauren, focused on product and merchandising across categories. So my background blends experience in both North America and in global roles, working for brand and product-focused organizations that know how to win with the consumer. I'm thrilled that my career has led me to PVH, and I'm so excited to be here with you today sharing why we are so optimistic about the future of Calvin Klein. So we'll start with this quote. "My dream when I started was to create a brand that could go on long after I'd finish working and it's still going." So I wanted to start with this quote because it's one that deeply resonates with me. Calvin Klein started this brand over 50 years ago and true to his dream, the brand is stronger today than any other time. In today's environment, as Stefan mentioned, it's become increasingly easy for new entrants to gain notoriety, but it is harder than ever to build a brand with true staying power. Not only did Mr. Klein's dream come true, his brand became one of the most iconic brands of all time. He instilled in this brand a DNA and an aesthetic that is ageless, timeless and really rooted in modern simplicity. And after 50 years, we continue to work with, inspire and be inspired by the cultural creators of our time, notably collaborating with Drake, Justin Bieber, the Kardashians and Jenners, Kate Moss, Pete Davidson, Kaia Gerber, Millie Bobby Brown, Frank Ocean and Jennie Kim, just to name a few. It is thanks to this unique ability to remain timelessly rooted in culture that we remain one of the very few truly iconic global brands in the industry today. By sales, the brand is almost 3.5x larger than when it was acquired in 2003, and this equates to annual global retail sales growth of 6% in the 20 years since we've owned the brand. During this time, we acquired Warnaco to bring in-house our previously licensed underwear and jeans businesses, and we scaled our businesses both in Europe and in Asia. In 2021, we drove an accelerated recovery, which was fueled by growth in digital and in international markets. Our recovery efforts helped the business to rebound with global revenue numbers back to 2019 levels at $3.7 billion. From a market share perspective, we are now positioned as the #1 global men's premium underwear brand, the #7 global premium jeans brand and the #9 global premium apparel brand. Our brand awareness and our recent purchase scores remain very high globally, outperforming most of our key competitors across regions. While awareness is strongest in the Americas and in Europe, we have made significant improvements in Asia and in particular, China, where we have seen a 10 percentage point improvement and prompted awareness since Q4 of 2019. I will now take you through how we will unlock the full potential of Calvin Klein. Leaning into the strengths of the Calvin Klein brand, we have set an aspirational and achievable goal that by 2025, we will have grown the total revenues to $5.4 billion, increased our brand relevance even further and be in a position to continue to drive to sustainable, profitable growth. Our 3 key value drivers will guide everything that we do: product, consumer engagement and brand experience, and I'll go into detail on those momentarily. To achieve our goals, we are taking a targeted approach for each region. We are building on the strengths in Europe. We are accelerating the growth in Asia Pacific, and we are unlocking the opportunity in the Americas. And here's how this comes to life. With a relentless focus on these 3 value drivers; product, consumer engagement and brand experience. So first and foremost, we will win with product. And we have already started to create the best, most iconic, most desirable essentials for our global style aware consumers. We're driving pricing power by amplifying these hero product essentials across lifestyle categories, satisfying the consumers' full wardrobe. Next, we will win with consumer engagement by connecting our product concepts to key consumer moments, driving cultural relevance and brand heat, and we'll continue to partner with both aspirational and emerging talent in new and innovative ways. And then finally, we will win with consumer experience by delivering a consistent and seamlessly connected and well-executed experience across all physical and digital touch points. At this point, I would like to hand it over to our Executive Vice President, Global Design, Jessica Lomax. Jess joined us in 2020 and Spring '22 marks the launch of our new product direction under Jess.

Thank you, Trish. Hi, everyone. So we just wanted to start with this image as we're starting to talk about product is from our Spring 22 campaign, which just launched very recently. And Calvin really believed in finding inspiration in the world around us, and I love this image because I think it shows that. Featuring Dominic Fike from the popular TV show Euphoria, surrounded by his friends. So for us, it always starts with the consumer. And here you can see a subset of our target customers, they're young in attitude, fashion-aware and they aspire to have really high-quality essentials that are designed with purpose. So today, we're really capturing this consumer with our close to body categories like underwear, fragrance and bras. And really to connect with this audience even more in our other categories, we're doing a lot of things like focus groups, qualitative research to really understand what they're looking for from brands and from the product that they wear. And then our ultimate goal is really to translate our success in underwear across all of our different categories to win with Gen Z and millennials from all different identities and backgrounds. And at 21% of our business, underwear is really our entry point into this consumer's closet, opening up a significant growth opportunity for us in other categories including denim, casual, refined, and athleisure that you can see here and really in both apparel and accessories. And the reason that this is so exciting, and we feel really good about this opportunity is that these demand spaces, where we really have the right to play and win and a clear point of entry with our target customer represent a huge market opportunity. And in the markets where we have already started to do this, like in Europe and Asia, we have already -- it's been well received, and we've built a really strong business. The success of this product strategy really hinges on creating the best essentials. These are those must-have items for our customer, really true to our brand DNA and better than our competitors. So we're really, really focused on building hero products across our consumers' entire closet. From things like instantly recognizable graphic T-shirts to the must-have hoodie, sneakers, bags, denim, dresses, jackets and workout wear. And then really, once we've built those hero products, it's about amplifying them. And this is critical to create newness while maintaining the iconic strength of our product. So here, you can see our Modern Cotton, Jennie Kim's wearing it. We just shot her recently for Spring '22. And really it's about taking these very iconic hero programs and then building on them through things like color and print, halo and hype, inclusivity, sustainability and innovation. And this will really open doors for us across different regions and channels. And it will really allow us to play into those key consumer moments that Trish mentioned, create product segmentation while tapping into seasonal trends and colorways. We also understand the importance of driving brand heats in order to keep our most style-aware consumers engaged. So while our hero products and amplified essentials are really our core foundation, we can also create this kind of halo effect with these seasonal capsule collections. And these can be brand-driven or in partnership with culturally relevant collaborators. So our new product ventures team is really focused on discovering and partnering with icons and artists that really share our target audience as well as our brand values. And our most recent collaboration, that Stefan mentioned, CK1 Palace just launched on Friday with record sellouts and high consumer engagement across the globe. And then we know that building a sustainable and inclusive business is critical to our future. So really building on PVH's forward fashion platform, we've identified the causes that are closest to our consumer. And we're focused on embedding those into our brand ethos. So in terms of our inclusion efforts, we'll really start with offering expanded ranges of new products each year that really meet our consumers' lifestyle, needs and wants, and with a particular focus on sizing and gender inclusion. So this season, you can expect to see more inclusive underwear size ranges as well as expanded representative colorways in both our Pride and Naturals collections. And our Calvin Klein Naturals collection really stands for sustainability across material, dye and process. We also just recently transitioned our Calvin Klein men's underwear boxers in North America to recycled paper saving close to 650,000 pounds of plastic. So we're really excited to keep delivering more innovation and positive impact in this space. And with that, I'll pass back to you, Trish. Thank you.

Thanks, Jess. In addition to our owned and operated businesses, our license partners play a vital role in allowing us to bring the full lifestyle of Calvin Klein to our consumers. To our consumer, however, the full world of Calvin Klein is perceived as one brand. And as such, we are working closely with our licensing partners to bring them along on our journey. We recently held a licensing summit, where we took our partners through our strategic plan, which was very well received. We're working closely with every one of our partners to make sure they follow us on our consumer-centric, product-focused strategy. And at the same time, we're able to leverage their unique category expertise. When this is well executed, it is truly a win-win. Here, you'll see pop star Jennie in our current campaign for spring. Jennie was featured with her friends, wearing our Calvin Klein standard logo tee and denim. This campaign and this moment in particular, had a really unique and authentic realism because we invited Jennie and our other talent to bring their friends to the shoot regardless of their gender, their body type, to be part of this special campaign. We understand the recipe for consumer engagement, and it starts with knowing our consumer -- our target consumer. As Jess mentioned, we engage in dialogue and leverage quantitative research to truly understand our consumers and to understand what our brand and our product means to them and everything stems from this. This slide illustrates how we tie our product to consumer engagement through monthly concepts. For example, in February, our product focus was denim, and this image shows Vince Staples in our iconic denim hero product. This imagery not only showed up in our store windows in February to support our front-of-store denim display, but it also led the digital experience featured prominently on landing pages in social channels and also in e-mails. Another incredibly important ingredient to consumer engagement is culturally relevant collaborations. We collaborate with creators to bring new and unique perspectives to the world of Calvin Klein. These collaborations index high in media. They influence our top line growth and they bring energy to our key items and our focus categories. They create buzz and talkability within the industry and across our target consumer base. Let me walk you through how we brought our most recent collaboration with Palace to life. For the week leading up to the launch, we executed on multiple, strategic marketing teasers, including short films and social media posts with key talent to create hype and interest. The image here is a street takeover in Hong Kong, featuring the Palace crew and model and influencer Adwoa Aboah. At the launch this past Sunday, the lines for the Palace store were around the block, emphasizing the global reach and the cultural transcendence of the brand. Here's an example of some of our wild postings with Lourdes Leon, Willem Dafoe, and Dame Joan Collins and Sean Powers, a member's of the Palace skateboard crew. On the day of launch, the same imagery was featured on our Calvin Klein websites globally. The collaboration, as you heard, was an incredible success, our disruptive grassroots teaser approach generated high global influencer earned media value. And in the first 20 hours post launch -- 24 hours post launch, we sold through over 70% of our apparel and 85% of the purchases were either new to our site or reactivated consumers. And in addition, these particular consumers drove a greater value, spending over 60% more on average than our current consumer. The Palace collaboration really highlighted the potential of a strategically executed social media strategy focused on increasing our reach with Gen Z consumers. To that end, we'll focus our attention on social platforms where Gen Z consumers will see us such as Instagram and TikTok. And we've already begun to redefine our platform strategies, delivering innovative content and channel behaviors. Our impressive following of over 21 million on Instagram outpaces our competitors and enables 2-way dialogue with our consumers. And you'll see here some of our most successful posts over the past 12 months. Squid game, Actress, HoYeon, took over our Calvin Klein Instagram account, taking photos in #mycalvins, generating a record 6.7 million likes. Pete Davidson and Machine Gun Kelly also hacked our account over the holiday, generating a reach of over 5.1 million. And our Palace Post featuring Willem Dafoe generated in just 2 days, over 225,000 likes and a reach of 1.8 million. And we are just getting started. We'll continue to drive relevancy with Gen Z and millennials by tapping into the cultural [indiscernible] creating disruptive and interactive initiatives. Finally, we're going to talk about how we bring all of this together for the consumer across all of our channels and touch points in one coherent and elevated experience. Leading with digital, we work hard to have our consumer experience the world of Calvin seamlessly at all touch points. Represented here is the full 360-degree experience that we were bringing to our consumer now, right now in Spring '22. Our campaign imagery in-store and on-site experience and our digital marketing are all purposefully and holistically connected, backed by our key hero products for the season, which the consumer will see and experience on every part of their journey. Here's another example of our 360-degree execution for our collaboration with Heron Preston last fall, featuring billboards, in-store setups, digital assets, all focused on hero products. Whether we're launching a large campaign or supporting an emerging collaboration, we are intensely focused on creating a cohesive, authentic and iconic experience end to end. From Chile to Tokyo, we bring the world of Calvin Klein to consumers through premium global touch points in major key cities. And here are just a few examples of our owned and operated store fronts and our wholesale partners around the world. To wrap up, through this plan, we will unlock the full potential of Calvin Klein as a global fashion lifestyle brand. I would like to leave you with these 3 points. Number one, we are focused on our product strategy. We are anchoring an essential hero products that leverage the brand's DNA. We are building out full lifestyle assortments across growing demand spaces. Number two, we are partnering with aspirational and emerging talents that is connected to culture and regionally tailored and we're innovating our social media strategy to focus on our Gen Z consumers, and we have proven our ability to drive consumer engagement through product collaborations. And lastly, as it relates to the consumer experience, we are driving a cohesive journey across all touch points, digitally led, and complemented by our energized physical presence with more modern, engaging in-store experiences across not only our own stores but with our wholesale partners as well. Thank you so much for your time today. We are so grateful for this opportunity to share with you our excitement for and our confidence in the future of Calvin Klein. And with that, I think you get a break now. [Break]

So welcome back, everybody. Changing heads now, PVH Europe. So we're going to dive into the region now. So I start with this statement from Stefan almost that Europe is building from a position of market-leading strength and I've been diving into that and distilled like 5 proof points that I think that underscore this statement. And I will -- in the first part of this presentation, I will walk you through each of those 5 proof points. So consistent profitable growth, high brand awareness and premium positioning, a strong consumer base, leadership in digital and having that systemic, repeatable way to execute with excellence. And to start with the consistent profitable growth. Here, you can see some numbers of the last 5 years where we grew in efforts with an 11% CAGR. And both brands significantly contributed to that. Tommy, we were benchmarking on that lifestyle product offer, that portfolio and the strength that sits within that. And in Calvin, the story is slightly different in the sense that following the Warner acquisition in 2013, we had to significantly reposition the brand in Europe. We cleaned up distribution, cleaned up the store portfolio and repositioned Calvin Klein jeans. But since then, the growth story for Calvin in Europe has been phenomenal. And underlying all of this is an operating platform in Europe that is supporting both brands. It's fueling the growth. It's helping them leverage on investments around digital or around the infrastructure. So the platform itself, that leveraged shared platform is very important for the success of our brands in Europe. And then, yes, I think this page is perhaps the cornerstone of the success. This speaks to the high brand awareness and the premium positioning. Awareness of above 80% for both of our brands, strong market share positioning in the key product categories and over 80% of all our distribution is full price distribution. So what we call full prices, everything except our outlet stores and except some clearance of excess stock. So the foundation is really the premium, full price distribution. And then our consumer base. It's strong. It's growing. We talk about 180 million unique visitors to our stores and our digital platforms in Europe and significant growth we've seen in terms of visitors on our digital platforms and still growing today with millions more new customers entering the platform last year. And that wide reach of consumers. So both brands have those 2 distinct labels, and they speak to this wide range of young consumers. And the product we bring to the market really resonates with that consumer. So that's an extremely solid foundation for the success in Europe. And then digital. So pre-pandemic, our digital penetration was about 20% in 2019. But the infrastructure was there. We had made the investments. We've made the connections between our stores and our own platform between the stores and partner platforms. So when the pandemic hit, and we were facing all these lockdowns. We were able to accelerate our digital infrastructure and to really leverage that to where it is today at 35% of our total business. And later on, you will see it doesn't stop there. We still see this within Europe as our largest growth channel. And we expect that by the time we hit 2025, our digital penetration might be close to 50% of our total business. Now looking at our business from a slightly different way, 35% of our business is direct-to-consumer business and 65% is wholesale. D2C, extremely important as we own the consumer journey, we own the first-party data. And within D2C, digital plays a crucial role. Our own platform plays an extremely important role there in the growth and the connectivity between the offline and the online worlds. And the wholesale business is very important for us. We have long-standing relationships with all key premium department stores across Europe and with all major pure player platforms. That relationship is very important. And the reach that those wholesale partners have. And the point of distribution they have to raise our brand awareness and to showcase the best of our brands is critical. Within that wholesale space, obviously, the digital sales through pure players or third-party dot-com is the largest growth driver as well. And then when it comes to that systemic repeatable way of operating, the backbone is that positioning, that premium distribution, that high awareness, that connection with that large, diversified consumer base. But equally important is how we are organized internally. And our organization is built around brand management. It's built around the consumer, it's built around product development. So everything we do every day, the first thing we want to secure is that premium positioning. We think about the brand first. And from a product development point of view, the organization and the processes are in such a way that we work extremely closely between the commercial side of the business and the product development side of the business, that we leverage all the insights we can get from all the channels. And through that, always find that sweet spot of that unique product market combination to drive sales in each of the European countries that we operate in. And also part of that internal structure is that operating platform. Digitalization has been so important for us, digitalization when it comes to digital product development, for speed and efficiency. But also digitalization when it comes to digital selling tools to service all those wholesale accounts, we have over 6,000 wholesale accounts in Europe that we service. And we have developed digital selling platforms through which we can sell remotely to all 6,000 accounts. And we've had seasons during the pandemic where 90% of our seasonal orders were done remotely through those digital platforms. And digital is, of course, also about data. Data, consumer insights, data analytics, it's so crucial in today's business that you understand the consumer, that you have all the data point needed to make informed decisions and to be able to -- and to have the data also fast so that you can pivot and respond fast. So with that current position of market-leading strength, we're very confident about the next growth chapter for Europe. And towards 2025, we see our net sales growing with $1.3 billion, which represents a high single-digit growth CAGR. And our strategies for Europe for the coming years are centered around product engagement in the digitally led marketplace. And in the next slides, I will zoom in on each of those. And I start from a product and brand perspective, starting with the Tommy Hilfiger brand. So you've just heard it in the global presentation that distinction between the 2 labels is very important. And I just want to reiterate why it is so important because they speak to a different consumer. And it's a different collection offer. So what we should avoid is that there's cannibalization between those 2 labels, okay? And what we should ensure is that our product development teams have very clearly in mind like for with consumer, am I developing this product. So each label has their own design teams. And if we execute that well, in the coming years, we can grow each of those labels in parallel with mid-single-digit growth numbers. Now this is one of my favorite topics. It's about segmentation. And I always say we need segmentation for growth. And on this slide, you see a pyramid and think about that pyramid as the total premium sector in which we operate in, in Europe. And I've used the example that Avery just showed from that Alaska puffer jacket, the iconic style. And Avery's spoke about how from a product perspective, we are tiering the offer. And so we come from a core offer, all the way up to a very pinnacle and fashion-forward offer, which is a more premium style, a more elevated style, more expensive material streams, et cetera, better local execution. So there is tiering happening from a product side. Now if we step towards the commercial side of the business, our distribution in that premium segment is not all the same. We have good distribution points. We have better distribution points, and we have best pinnacle distribution points. And we want to play in all of these, and we want to grow in all of these. So the segmentation from a product side and the segmentation from a distribution side and to marry those 2 is extremely important because if we do that really well, we can grow in each of those segments, in each of those tiers. And being present in those higher tiers, the Tier 1 and Tier 0, you might say that's a small part of your business, which it is, but it's very important to drive the halo for the brand, the halo that drives volumes and sales in those lower tiers' points of distribution. And the other beauty about segmentation is that you can play with exclusivity. Certain styles you only show in a certain tier and with that increases the desirability of the brand. Yes. So when it comes to consumer engagement, it's interesting what's happening. There's this ongoing blending merger of the physical and the digital worlds. And we need to engage with the consumers where they are, which means in all of those segments. So whether it's in the physical world or whether it's in the digital world or whether it's in the virtual world, we need to be there with aspirational collaborations with hero product campaigns. And recently, you might have seen it, we started experimenting Web3; we were in Decentraland. And it's testing and learning in the Web3, but you do feel that the opportunity is there. You do feel that the consumer is going there. So we don't want to miss it. We want to understand it. We want to learn. And, there's a fire alarm. Can somebody stop my timer because I have a lot to tell. Are we good. Yes? Okay. Yes. And then one of my other favorite topics, and Avery also touched on it here from a global brand perspective, it's about membership. So membership is not new. We have it. But with that acceleration in the digital channels and through that enormous growth in those digital channels, our consumer base just exploded. It became so much more bigger, so much larger. That we now -- we feel it's now the time to double down on membership. And the value proposition is very easy when it comes to higher repeat purchases, higher IFRS transaction value, longer relationships with the brand. So the value proposition is super clear. And also for the end consumer, the value proposition is clear because we offer exclusive product, early access, hyper personalized targets and so on. So that's super clear. So we doubled down on it. But it's not just from a commercial point of view that membership is important. Membership is also important because it generates a wealth of consumer insights. And those insights we can leverage across our business. We can leverage it to increase our marketing efforts, we can leverage to improve our product development and with it also support other parts of our business. The pure player business, the wholesale business. So this membership is not just a D2C game. And yes, a picture says more than 1,000 words. So for Tommy, just some images on how we show up in a premium way across the digital channels, our own channels and the pure player channels and also in brick-and-mortar through our full price stores and with our key department store partners. Then for Calvin. For Calvin, it's simple. It's all about expansion. There's so many white spots or white spaces. I always use the wrong word here, but we can expand the lifestyle offer of the Calvin business in Europe. There is this extremely strong foundation in underwear, and we've successfully repositioned jeans, and it's growing really strong. But the next chapter of growth here is the sportswear business, the footwear business and the accessories business. And with introducing those, we complement that lifestyle offer. And we're now at the point that we also start to invest in distribution in, with our partners, in shop-in-shop environments but also in our own stores to showcase that lifestyle offer. We don't have it yet today. We have underwear stores. We have jeans stores, but we don't have lifestyle stores and similar in the wholesale business. So this is an enormous opportunity, and we so much believe in this because the Tommy brand is extremely successful in sportswear, it is extremely successful in lifestyle. We know how to do it, and we have the relationships to do it. So expansion for Calvin through lifestyle is a key growth driver. And that expansion will be supported by driving brand heat. We, of course, have the phenomenal support from the Calvin global team, where you've seen some of the examples of the powerful brand campaigns, and we take those and we apply those in Europe. But on top of that, we also adapted to our regional needs. So we do create specific content, for example, for a partnership with Zalando, and we might even make specific product for that. And we have customized digital assets for our pure players and for our own site. And in our store environment, we do super nice activations like wrapping here the Paris store with global brand campaign images. So it's the combination of taking those global assets and adapting them and adding to it specific needs to drive that expansion in Europe. And also for Calvin, we have that premium positioning. So in digital and also in the brick-and-mortar environment to stores and partner stores. So that's from a brand and product side. So now let's look at the growth from a channel perspective. So the biggest growth is definitely in our D2C channels and the digital channels. And I've officially earmarked in Europe, D2C as our #1 priority channel. And why did I do that? Because we have there such a unique combination of assets that we should leverage. Because we are the brand owners. We own full-price stores. We own a premium digital platform, and we own the consumer journey and the consumer data. Now that's a hard-to-replicate set of assets. Not everybody has that, not all our competitors have that. So I want to bank on that and leverage that unique strength. It's, of course, also the place where we can showcase our brand in the most aspirational way. It's also the place where we build the strongest connections with our end consumers. And in that context, that membership program that I was just alluding to, is critical to further accelerate in our D2C world. And then digital, first and foremost, we have our own dot-com channels, and we see opportunity to gain further market share, to grow from that 35% presentation to 50% penetration by 2025. But it doesn't go naturally. So we need to make a lot of investments in the platform, in digital assets, in the backbone in terms of logistics operations. So there's a lot of investments happening to drive that market share growth. But the good news is that the return on investment is there. It's super clear. It's very profitable. So to make these investments is for us an easy decision to do and through that, we will further gain and drive market share. On the partner side, it's a bit more a strategic play. And we grow very fast with the pure players, but we want to make sure that we grow in a brand-right way, that we protect our premium brand positioning on their platforms, that we protect our pricing power. So we have to be strategic about the types of partnership models that we engage on. And we have to be very strategic here also on segmentation. What do we offer on which digital platform? And how much volume do we want to have on each of those platforms? And looking at those growth drivers, D2C and digital, you see how they relatively grow compared to each other. With the digital channels, growing the fastest following by our D2C channels and then the wholesale channel also shows consistent growth. But the mix will obviously shift because of these different growth rates over time. And then translating all of that into numbers. So I've mentioned, we plan to grow with $1.3 billion by 2025, that high single-digit growth CAGR. And looking at the absolute growth, both brands contribute roughly equally. But Calvin has that higher growth rate because of that enormous expansion opportunity. So the shift, we will shift a bit in terms of share between Tommy and Calvin from today, 65-35 to maybe 60-40 by 2025. And from a channel perspective, I've mentioned it, D2C and digital, they will drive the growth, both in relative and absolute terms. So in summary, PVH Europe, it's about perform and grow. And we're super focused on continuing to deliver that profitable, sustainable growth. And we come from a very strong base. So we are confident that we can execute on this strategy. And by doing so, that we can achieve these ambitious growth targets and leveraging and building on our strong, proven consumer-centric operating model. Thank you very much. And next is Tom to talk about Asia Pacific.

Good morning. My name is Tom. I'm the President of PVH Asia Pacific. I'm very excited because this is my long flight -- international flight since the pandemic first started. So I'm very giddy here. So please, please forgive me. I took on this role since 2 years ago. And prior to that, I was the head of our Japan market for about 6 years. And before joining PVH, I was also the Head of HUGO BOSS Asia and Godiva Chocolate Asia. And before that, I was also with Nike and also with Prada. So my whole experience has really been in the fashion industry. Today, I'll walk you through how we plan to unlock our full potential in this exciting region. So today, PVH Asia represents 16% of total PVH revenue and represent a long growth potential for PVH. Within this dynamic region, we offer in a very strong and profitable business. We're present in 15 markets. Our top 3 directly operating markets, China, Australia and Japan represent 75% of PVH Asia's revenue. We have built a strong, healthy and balanced full price and outlet business. Our store network is sizable and profitable, and we have a rapidly growing digital business. Despite some of the lingering headwinds such as the COVID lockdowns, border closure and supply chain disruptions, especially in China, we are seeing clear proof points in product, consumer engagement, marketplace for our strategic priorities. Over the last decade, PVH Asia has grown through both strategic acquisitions and organic growth. Since 2017, we have growth at 8% CAGR for top line revenue, and we see growth opportunities accelerating even further as we go forward. Throughout the region, we have been able to accelerate e-com growth, provide a better product assortment, increase brand equities and are in better place than ever before. Our powerful brands Tommy and Calvin have a clear premium brand and product positioning in the region with opportunity to grow further in all markets. Both brands are sizable and growing robustly in the region. One of the largest opportunity is to further increase overall brand awareness, especially in China, where both Calvin and Tommy are underpenetrated relative to their potential. At the same time, our Australia and New Zealand market already enjoys some of the highest level of brand awareness globally for both brands. In order to unlock further the potential of both brands, we continue to tap into millennial and Gen Z opportunities by strengthening our connection with our targeted consumers. Our digital strategy is to unlocking our next phase of our growth in the region. And we focused on building even stronger partnerships with the key existing digital partners such as Tmall, JD.com and new digital partners. For example, we are increasing our partnership with Tmall Innovation Center for the upcoming June 18 consumer moment and will continue to expand. And as Avery mentioned earlier, our previous partnership that lead to keep Tommy Polo style becoming #1 in the Tmall Polo categories. We continue to innovate by accelerating new platform for digital commerce, including social commerce, we see growth with recent commercial and brand launches for both brands on Douyin, which is the version of TikTok in China and we'll continue to scale up this platform. Our initial results have exceeded our expectations as we engage with the younger consumers, and we see opportunity to drive further sales through the key consumer moments. We continue to pursue other digital opportunities such as digital gamification, personalization and unified clienteling. We see continued success in consumer engagement and sales transaction coming from varieties of live streaming format, including from our own stores. While China is the main focus of our execution, we're just scratching the surface. And we see other opportunities in all markets in the region to drive digital engagement and partnerships. We see opportunity to grow PVH sales in Asia by over USD 1 billion through 2025. Our key objective is to grow a deeper brand relevance across Asia, especially in Mainland China, while still driving growth in other high-growth markets such as Southeast Asia, Australia, New Zealand and opportunity with Calvin in Japan. We're driving growth from a position of strength. In product, we have built out strong hero product program within Calvin and are starting to establish Tommy hero program that resonates locally. These key must-have styles already represent 10% of our sales, and we are increasing in share. We have engaged consumers with successful celebrity campaigns with Asian celebrity, including exciting retail activations, unique Asia product capsules. There has been significant investment in digital marketplaces such as Tmall and new brand website launches in Japan, Hong Kong, Singapore and Malaysia. To position the region with success in mind, we continue to ensure underlying digital platform and system-supported business continue embedded with sustainability, inclusively and speed across the region. For Calvin, we're aiming to provide a modern, youthful and culturally relevant brand experience. In terms of product, we have created Asia-specific capsules such as the Lunar New Year, year of the Tiger collection. And we are further increasing our sourcing product in Asia for the Asian markets. In the past year, we have had many successful regional investor partnerships that resonated very strongly in Asia, and we plan to continue to leverage these key talent to drive further relevancy engagement with our targeted consumers. For example, we saw incredible results from our partnership with global celebrity Jennie from the Blackpink. This partnership drove huge social media engagement, further increase our brand awareness and relevancy and double-digit sales growth in key product category in our Sitka underwear. We continue to engage the Calvin consumer to social and digital platform innovations such as WeChat gaming, live streaming, content and unique retail moments such as the successful [ health of gaming ] Interactive activation in Shanghai. Overall for Calvin, we have built a strong premium world of Calvin in our region across our channels. As mentioned earlier, we'll continue to enhance, elevate and digitalize all of our channels. From designing concept innovations, and exciting pop-up in our full price channels to rolling out our global platforms and improving content online to better product offering across the board. Now moving on to Tommy. For Tommy, we connect with our consumers through both the Tommy Hilfiger and Tommy Jeans label and drive brand heat through differentiated Asia limited capsules that reflect each label's personalities. For example, you can see here, the Year of Tiger product capsule for Lunar New Year, which is a key holiday and sales period in China and in other part of Asia. This product resonated strongly with our local consumers driven by online and off-line engagement with social commerce sales via WeChat and gifting moments. We had strong local relevant global product collaboration, such as what Avery mentioned earlier, the Tommy Jeans times AAPE, which also resonated very strongly with our local consumers, generating near sellout in such a short period of time. As we look forward, we're establishing Asia hero product programs unique to each label, elevate it and better communicate it with our brand DNA to our consumers. Our hero product and capsule will be animated by locally relevant regional talent and celebrities. Like Calvin, we take a digital-first approach to Tommy consumer engagement, focused on interacting with our target consumer where they most enjoy spending their time and attention. We're focused on social engagement on all digital key and social accounts, relevant brick-and-mortar store activations, CRMs and loyalty programs. As an example, one of our most successful digital consumer activation was a Double 11 on Tmall live streaming in China which we supplemented with both executive live stream with our PVH China President as well as over 90 minutes of in-store live streaming. At the same time, we're also activating this moment in our physical stores. You can see here our iconic Tommy flagship store in Tokyo's Omotesando. With the strong brick-and-mortar store presence, we also continue to capture consumer traffic, engaging new consumers and offer a best-in-class retail experience. In totality, for the world of Tommy, we have established a strong footprint across multiple consumer touch points. Offline, we plan to focus on high consumer energy zones with better store concept and products and online leveraging our global platforms, ensuring data-driven decision-making and focusing on social. As a region for both Tommy and Calvin, we will leverage our distribution scale to elevate our brand desire by creating a compelling and coherent consumer journey across our touch points with enhanced executions. With our focus on consumer, we continue to enhance an exceptional consistent and seamless experience for our consumer no matter where they shop. Our CRM and loyalty members today already drove over 1/3 of our business in the region. And we see further opportunity to increase more in this going forward. We remain adaptive to the rapid change in consumer behaviors and continue to be present where our targeted consumer shop, which remains very localized. Our initiative range from enhancing refreshing our existing channels, implementing new omnichannel services to accelerate a new platform relevant to each of our markets. With a strong focus on digital growth and engagement in all markets in Asia, we'll continue to expand key digital partnerships and further increase our digital shares of sales growing at over 25% CAGR through 2025. DTC will continue to be over 70% of our overall business mix, allowing us to control product assortments, pricing, inventory and presentation and continue to elevate our brands. We continue to invest in our e-commerce presence, both on our branded dot-com and through third-party sites in terms of digital marketing, systems and people. At the same time, we believe our store remains a foundational asset for the growth as they continue to grow and strengthen our holistic direct-to-consumer positions. Overall, we plan to further unlock this opportunity by expanding and enhancing our e-comm network, ensuring exciting best-in-class product content on all of our digital touch points, accelerating digital innovations, adapting a digital-first approach and enhancing data and analytic capability to drive decision-making. By FY '25, we plan to grow the Asia business by over USD 1 billion to achieve USD 2.5 billion net sales with growth driven in almost equal parts by Calvin and Tommy, and 80% of the growth coming from direct-to-consumer. This sales increase represented a 15% CAGR, a further acceleration from our 8% CAGR over the last 5 years. Mainland China is expected to be the majority growth of FY '21 to FY '25. However, there is a significant growth potential with Japan, Southeast Asia, Australia and New Zealand market. Direct-to-consumer channel will drive most of the growth where brick-and-mortar stores will remain a strong foundation for our e-comm accelerations. We plan over 21% digital penetration in FY '25 with potential further upside opportunities. To capture market share, we are focused in creating hero products that our consumers in Asia want to buy. We are connecting our consumers and engaging them with localized marketing and communications. Most importantly, we continue to win in the digital marketplace by meeting our consumer where they want to buy, especially online to our branded stores. Finally, as we unlock this growth through enhanced platform, systems and people, I want your takeaway today is we see huge, huge growth opportunities across our region in Asia. Thank you for your time.

Hello again. Hello, and welcome to our PVH Americas presentation. In this session, I will take you through how we are unlocking PVH Americas to drive long-term sustainable growth. It's important to recognize first that we have leverageable brand strengths that are very difficult to create, that are unique to only us and a few of our very key competitors. We have 2 of the most iconic, recognized and beloved brands in North America, Calvin Klein and Tommy Hilfiger. Both born in America, these brands have remained relevant with the American consumer for decades. Because of this, we have significant strength with our large consumer base. And we have earned the right to play and win across big and growing categories. We are close to body and underwear and fragrance. We are refined and [ were ] to work in apparel, and our consumer further enjoys our brands in footwear and handbags, eyewear, watches among other categories. You can see the strength. You can see the strength in our awareness scores where 8 out of 10 men and 9 out of 10 women in the United States recognize our brand name. Beyond this, over 50% of the population considers purchasing our brands when on their shopping journey, and this number is closer to 60% for men. And of our competitive set only Levi's tops us for consideration with men. While we remain highly relevant with today's consumer, we recognize that we have underlying business challenges that we are addressing. First and foremost, we have not put enough focus on winning with our domestic consumer. Because of this, we have been over relying on tourism and our international consumer. Prior to the pandemic, international consumers made up 30% to 40% of our total business. And because of these 2 challenges when the pandemic grounded flights and forced would be international tourists into lockdown, we lost a significant portion of our sales base, and we lacked the strength we needed to recover with the domestic consumer quickly. And finally, we have under-invested in growth channels where the domestic consumer shops like e-commerce and owned and operated stores and we have driven too high of a penetration in the wholesale value channel, which made up 1/3 of our retail sales in 2019. We know this is not where we should be. So to address these challenges, we will intensify our focus on the domestic consumer. We will be ready to welcome back our international consumer and most importantly, we will rebalance our distribution footprint in North America to drive higher-quality sales and long-term sustainable growth. I'm going to take you through how we will make this happen. But first, I want to spend some time on what we mean when we say rebalance our distribution footprint to drive higher quality sales. It is all about focusing on where our consumer wants to shop our brands. And for us, it starts with digital and direct-to-consumer where we are in control of the whole experience. Today, we are underinvested in owned and operated e-commerce. And to just put this in perspective, in 2019, our owned and operated e-commerce made up only 3% of our total revenue. We know that digital is where our target consumer is increasing their shopping the most. So we are leading the rebalance of our distribution strategy with this channel and significantly looking to grow the penetration. From a retail perspective, today, we have no full price owned and operated stores in North America. We know, though, that to successfully drive brand relevance and brand heat, we need to have an exciting and innovative full price experience that we can control for our customers to experience physically. And the way we lean into this channel is through a test-and-learn approach with the goal to have a few brand-building locations by 2025, all within key power cities that are important to our consumer. Where we do have a large strong presence today is in our factory stores. We operate and fully control approximately 200 stores for brand where our consumers can physically experience our brands. We see a huge opportunity here because historically, we have underinvested in the store experience. We have set in motion a plan in place to enhance and optimize our full factory fleet through investments in updated technology and in new fixtures and in enhanced product storytelling. We will enrich our shopping experience and significantly improve productivity and the quality of sales. From a wholesale perspective, we are strengthening our relationships with our key partners to improve the overall quality of our sales with a digital-first mindset. Today, a little over 1/3 of our full price wholesale business comes from our partners' dot-com businesses. Through elevated product exclusives and improved product placement, we will work with our partners to jointly move this towards 50% as the consumer shifts further and further online. Moving on, full-price brick-and-mortar wholesale is one of our largest distribution strengths today. And our key partners create increased physical reach for our brands, providing our consumers with the opportunity to see, feel and touch our products as part of their omnichannel consumer journey. While we don't see brick-and-mortar as a major growth vehicle, we want to continue to enhance and optimize this channel through reduced promotionality, improved execution, driving increased pricing power and greatly increase profitability by 2025. And then finally and perhaps most importantly, we know today that we drive 2 large share of our business through the wholesale value channel. This impacts our pricing power across the market. And without sufficient product segmentation, it creates cannibalization and it creates lower quality sales. So in order to be successful, we must greatly decrease our share of business within this value channel to one that is sustainable. We will continue to capture quality sales from our value-oriented style where consumers while also creating room to grow our focused channels, which are owned and operated in third-party e-commerce as well as our owned and operated stores. Through this plan, we will shift towards significantly higher quality sales by 2025. First and foremost, ck.com and tommy.com are becoming the pinnacle brand experience. And it all starts with product. We will lead on our ownedandoperated.com with exclusive products with capsules and collaborations. As an example, you heard about our Palace collaboration. This product was only available on ck.com and on palaceskateboards.com. And on the day of launch, it drove a 200% increase in demand sales over last year. On the back end, we are actively investing in consumer capabilities that will create the versatility and the flexibility our consumers are looking for, including ship from store, vendor drop ship and more. And then finally, we are updating the digital experience with elevated imagery, assets, fit guides and a mobile app that will make the shopping experience for the consumer easier and more personalized. In 2021, we saw triple-digit growth for Calvin and Tommy over pre-pandemic numbers with more profitable sales driven by higher full-price selling. This, coupled with significantly higher conversion led us to improve our gross margin by several hundred basis points for both brands. Third-party e-commerce, in addition to our owned and operated business, digital wholesale will play a major role in our success. And this includes both pure players and the dot-com portions of our key omnichannel wholesale partners. We recognize the need to think about this business differently. And so our focus areas are truly targeted at growing digital sales and these include: Having the right assortment at each -- having the right assortment at each account so that we can build equity in hero products; drive brand heat through exclusives, collaborations and capsules; maximizing our content in a consumer-centric way where the consumer doesn't have the benefit of touching or seeing the product in person; and then making very purposeful choices in the imagery that we select for our ad placement, ensuring that it captures our focus categories and represents an elevated depiction of the brand. We will be optimizing our marketing mix and digital spend to make each dollar go further. And we are changing our ways of working to embed an agile test, learn and scale approach in our digital organization. We have significantly increased our digital penetration of full-price wholesale since 2019. We're actively partnering with Amazon to rapidly deploy a series of tests on their site to improve sales and margin growth. And so far, these tests have proven to be very successful with small tweaks like product descriptions and product bundling, driving greater than 20% lifts in the test groups. So we are now at the point of scaling some of these successes, and we anticipate doubling our apparel sales on Amazon over 2021. If we move into retail, our strategy is anchored in improving our factory store execution in order to drive higher quality, significantly more profitable sales. And we are tackling this from multiple angles. As I stated previously, we're enhancing our in-store experience. We're updating our visual merchandising to create compelling marketing stories and we're investing in new fixtures, in imagery and technology to improve the consumer shopping experience. It is thanks to these changes that we drove positive, comparable traffic comps with domestic consumers for Calvin Klein in 2021 compared to 2019. Our AUR for both brands achieved nearly double-digit growth in '21 compared to '19, driven by our strong hero product focus. In addition, we are building out an innovative, thoughtful, full price experience for both brands that is focused on top product with a drop-based assortment strategy that drives brand heat and newness for our most style engaged consumers. Beyond just digital, we are changing the way that we approach all of our wholesale partnerships, and we will work jointly together with them to build pricing power and to strengthen the profitability of our business through proactive, [ data-based ] planning based on hero product and segmentation guidelines, improved execution and compelling visual merchandising, exclusive channel right capsules and collaborations, reduced promotional cadence and depth and increased breadth of categories in our top of funnel marketing. Through these wholesale partnerships, we have been able to increase our AURs by double digits across all of our wholesale businesses since 2019. To support the rebalance of our distribution and drive higher quality sales, we will better leverage the strength of our brands by building product strength, driving consumer engagement and taking a segmented approach to each channel. Let me take you through what this means in more detail. First and foremost, we will build on product strength. Our product strategy is anchored on developing hero products, top products in the market that our brands are known for. We have leveraged consumer research and market research to improve on fit, on fabrics, on silhouettes, and our updated hero products are just hitting the market now. We have institutionalized stronger discipline in our creative development process, increasing our forecasting accuracy and reducing the total choices we present to the consumer. This allows us to focus the consumer on the hero products and the key looks and the top essentials that we most believe in, cutting through the noise. So since 2019, we've cut our total SKU count by over 30%, reducing total markdowns and improving gross margins. Combining these 2 efforts will allow us to shorten our lead times and increase our share of business that we have on, never out of stock, which opens up capacity and space for increased read and react capabilities. I now want to walk you through how we're already bringing this to life for Calvin Klein. As you heard earlier, Spring '22 marks the first season of our new brand direction. Our first global chapter launch, Reimagined Heritage, which you can see here, is performing across channels in both underwear and in apparel. And our relaunched hero product tees are driving significant AUR improvement with the standard logo tees surpassing our total Tee AUR by 34% and the Archive Logo Tee by 40%. Despite our strength in Intimates, we continue to improve and enhance our hero products in this category as well, and our relaunched hero product bras are up 70% to 2019 in March, while our men's underwear hero products were up 75% versus 2019. We are really excited for the launch of our Naturals collection in stores and online, which will take these hero products across Tees and Intimates and dimensionalize them across a range of skin tones made with sustainable dyes and sustainable materials. We've taken the same approach in Tommy Hilfiger, focusing on enhancing our hero products in key categories across genders and leveraging the strength of global product performance to inform our investment. We are so energized by the response that we've seen. So for both Men's and Women's, new spring '22 hero products have risen to the #1 spot in terms of product sales, all the result of taking prior season's global bestsellers and assorting these styles in our North America factory stores this season. In Women's, our new French Terry Hilfiger Hoodie came in on top and is driving 29% of our total fleece business. And in Men's, our Regular Fit Polo was our #1 product in March despite only being on the floor in all doors for 3 weeks, salted an AUR that was 60% higher than our average Polo AUR in 2019 and led the overall Polo category to a 51% increase in AUR over '19 for the month of March. Overall, our global products drove 52% of our total March business on only 38% of the inventory, but by fall, these products will be 90% of our investment. To win in the market, we must connect these hero products to the consumer through product-based assets, images, and messaging, and we must do it during the most important key consumer periods. To cut through and to make this resonate, we'll partner with culturally-relevant talent and collaborators and create domestic consumer loyalty programs focused on personalized access and shopping experiences. Let me give you some examples of how we're leveraging the emotional strength of our brands to connect the product to our consumers. Our most recent Palace teaser campaign drove engagement in the hundreds of thousands every day leading up to the launch. This engagement ultimately led to our 3x performance in sales versus last year in the first 24 hours. This was not our first collaboration. Our first drop with Heron Preston proved that when we connect products to key consumer moments and culturally relevant talent, our brand cannot be stopped. Our top 3 apparel products sold at an AUR over $180, and our average order value was 3x benchmarks. On the Tommy side, 90% of our Tommy X8 collection sold out in 36 hours, and our collaboration with Timberland, our most successful Tommy Hilfiger collaboration in North America, proves the power of 2 iconic brands joining forces. To reinforce our efforts to rebalance our distribution, we must take a segmented approach to our product assortments. Our hero product-based assortment will allow us to maintain the integrity of our brand across channels. And the dimensionalization of these products through seasonal prints, colorways and innovations, as well as our collaborations and capsules, will allow us to differentiate across channels, giving our consumers a reason to shop our better and best essentials in our full-price focused channels. We will minimize overlap across full price and value channels to protect and to drive healthier sales, while still allowing our more value-oriented consumers to participate in the brand in a sustainable way. No part of this strategy will work in a silo, so we are leveraging the strength of our brand and bringing together our initiatives across consumer, product engagement and our rebalanced distribution to win in the digitally-led marketplace. By 2025, in owned and operated digital, we will drive towards 4x our 2019 revenue and 2.5x our 2021 revenue. We will open a few strategic full-price stores, test and learn into the best, most innovative formats in power cities. We will have increased the productivity and the AUR of our factory stores significantly versus 2021. Third-party digital will represent at least 40% of our full price wholesale revenue, increasing our total third-party digital versus 2019 by 2.5x. And then finally, we will increase our penetration of full-price wholesale, while cutting the penetration of the wholesale value channel by approximately 40%. So this rebalancing will take place over several years as we work in parallel to grow our wholesale and our owned and operated businesses. We are committed to supercharging our digital and DTC growth, while sustainably growing our wholesale brick-and-mortar, significantly shifting our penetration from value to full price. So by 2025, we will deliver $1.1 billion worth of higher quality, digitally driven growth, significantly improving our operating margins and recovering beyond our comparable 2019 sales. In conclusion, we are leveraging an industry-proven approach, focusing on the domestic consumer, building product strength, driving consumer engagement and rebalancing distribution to win in the digitally-led marketplace. We are unlocking the full potential of PVH Americas. Thank you. And I will now turn it over to Zac Coughlin.

All right. Thank you, Trish. Quite a high standard is set by the team. I was commenting on the back earlier, it was great enough to follow Avery and Jess. It's been a tough bar to say. So just to start by saying how excited I am to be here with everybody today in my second week with the company, but I think in general, while being newer here, I think my experience, just a little bit about me over the last few years, has probably been useful in getting onboarded here. I started a few years ago working with Nike and Converse, being a part of the sort of product-led rebasing of the marketplace with Converse. And then most recently with LVMH, working for DFS, getting to be around some of the most amazing brands in the world and really honing my retail experience in that regard, which is so important as you saw from the DTC piece. So I think, in some ways, starting new. But I think, in a number of ways, having had the last few years of time, really getting ready for this moment in time. So I think I'm really excited to be here. Grateful to Stefan for asking me to join the leadership team and be a part of this next phase of the growth journey, so. Now enough about me, probably the least interesting thing for today. And now the most interesting, the financial model. So here's what we're going to see today. First off, Stefan mentioned earlier, we're coming off of a great 2021, record-setting financial results and really moving forward with growth, and so I think the 3 major parts of the plan. One, this is a growth plan. Sustained growth over time, but starting from the top line. Secondly, we are going to unlock the income statement with gross margin expansion and SG&A leverage. And then finally, driving strong profitability, strong cash flow, and ultimately, great returns for the shareholders. That's what we're going to talk about here today. Now before we get into the specifics, I wanted to start first here with the commitment that this leadership team is going to make to the investment community around how we're going to engage and communicate. So first off, simplicity; second, transparency; and third, long-term focus. So simple KPI -- financial KPI, delivered consistently and repeatedly to all of you. And also, while not walking away from our short-term commitments financially, extending our view, planning over a longer horizon and making sure we're making those investments that drive long-term and sustainable growth over time versus a shorter-term focus from there. So that's our commitment to all of you. Now getting into the specifics, and you saw some of this from Stefan earlier. So starting first and foremost, this is a growth strategy. So high single-digit growth, strong and sustainable. Secondly, not just growth for growth's sake, but growth also driving profit improvement and improving operating margins. Third, returning value to the shareholders through EPS growth greater than EBIT growth. And lastly, and in some ways, most importantly, fueling all of this planned strong free cash flow that allow us to both invest in opportunities and return value. So we take a look at what that means from actually the commitments perspective, and again, you saw these also earlier from Stefan. $12.5 billion in revenue by 2025. It's a 37% increase versus 2021 we just finished; 15% operating margin, so strong profitability; and free cash flow greater than $1 billion in 2025. So again, our firm commitments, and I got to go back to those ideas of simple, transparent and long term. So now to talk a little bit more about the composition of that. So again, being a growth plan, starting from the top line here, and you saw this in each of the individual plans. I want to talk a little bit further about the global picture of what this looks like. So I think starting out from a brand perspective. Good strong growth across both of our brands, so good balanced growth from there. From a regional perspective, we see strong growth in Europe off of a very high base, successful marketplace we've built. Tom talked about mid-teens growth in Asia. And underpinning that, again, as Tom mentioned, growth across the region, but a really powerful focus on China and specifically China e-com, where the growth rate over time we expect to approach 40%, and the business will be over 5x larger by 2025 than it was in 2019. So making our big bets in the safest growth market segment anywhere in the world. And then in North America, as Trish mentioned, strong growth and more importantly, in some ways, good growth. Moving towards that full price points across all of our segments. So again, good balance growth globally as well. And then finally, from a channel perspective, DTC driving the growth. We talked about putting the consumer at the center of our focus and really making sure that we focus on those channels that allow us to sort of address them directly, most directly from there at that point in time. So strong growth, low double digits in DTC and wholesale growth as well, and I'll talk about that more in a moment. So again, I think, overall, good, balanced growth. So we've got our priorities, of course. But overall, not reliant on any one single point, taking advantage of the idea of really having a portfolio, both in brands as well as markets around the world. So now going just a little bit deeper in terms of looking at the channel mix. So we talked about digital being the focus, and you see that in the growth rates. And we see that across the world there, outsized growth across all the regions. And then when you take a look at the split between DTC and wholesale, DTC growing around 2x higher than wholesale across the markets also. Now to address wholesale, wholesale remains an important and vibrant market for us, absolutely. But I think what we're talking about now is really focusing more and more on our best partners and on their digital platforms as well, and really moving towards this idea of full price as the approach you want to take from there. So we get good balanced growth. So now as we've talked a little bit about margin, we'll talk the next couple of slides lay out the rest of the income statement structure. So we'll talk about gross margin, we're going to talk about SG&A, and then, ultimately, how that comes together in terms of EBIT. So starting with gross margin, and just to ground everybody. 2021, we ended the year, strong year, 58.2% margin. We do expect the PVH plan though to drive margin improvement, landing somewhere a little bit greater than 60%. The biggest driver by far, and you can see that on the top of the page here, is channel mix. We've talked about earlier driving DTC towards almost half of the business by 2025 and the powerful margin improvement we get from there. Below that then -- and that's worth probably about 2/3 of that margin increase. Below that then, regional mix. Tom's Asia market is growing at a faster rate, and they are relatively our highest margin markets in the world. And then underneath that from there, I think we talked about great brands, great product, a sharpened marketplace perspective. We do expect that to drive pricing power. And a smarter, more agile supply chain, allowing us to get closer to the customer faster, allowing us to drive savings there as well. And so in spite of the fact that we obviously look and see inflationary and exchange rate pressures, we expect as well to drive the other approximately 1/3 of that margin improvement in gross margin out of those items. And so again, landing gross margin at something a little more than 60%. We'll talk just a little bit underneath of this around North America margins, which I know has been a point of contention -- or a point of discussion. North America overall, we expect to grow gross margin by around 500 basis points over the same time period. Very much focused on the same drivers. About half of that 500 basis point gross margin improvement is tied to that full price mix across all channels that we're looking for. Around 150 basis points or so is tied to a stronger movement toward DTC. And then especially in North America, we've talked a lot about some of the supply chain challenges we've been facing, not annualizing some of that as we work our way through that over the next year to 1.5 years of another 100 basis points. Around a 500 basis point gross margin improvement in just North America as a key part of this. Next on SG&A. Again, grounding ourselves, 2021, 47.4% for SG&A. And as we move forward, a couple of points. We want to make sure this is viewed as an investment-driven plan. So we will drive efficiencies. We'll talk about that in a moment. But first, the DTC growth brings with it expenses, store expenses, e-commerce platform expenses, and we expect that to be around 150 basis points. But just to sort of point that back towards the strong growth we saw there and the margin expansion, so a good balanced plan. And we do have some targeted key growth initiatives. Obviously, the plans that we laid out in front of us earlier, those don't happen just sort of naturally. So we're going to be driving those improvements, investing in the e-commerce experiences that our customers expect, the supply chain that allows us to drive with speed, and the digital market that allows us to connect closer and closer to the customers. And we expect that to increase SG&A by around 150 basis points also. And then you see the long bar down in terms of efficiencies, scale and efficiency. So I think that equates to over 500 basis points of improvement, and I think important to highlight. So one, especially in a place like North America, where we have a sizable fixed cost base, we get significant scale leverage just by returning to the leverage we lost in the COVID period. And then beyond that, a couple of key places. One, Stefan mentioned earlier sort of working differently, working smarter. We expect that to drive improvements, and we see our people-related costs growing, but at a rate less than sales. And then also importantly, inside of our rental and occupancy space, we get a lot of scale across there as we drive up of a great fixed cost base around the world. And at the same time, working closely with our most important landlords to drive win-win solutions. So the result of all of that is landing SG&A at a number approximately 45%. So where does that land us, and that's what gets us to the 15%. So strong growth, over 60% gross margin, about 45% SG&A landing us at 15% global operating margins. From there, a 5-point improvement from where we landed -- almost 5-point improvement where we landed in 2021, and about half in gross margin and about half in SG&A improvement. So I also want to talk just a little bit about the regional mix from there. You see North America landing in the low teens. That is an almost 10-point improvement. It's traditionally our strategy to go to market in an entirely new way there. And again, we talked about margin already. So of that 10 points, margin is around half of that at about 500 basis points. The other 500 basis points coming out of SG&A leverage really predominantly about growth off of -- driving scale off of a baseline that we had really in 2019, regaining that leverage that we had pre-COVID at that point in time. So again, a good balanced margin improvement plan in North America. And then as we look at our international markets, landing in the high teens. So it may look a little bit like we are maintaining to only slightly growing, but I think one important note from there is this also incorporates a non-annualization of a Russia business, which we've exited, that we had in 2021, that were assumed to not be in by 2025. So if you look away from that for a moment, we are growing our international markets as well from an operating margin perspective. So good, strong operating margin expansion around the world. Now before we go into talking about cash in a moment, I just want to talk a little bit about tax. Obviously, we gave tax guidance earlier in the earnings release that talked about an increase in rates up to 29% to 30% from our historical high teens rates. So I just want to explain again quickly on why we're seeing that increase. So first, we've had a couple of favorable tax regimes internationally in some of our other markets that rolled off in 2021 as global tax reform has come into place. Second, we had a non-cash tax regime as well tied to the purchase of Calvin Klein brand all the way back in 2003. That finished in 2021. So those 2 factors alone would have driven this up to about 25%. And the last piece is really the way our regional profitability mix right now leans more towards Europe and away from the U.S., pushes us up into the 29% to 30% range. So I think, one, I want to make sure it's clear here, we do not expect the rate to stay at that level through the plan. So initially alone, the work that Trish and the team are doing to drive North America to better profitability, we believe by about midpoint of this plan will bring rates down to about 25%, so that is a starting point. Then we're working on long, medium and shorter-term strategic planning that will allow us beyond that to drive down, we believe, into the low to mid-20s for a tax rate by the end of 2025, which is where we believe, because of global tax equalization, the market will rise up to. So just to give a little bit of clarity around that. Now I'll just talk a little bit about sort of cash and investments. So, as mentioned, growth doesn't come for free. We are going to drive the growth that we're talking about, and what that's going to come requirement for increased CapEx. So we see on the left-hand side, we're targeting about 4% of sales, which we believe is competitive and more than sufficient to both drive this growth plan as well as sustain it, importantly, ongoing. And so what you see here is an increase from historically around $300 million a year, up to $400 million. That stair-step function really first off into 2022 is a matter of -- for the COVID era, we restricted back on spending a little bit for financial and operating reasons, so we've got a bit of catch-up to do from there. So stay in that level. And then by the time you get to 2025, I would look at that as more indicative is really where we're going to land us about that 4%. So I think that's the overall plan. So good capital spending. And then from a composition perspective, significant growth in digital and technology. We've got to invest in the e-com experience as our customers expect from us, and the technology to put the tools in the hand of our associates around the world to drive smarter, faster decision-making. Another 40% on stores as we've got a sizable global network of over 1,600 freestanding stores that requires both rejuvenation and store expansion. Between those 2 buckets, I wouldn't get too caught up because obviously, there's a lot of blurrier lines between what is stores and what is e-commerce and the business model that Martijn has built in Europe shows that seamlessness coming through and the connectivity from there. And then lastly, 20% of the CapEx on the key enablers. Obviously, we don't want to forget about the things that are actually underpinning all that growth, with a heavy focus on supply chain, again, as we get faster and shorter to market. So a good balanced approach with capital spending. Then lastly, and also quite importantly, is cash. So we expect the plan to deliver significant amounts of cash, over $3 billion of free cash flow from 2022 to 2025. And here's sort of a framework of how we're going to think about investing. First and foremost, we will continue to invest in ourselves. We want to fuel every opportunity that we can find and you've heard many of them today here, so that's first and foremost. Secondly, we have a great balance sheet. We want to maintain the strong balance sheet that gives us that flexibility and agility to adapt as we look forward. And then thirdly, and probably most powerfully in some ways, we will return excess cash to the shareholders. And you may have seen earlier this morning, we announced an extension of our share buyback program for another 3 years and another $1 billion. So we expect to return significant value to the shareholders through predominantly share buyback. So again, a balanced approach there that we will execute sort of agilely as we work across our way from there. So with all of that, just to sort of wrap up before handing back to Stefan, I think, again, we look at what is the algorithm, what you can expect from us ongoing. So high single-digit growth, resulting in $12.5 billion in sales by 2025. Expanding operating margins, resulting in 15% by 2025. And strong cash flow, which will result in over $1 billion in 2025, which all of that will allow us to be driving EPS and shareholder returns at a strong level over this plan from here. So with that, I'll turn it back to Stefan for the closing. Thank you very much.

Thank you, Zac. Hard to follow those numbers, accelerated financial performance. Wrapping it up before we take a quick break and then switch over to the Q&A. Having spent my whole career building brands, winning with the consumer, driving -- going for high performance, this growth opportunity that we shared today is the most exciting that I have seen. And let me just, as a wrap up, share the key reasons why. The first one is the power of the iconic brands. And if you have one of those today, you're lucky. If you have 2, like we have, and are able to leverage the strength of both those, we have an incredible advantage. And the connection that I hope you have seen today from my team that we connect those brands in a very strategic way. So the second reason that I'm so excited about this opportunity is that we have a value-creating plan, especially when we move into an economy that sometimes goes up, sometimes goes down, it's never been more important to have a clear value-creating plan. It's also never been more important to have strong brands. So we have the strong brands, we have the plan. And then lastly, what excites me the most, and I was just -- when we prepare for something like this, we are all in it and do it together. And this is the first time I had the opportunity to sit and see my team present. It gives me goosebumps because I know that the team that we have has the capability to execute. We won't always get it right, but to Zac's point, we will be transparent and we will quickly learn and adapt. And that is something as a leader that I've always driven with my teams to say, let's be really clear on the vision, really clear on the plan and continuously learn. Because then the compounded effect of continuously learning and improving, we should be able to deliver the financial targets Zac just went through and beyond. So just wanted to wrap up that way and share my excitement and the invitation to you all to follow us on this journey. And the next step on this journey is a quick break, and then we wrap up with Q&A. Thank you. [Break]

Welcome back from break. We have, as I shared earlier, 45 minutes for your questions. We have 2 mic runners, one on that side and one on that side. So please just raise your hand and then please wait for the mic, given that we have a lot of people remoting in through the webcast.

Michael Binetti. Nice to see you. Thanks for all the details today for the team. So I wanted to ask about North America margins. I think the guide was low teens from about 3% in '21. You gave us the guidance of 500 basis points of gross margin. I'm just curious, I think, in particular, I'd love to know a little bit more about the channels and how we build up to that? Where the biggest opportunity is as we think about the channels? I think for some time it's been focused on wholesale. So maybe if that's an unusually low number today, given the conversation about the mix of revenues through the value channel that you're trying to improve, that seems like it would be easier to understand low-hanging fruit to reverse. Maybe just some thoughts on the components of the build there in the U.S.

Yes. Absolutely. Zac, do you want to start from the financial perspective? And then there is, of course, a connection to the business side.

Yes, of course. I mean, I think overall, from a channel perspective, we're going to get into laying out channel-specific profitability. I think what we can say though is the plan that we've built, that Trish and the team have laid out, is ultimately grows and delivers strong profitability across all of the channels. I think for us, from our purposes, we want to make sure that regardless of where the consumer is choosing to shop, that we've got sort of the economic and financial model built across those. So I would say, as we look at where that improvement is coming from channel by channel, we would see, largely speaking, that level of improvement coming across all the channels as we have them today. To deliver, again, strong profitability across all the channels that we have moving forward.

And the value driver -- the key value drivers will be coming from the key growth drivers. So starting with product. So what Trish was sharing was the proof points and the examples. So when we start to become more disciplined on focusing on the key growth categories, the hero product, we see the response immediately in AUR, and we see that falling down to margin. And so we see that increased product focus cut through across all channels, to Zac's point. And then there is, of course, always ways to optimize, simplify how we work across bringing that product to market, driving that consumer engagement and winning across all the channels. Because it's really about winning more across all the channels with the domestic consumer first and driving that full price penetration D2C first and then supported by strengthening our keys wholesale partnerships.

Simeon Siegel, BMO. So I was hoping we could talk about licensing a little bit. Licensing is a very key part of your history, and obviously, both from product and in-housing and leading. So as you think about the future, the revenue number you have for licensing was a little bit -- wasn't very much. So curious how you want to view that? And then also, Zac, the same conversation, as we think about the gross margin from the channel mix, you think about that being maybe a bad guy. So how do you think about the impact from licensing not growing as much?

I can start. Thanks, Simeon. So our licensing strategy is simple, which is it's the same as our overall strategy, which is to win with the best products and win with the best products in each category we play to win it and make sure that, that product shows up in the right channel mix to drive brand accretive, more profitable sales growth. So what Trish was sharing is that we have invited our licensees on this journey, and the initial response has been very strong. Because from end consumer, everything we do has to start and end with the end consumer and winning more with that consumer. And that's why there is a PVH+ Plan that then is the same PVH+ Plan and priorities for our owned and operated and for our licensed business.

Jay Sole, UBS. I have a 2-part question. The first part is, if we think about the trajectory and the cadence of the earnings growth over the 4-year period, do you feel like the growth will be more sort of weighted to fiscal '24 and fiscal '25? In other words, is there a big investment that we'll be having this year or next year where you see really acceleration in the EPS maybe in the outer years? And secondly, on marketing. When you think about the investments that you're going to make in SG&A, what percent of sales do you expect marketing to be? And do you expect that to grow over time? Or how do you expect that to play out?

Yes. Let me take that one. I think overall, we would expect that the trajectory of growth -- we've given guidance for 2022. And that trajectory from 2022 to 2025, we expect to be relatively linear. So the growth plan we've laid out drives relatively linear over that time and the investment plan as well is paired to that. And I would say not just in terms of what's written down, but actually in terms of the planning we're putting in behind that, to make sure that if the market runs ahead of us a bit and we can invest in behind that more heavily, we'll be able to do that. And if it runs a little flatter, we'll be able to adjust. So I think not only have we planned it linearly, but I think the operating plan behind that will allow us to move the levers in such a way that we should be able to see that rate improvement on SG&A over time at a relatively steady improvement between now and then. This is not a hockey stick plan at the end, but we would expect to see improvements in middle and the longer parts of the plan. And then from a marketing perspective, as a total percent of spend, I would expect, overall, we see that sort of migrating up, but nominally. It's an improvement point from there. I think the key points in the SG&A piece is that it's a point of investment into the business. We do not see marketing as a leverage point. I mean, as we talk about a new consumer strategy or driving closer to them, that's going to require investment. And so as we drive -- even as we scale -- overall scale the business up, we want to make sure that that's not a point that we're using to drive some of that for scale and efficiency, that we maintain the growth and spending commensurate and then slightly above where the rates of spending that we have today are.

Stefan, good to see everybody in person. This is John Kernan from Cowen. Did you think about a demand and data-driven model with 15% operating margin to $1 billion of annual free cash flow. How much is the supply chain involved? You obviously have a lot more experience in supply chain than many of the other CEOs in this space. It has been a major pain point for the sector. How do lead times costs in the supply chain change in this model? And then I have a quick follow-up for Zac.

Well, thanks, John. I'll come back to it. It's one of the most asked questions I've received since I spent half of my career, a little bit over half, leading out of Europe, a global business, and then in the U.S. And ever since I've been leading from within the U.S., I've received that question all the way, all the time, and it comes about speed. And I think, again, what's important is that there will be a lot of value to unlock eventually in speed, but it starts with the product creation discipline. And you already have some of that in Europe, so maybe, Martijn, you want to just give some examples. Because once you start to work as disciplined as we are in Europe, and we still have a lot of improvement to do in speed, but you can start to break away from one long lead time and be much more flexible in some parts of those [ orders ].

Yes. I think that's where the unlock sits. So it's stepping away from that one monolith, almost heavy process for all product creation that you do and starting to break it apart. Because for some parts of our business, there is no need to have as a primary objective to increase speed. But to have a speed lane available where you can respond fast and to have a continuous core replenishment stream available, that's essential. So I agree that, yes, speed is important in certain pockets of the business, but it's definitely not the overarching objective.

And it is like speed is the outcome of working closer to demand and having a very disciplined product focus. So the supply chain, back to your question, it all connects back to the discipline of winning with product, because we are growing 2 lifestyle brands across, say, 5 to 10 key growth categories, and then developing a hero product strategy to have the best hero products within each category. And then each category has their own sourcing connection because it's different if you make a T-shirt or if you make jeans or if you make underwear and bras. So developing that key category focus, hero product focus, and then connecting the supply chain improvements to that. And it's one of the biggest unlocks I've seen from a value creation perspective. Eventually getting to shareholders from supply chain work is actually the cross-functional work. So historically, we have led with the designer being one silo, the merchandiser being one silo, the planners, the sourcing, but bringing everybody together around back to that category again, and say, we are a category team that's going to crush it with the best products. So the designers and the sourcing experts upfront knows exactly what they set out to do. And then you can unlock speed, and then you can unlock value.

Zac, a quick question. So $3 billion in free cash flow is almost 60% of your current market cap. How does share buyback play into the EPS algorithm as you go into fiscal '25 and the reduction in share count?

Yes. Without a doubt, we tried to recognize in the presentation significant free cash flow generated from this. And I think the framework we tried to lay out is meant to be less prescriptive and more as the set of tools that we would expect to lean into it. Again, we want to start first and foremost with the idea of investing in ourselves first. The idea is to have to drive growth; to drive that flywheel, I think, is priority one, making sure the balance sheet stays strong. And then that obviously will leave significant amount of spending for the share buybacks. I think that's why the announcement this morning was so important, authorizing an incremental $1 billion over the next 3-year period. So we're not being prescriptive right now about how that will go, because again, we want to leave ourselves the flexibility. It makes it a lot easier knowing that there's going to be substantial cash flow generated to do that. And it's up to us comfortable committing that EPS growth will be ahead of profitability growth over this plan because we have the levers to be able to do so.

Dana back there? Okay. First, so Dana, hold.

Brooke from Goldman Research. I'd love to hear a little bit more about the cadence and the plans that you have for eliminating some of that value retail in North America over time, and the offsetting growth that you're getting in the rest of your core wholesale business. What embedded growth rates are you assuming, and how should we think about the sequencing of that throughout the time line of the plan?

Let me just start with my experience from having done this before and seen it before. There are really 2 moving parts here. So one is in the North America unlock. One is the rebalancing of the channels, and that goes with one speed. And that, to Trish's point, goes over the 3, 4 years that we have laid out for 2025. So you should see that gradually happening. And then what has faster value-creating opportunity is the improvement in product, consumer engagement. And so it's the parallel pathing of those 2 that is the proven model that I've been personally involved in before and seen successfully being executed, and that's the path that, again, all our biggest competitors and best brands have at one point in time been in this situation in North America. So the way they have approached it is the way we will approach it.

I think you covered it.

What gives me confidence in this is 2 things. We have a really clear fact-based understanding of where we are. Trish shared with you the strength of our brands in terms of awareness going all the way to relevance. And then the improvements in product and engagement that Trish and team is already doing, we are constantly getting green shoots for that. And then, of course, on top of that, I've seen it being done before, and I've been part of doing it before. It's just going to take time, and back to your question on channels, we are growing e-commerce really fast. We are partnering -- intensifying our partnerships with our full price wholesale partners, and we maintain a strong partnership with our value partners. It's just that balancing and it will happen over the next 3, 4 years step by step.

And the fact that it is a multiyear journey allows us to be very deliberate and very thoughtful about how we go about it, and it's not an overnight. It touches every channel. So we just want to be mindful and deliberate and thoughtful.

And when Trish and I walk stores, and as you shared, you were part of building the growth and the success with the young consumer with Urban Outfitters and driving -- I believe, when you left, you have an industry-leading digital experience and very strong connected retail experience. But when we walk stores and take the test of the 10 most essential products, then we see how much opportunity we have. Like, we have so much opportunity to tap better into any given time the 10 best essential products for the consumer in every channel. So just that in itself, those kind of improvements coming in parallel with the rebalancing. That's what gives us the confidence and having done it before.

It's Dana Telsey from Telsey. As you think about what you've done before, Stefan, in terms of the systematic, repeatable processes that incorporates the speed model to drive margins. In the journey that you're on here in terms of speed, how do you think of the timeframe in terms of what is it here compared to what it's been in your other, where you've been before? And were you furthest along that could positively impact the margin go forward?

Yes. Dana. That's a good question. I would say it's early innings in the value unlock from a demand and data-driven operating model. Then we have the benefit of having market-leading strength already in Europe, and in growing, accelerating from strength in Asia that we have -- the benefit we have is that we have 2 brands and a global presence and where we have a lot of proof points internally, where we are working closer as one team than any time before. And sometimes, one team is a slow gun, but for us, it's real that we say Trish is picking up the phone and calling Avery and Martijn and say, how are you working with the speed pipeline when it comes to this product? Or how -- so we are sharing knowledge, and we have the benefit of having the market-leading strength to tap into. Again, yes, there are differences between the American consumer, the Asia consumer, and the European, but the underlying value -- and that's why the framework is so important, and that's also why when we engage the top 100 leaders, it's around the framework. It's the same language. So we can say, somebody who is really good at full price wholesale in Europe is now going to join Trish's team to support on her team to just bring best practice and share that. So that's a little bit of how we are approaching it. But the early innings overall.

Will Gaertner from Wells Fargo. I was wondering if you guys could just talk a little bit about your store opening and closing plans? I think you mentioned you had 2,000 stores globally. How is that split between Tommy and Calvin, and what are your plans for openings and closings going forward?

Yes, absolutely. So in terms of the store portfolio, what you heard from every region is that we are optimizing over the coming 4 years. We're enhancing the physical store experience and optimizing the portfolio. And then we're standing slightly different in each region. But the underlying approach is the same, which is we are optimizing the store portfolio to make sure that in each geography that we have the right store exposure and balance between our stores, our wholesale account stores, and our online business. So that's going to be an ongoing work for us. That I'd say is the -- that's our approach. So we have strength -- why I was hesitating a ton there was like we have strength in the store portfolio. Stores, to Martijn, I believe you shared it, and Tom, you shared it, the store experience is going to be really important, even though we lean into digital first, because it's going to be increasingly about connecting digital with the stores. And that's why we also, from an investment perspective, as Zac showed, that we're going to invest in the stores. And as Trish shared, we have underinvested in our outlet fleet in North America. That won't work. We will lean in to invest in making sure that our outlet fleet in North America is on par with the strength of the brands in the eyes of the consumer.

Alex Straton from Morgan Stanley. I just wanted to drill down quickly into your owned e-commerce business. I think some of the stats you gave were, I think it was owned as well as the wholesale. So I just want to understand what is it as a percentage of your total revenue? Whether that varies by geography? And then, how you think about your owned digital strategy versus your wholesale digital strategy? If it's different, or what you have there?

Yes. No. Super relevant question. And I would say where we are leading in the companies in Europe. So perhaps, Martijn, you can just share a little bit of how we are growing both and the different roles they play.

Yes. Yes. So what I shared in my presentation is that our owned and operated e-commerce, that's the area where we're going to heavily invest, and we want to continue to accelerate the growth in that channel. And that's also the platform that connects with our stores, so it very strongly links to that D2C strategy, to the segmentation strategy, to that elevation strategy. So that's important to invest, and we have the proof points that we can invest in it and we should drive that business further up. The partner side of it, so the pure players and the third-party dot-coms, there we have to be much more strategic. There's huge growth opportunity, but there is a risk that you lose grip of it, especially the third-party marketplaces. It's like everybody can offer our product there, so we need to be strategic there, we need to control that, and that can be through different partnership models. But also that product segmentation is super important. So it's a completely different approach, but the opportunity for both is equally big. So our third-party dot-com and our own dot-com will grow at the same pace and will both contribute significantly to our overall digital penetration.

Bob Drbul from Guggenheim. I guess 2 questions, really. The first one, in North America, the distribution changes that you're talking about, can you just talk about the Kohl's opening and sort of how that's gone, and sort of the future of the Macy's relationship just in terms of any changes that you're making, I guess, in either of those 2? And then the second piece of it for Zac is on the tax rate. I was wondering if we could just sort of unpack it a little bit more based on when you think about the North America -- I think you commented that North American -- the profitability in North America, the game plan in North America over the next several years to get the 1,000, 1,100, basis points of profitability. How much of your longer-term tax rate is relying on North America getting to sort of a mid-teens type operating profit? And are there any other plans around the Netherlands expiration? Can you go back and get a new relationship? Will you consider moving through Switzerland? Like, just in terms of some of the buckets to help us to get you to a more competitive longer-term tax rating and that would be great.

So 2 very different questions. We'll try to start with the first. I mean, both I'll hand it over to you, Trish, to give some more texture. But great relationships with Macy's, great relationships with Kohl's. We have tested Kohl's, and I'm sure you can share a little bit, Trish. But both are starting to really step up in terms of true omnichannel, digital first. And again, long-standing, great partnership.

Yes. Strong partnerships, both emerging and growing e-commerce as well. So we'll continue to tap into that as that's one of the tenets of our strategy as well. Those accounts, particularly, we're starting that product segmentation that we talked about as well. So less overlap, but that's part of the greater growing the wholesale distribution, not being as reliant potentially on the value channel and sort of working with our really strong partners and accounts to grow not only brick-and-mortar, but their digital as well.

And we are very much aligned with our key wholesale partners. So take Macy's and Kohl's as an example about the importance to do it in a brand accretive way and to do it with pricing power. And that's why it's so exciting to see how our teams are coming together and really making that happen. So from there to tax. Zac.

All right. So on the tax piece, and I promise I'm not going into too much detail and put everyone to sleep here. But I think what we see overall with the U.S. tax changes in 2018, there was a lowering of the rate overall, but one of the underlying elements was for companies that have unbalanced, ultimately more foreign earnings than local, there's a mechanism inside of there to try to capture some of those taxes that happen overseas. And I think it was not targeted at companies like us that are unbalanced for right now operationally from a profitability perspective, but we get caught up in that. So I think as Trish and the team drive back to profitability, which we're confident in, and it doesn't have to get all the way back to equal with the rest of the world, that will drop the rate from the high 20s, almost 30% down to 25%. So that piece, actually, we're very, very confident in that element of things getting to there. Beyond that then, as you talk about things like the Dutch ruling and things of that nature. Overall, I think that we take a look at tax reform around the world with the OECD rules, the idea of Race to Zero, those days are over, right? And so I think overall, we expect -- so extending some of the programs that were in place before may be difficult. But that doesn't mean that we're sort of throwing our hands there and saying mid-20s, is it? Absolutely not. And that's why I said tax planning over that window, more towards the back end of the plan that we've laid out here, working with -- determining where it is that where our value-add processes are, and this will tie to a lot of sort of the work that Stefan was talking about earlier in terms of how do we build that entire value chain and where is that work most efficiently done. We believe will drive opportunities for us to take advantage of more favorable rates around the world, which we think will get us down into like I said, the low to mid-20s there at that point. So I think really it's the 2 pieces. One, is earlier, and we're highly confident in the other one longer term, still confident in, but a bit more work, and that's why the timeline is a bit longer. But we will end the plan here with driving rates significantly lower than what we're experiencing in 2022.

Chris Nardone from Bank of America. Can we talk about China for a little bit? I think it's 6% of the business. Do you have a plan to, I think, grow that 5x from 2019. Can you just talk about how you're going to increase brand awareness above that 50% level? And just talk about the competitive dynamics, right? A lot of your competitors are kind of going through the same strategy. So what gives you confidence that you can win in that region over the medium term?

Thank you. Tom, you have been doing with the team such an incredible job in the most difficult of macro, of COVID situation that we are still dealing with. And so underlying that, do you mind sharing a little bit about what our approach of driving digital first, the partnerships with the big JD.com, Tmall, Douyin, et cetera, and just give some texture? Because I know you're deep into that.

Sure. I think first and foremost, we are winning with our product, especially hero products. Our focus on increasing the share, because it's a full price selling, so that's where we are really seeing traction and also early proof points. When it comes to digital third-party players, they are also fact based and we can see and track all those big consumer moments on Double-11, on 6/18, on the Chinese Valentine's Day. All the brands do participate and they do get the ranking, and we're always coming up on top. So already, we are seeing the proven point, the track records. And as you mentioned, our brand awareness in China is still low really compared to our potential. And if we compare to the other marketplace where Australia is in the 80s and 90s, Europe is in the 90s, China in the 50%. So if we start moving, improving our brand awareness, our growth potential is huge, huge in China that we haven't really -- and as I mentioned earlier, we're only scratching the surface where we are at this moment. And more connected to our consumer, the Gen Z and the millennials, the new Douyin, the new TikTok, it's actually making the Tmall and JD.com very nervous, and our partnership with Douyin has really proven to be so successful in the early stages that we believe that share not only with our brand, but in the whole market share in China, is going to change the dynamic in the whole digital landscape in China.

Tom Nikic with Wedbush. I want to ask about the tourism recovery in North America. Are we assuming that the tourism business recovers completely? And how do we think about the pacing of that? And following up to that is like, is there any concern that part of your international strength the last couple of years has been specifically because of the lack of tourism in North America? And that as foreign visitors return to the U.S., maybe it cannibalizes some of your international sales?

Absolutely. Two really important questions. The first one, Zac, do you want to...

From a pacing perspective, we've tried to build the plan as we presented in a way that was not overly aggressive. We wanted to provide a balanced plan. One of those assumptions we took was the return of international travelers. So we've assumed the international traveler doesn't really return in full until toward the end of '24, actually into '25. Just to make sure that we're not -- we're focusing on the rest of the core tenets of that plan, the domestic consumer and product for North America. And if that comes back early, that's a windfall. But at the end of the day, making sure that we're pacing it with what is likely to be as we're seeing with COVID-driven disruptions, lagging. So I think our assumptions are very much in line with a relatively conservative assumption of into '24, into '25, and late '24 to '25.

And from a -- my management team will smile, because I'll ask the second question quite often to them as well, calling Martijn sometimes late his time, because I don't think about your -- even though my European background and you're polite, so after a while, you remind me, that it's late. But what we have seen historically is that the tourism business in North America from European and Asian tourists and also big South American, it's been accretive. So we haven't seen -- what we have seen is that when that has been strong in North America, we have been equally strong in the regions. But that's -- I have called you and asked the same question 3 times. But you answered the same every time.

Yes. And we -- I have to say yes now. No. So when COVID started, we actually -- we tried to analyze data to understand, okay, how big is the impact actually for Europe? Also for Europe missing international tourism. Because we also have North America, we have South America, we have Asia, also traveling a lot to Europe. So there's actually quite a lot of key cities in Europe that also have a level of dependency on tourism, and most notably, in the capitals around Europe. So those stores were heavily impacted. And there, we see now slowly also getting an improvement from return tourism in those cities as well. But yes, overall, we don't feel now that when the markets will open up that net-net that will result in a negative for Europe.

It's very consistent with the 3 other times I asked the question. No, because I also don't think -- given that I'm based here, I don't think about the big cities and the tourism that normally comes into Europe is not coming in, and that will come back. So plus when we go back and look at the data overall, we see that we have been able to drive performance across all regions. Yes.

Janet [indiscernible] Research. I wanted to ask a question about the supply chain in North America, both from a near-point standpoint, what's happening with some of the backlog you have and how that may be resolved in the near term? And then secondly, as you elevate the product and move away from the value chain, just wondering if there were any structural upgrades that may present a near-term challenge to elevating the product and getting it to where you want it to be?

So thank you, Janet. So I'll take the global supply chain question, and then I'll hand it over to you, Trish, for the North America one. So on a supply chain basis, for North America, we have been increasingly unproportionately hit because of COVID-related sourcing disruption and then logistics disruption connecting to those sourcing countries that serve North America more than other countries. So we are seeing that disruption now, and we are not expecting it to be fully back until end of this year, so this is something that we gradually have to work ourselves out of. It doesn't help that we have long lead times, so that's where the work that we are doing with cutting lead times, a cross-functional go-to-market work where we are -- because if you're already having long lead times, you get extra exposed by this. So it's something that is we are working through. It's going to take some time, and we see it being better in the back half than the first half.

Yes. And then, Janet, when we talk about elevation, it's expanding the volume that we do in sort of a Macy's or a top-tier account. I don't want the perception to be elevation meaning that we're raising prices significantly. So it's the elevation, it's the expansion in wholesale partners and wholesale partners dot-com and our own dot-com is a pinnacle experience for the brand. But yes, I just -- when we say elevation, we're talking about elevating experiences. I just want to be clear with that, too.

And then also building on that, what Trish is sharing, from my Ralph Lauren experience. So what you can see now, Ralph is doing really well. They are really clear in having a lot of those most essential products true to their brand DNA, and we still have a lot of value to unlock by being as disciplined. So they're a little bit ahead of us. We are in North America. We have the benefit of once we execute what we have set out to do, we know with our brand value mix that we have the proof point from Europe that we can outperform them and outperform on the highest level. In Europe today, we perform, from a market growth perspective, with the best sports brands. So that's why, again, when we are walking stores digitally, physically and seeing, okay, we have X percent left to do there. And that's why I'm so excited, and Trish is so excited about like unlocking this step by step.

It's Michael Binetti. Just a quick follow-up here from the earlier question. I guess one for Martijn and one for Zac. Martijn, on potential for recession in Europe, hard to think of a company with a better pulse in Europe. How should we think alongside you about the range of scenarios, if we do see that unfold in the macro relative to your high single-digit growth rate that you've talked about in that plan today? And then, Zac, on the size of the buyback with the stock at about 8x earnings today, I think the timing of the buyback could be very, very significant, whether you do it today or whether you do it in the future. Maybe you could just help us think about the pace that you think is appropriate? Because I mean, I think it's safe to say if you hit these numbers and if you believe in these, the stock is probably not going to be here for long. I'd love to know how you think about the value of returning that to shareholders today versus pacing it slowly and giving yourself flexibility on earnings over time.

Okay. Should we start there? Give us some fresh [ insight about that ].

Of course, I mean you saw the plan has been laid out from there. You compare that to where we're valued in the marketplace today. We obviously agree that at this point in time, the plan that we're seeing should show significant growth at that point. I think we're not laying out sort of a prescriptive blow-by-blow on timing, because we want to make sure that we leave ourselves the flexibility to adapt accordingly from there. But this business model, not just in the future, the business model today generates substantial cash flow as well. And so I think that's why getting the timing of the extension of the program and the increase done now, we've not even run through all of the programs that we have in place, but just wanted to make sure we expanded it from there at that point in time to make sure that we could take advantage of whether that's in the short term here, we see an opportunity, or whether that's over the medium or long term or there at that point in time.

Yes. And I think the discussions around potential recession for Europe, I think, are clear indeed. The concerns, I think, are, to a degree, also real. From our brand performance, what I'm seeing is that the interactions that we're having with the brand, the transactions with the customers, the transactions that we're having, we're seeing that consumer confidence still when it comes to our brands. And I think that if I also look back in time, because of that strong position of our brands in Europe, we've always been that go-to brand. We are known for the quality. So even in times of recessions over the past decade, our brands have always performed really, really strong. So if the recession worsens and that comes into play, what will be the effect? Difficult to say. What I do know is that our brands have always done really, really well under those circumstances.

And when we travel in Europe together, and Avery, this might be a question that ties into the brand, is that you say the -- what resonates with me is that the positioning of aspirational and accessible, and that feeling of great value, like a great product at a really great value. It's not the lowest price, it's a great value, and in recessionary times that you really go to great value. So you work hard with that in terms of giving the -- always delivering the product and the price to get that value. I don't know if there is something you want to say.

No, I think that, that focus on really leading through the premium space has been a sweet spot for Tommy and also for Calvin in the European region and globally. So while we're leaning more currently into the aspirational aspects, because that really drives consumer demand and we believe that we need to show up in the most premium way in our products and experiences, it's always with that balance in mind. And because the core of our businesses is in the essential core products that are quite timeless during more difficult economic times, there's still kind of longer-term value in those purchases that we think really shores us up should the macroeconomic conditions continue to change.

Paul Carney at Barclays. Two questions. First, I was wondering if you can provide longer term what you think the margin differentials will be between the channels of owned and operated digital, owned stores, and the wholesale channel after it has kind of [ picked ] up? Second is back to licensing businesses, 2 parts. One, are you doing anything differently with your license businesses to ensure that they're kind of coming along with you on this journey to clean up the channels? And then two, do you still view it as a long-term opportunity to take some of these businesses back in-house?

You want me to take the first one?

Yes.

So I think from a channel perspective, and I'll go back to what I had said earlier, I mean, at the end of the day, the plan that we looked at earlier delivers strong profitability across all the channels: Digital, wholesale and stores. And I think that's actually what's most important, right, as we build a plan here. It's not sort of, relatively speaking, all of them will be growing and all of them will be growing to points of strength. Because I think what's most important for us to forecast where the customer is going to be 3, 4 years from now in terms of how they're shopping or where they're shopping. I think we've got a hypothesis, but that's likely to be fluid. From there I think what's most important is that we're able to satisfy them with the strategy we have, wherever they are, and then coming out from there is an economic model that allows us to drive profitable growth across all of them. And I think that's really what we've delivered here across, again, in each of the regions -- in each of the channels inside the regions themselves as well.

And to the licensing question. It's similar to the distribution question in terms of what's your distribution strategy, we always answer, follow the consumer. So when it comes to the licensing strategy, it's the same strategy. That's the most important. We are end consumer focused, winning with the end consumer in a brand accretive way. So yes, we are, as we mentioned, both Trish and I are taking every licensee on this journey. Saying, here's what we are setting out to drive the brand. How can you help us deliver the best products in a brand accretive way? So that work has already started. So they have actually got a preview to what you see now. They got a preview a month ago?

Yes, early March. But to answer your question, are we doing anything differently? That in itself is the biggest change, actually bringing our licensees along on the journey, explaining the plan, having that 2-way dialogue about how we're going to connect on it. So that is -- it's a very new approach.

And this long-term growth plan is a long-term growth plan that's set out to win with the consumer in a sustainable way across all channels: Licensed, owned and operated, and from that comes the power of once we execute that with discipline, then that shows up with the consumer and then we start to win and it becomes win-win partnerships. And like we see, when we lean into digital with Macy's, digital with Kohl's, Amazon, Zalando, About You. So it's being clear. We see so much strength of being clear on this is the path for us to win with the end consumer and unlock that strength. Again, there is not a single person you can speak within social setting in North America that doesn't have a perspective on Calvin and Tommy and has some underlying brand love. And that's -- having my experience of a number of now iconic American brands, like when you have that, that's like, impossible to replicate. And then as soon as you turn the knob on more relevant products, more engagement, better balance in the distribution, the consumer follows. Yes, we are 27 seconds away from finishing our 45-minute Q&A. So we'll, of course, stay back and be available. And for those of you who are here in person, there are products, hero products, represented right next to here. And management team will be here and you can continue to ask us questions. So with that, I actually feel like we -- it's not what I feel, the timer says, we are out of time, but I just want to again thank you all for joining us. This is the beginning of a really exciting journey. We love to take you on it. And next step is we'd just join you and follow up in the product section area. Okay. Thank you very much.