INVESTOR UPDATE DECEMBER 2015

Transcription

1 INVESTOR UPDATE DECEMBER 2015

2 SAFE HARBOR We (PVH Corp.) obtained or created the market and competitive position data used throughout this presentation from research, surveys or studies conducted by third parties (including, with respect to the U.S. department and chain store rankings, the NPD Group/POS Tracking Service), information provided by customers and industry or general publications. The specific U.S. department and chain store rankings we reference are on a unit basis. Industry publications and surveys generally state that they have obtained information from sources believed to be reliable but do not guarantee the accuracy and completeness of such information. While we believe that each of these studies and publications and the other information we receive or review is reliable, we have not independently verified such data and we do not make any representation as to the accuracy of such information. The information in our presentation contains certain forward-looking statements which reflect our view as of December 2, 2015 of future events and financial performance. These forward-looking statements are subject to risks and uncertainties indicated from time to time in our SEC filings, as more fully discussed in our safe harbor statements and risk factors found in our SEC filings. These risks include our right to change strategies, objectives and intentions; our need to use significant cash flow to service our debt obligations; our vulnerability to weather, economic conditions, fuel prices, fashion trends, loss of retail accounts, epidemics, war, terrorism, scarcity of raw materials and other factors; our reliance on the sales of our business partners; and our exposure to the behavior of our associates, business partners and licensors. As such, our future results could differ materially from previous results or our expectations as of December 2, We do not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimate regarding revenue or earnings, whether as a result of the receipt of new information, future events or otherwise. This presentation also includes non-gaap financial measures, as defined under SEC rules. Reconciliations of these measures are included at the end of this presentation, as well as in the SEC filings noted in this presentation. Our SEC filings are available on our website at and the SEC s website at 2

3 PVH BY THE NUMBERS PVH HISTORY ESTABLISHED IN 1881 OUR 2014 TOTAL REVENUES WERE OVER $8.2 BILLION 30,000+ ASSOCIATES GLOBALLY 700,000+ PEOPLE REACHED THROUGH OUR SUPPLY CHAIN WE OPERATE IN OVER 20 COUNTRIES AND SPEAK OVER 40 LANGUAGES PVH FOUNDATION (THE COMPANY S PHILANTHROPIC DIVISION) HAS BEEN IN EXISTENCE FOR 30+ YEARS 40% 20,000+ POINTS OF SALE REVENUE GENERATED OUTSIDE OF NORTH AMERICA 3

4 WE LIVE BY OUR CORE VALUES We live by our core values which embody who we are, guide our decisions and inspire us 4

5 CSR IS CENTRAL TO HOW WE CONDUCT BUSINESS We recognize the GREAT RESPONSIBILITY AND OPPORTUNITY TO MAKE POSITIVE IMPACTS from source to store by EMPOWERING THE PEOPLE WE WORK WITH, PRESERVING THE ENVIRONMENT AND SUPPORTING OUR COMMUNITIES CSR IS INSTILLED IN OUR ORGANIZATION and applies across all stages of our operations and supply chain, starting with our senior leadership and Board of Directors 5

6 THREE DISTINCT BUSINESSES, ALL POSITIONED FOR GLOBAL GROWTH 2014 Global Retail Sales: $8.1 BN Revenues: $2.9 BN EBIT Margin*: 14.0% 2014 Global Retail Sales: $6.7 BN Revenues: $3.6 BN EBIT Margin*: 14.2% TOP OBJECTIVES ACROSS PVH 2014 Global Retail Sales: $3.7 BN Revenues: $1.8 BN EBIT Margin*: 6.2% Continuing to invest in the product, presentation and marketing of the Calvin Klein and Tommy Hilfiger brands. Continuing to invest in our global operating platforms to support our growth strategies, including investments in our digital commerce systems, platforms and global supply chain. Significantly improving operating results of the Calvin Klein European business over the next three years. Expansion across high growth markets in Asia Pacific and Latin America for Tommy Hilfiger and Calvin Klein. Investing in talent, developing our people and expanding learning and development opportunities across PVH. Assuming more direct control over various Calvin Klein and Tommy Hilfiger licensed businesses in areas where we believe that we can maximize our core competencies to increase sales and our overall profitability. Generating solid free cash flow, which we will use strategically to drive sustainable long-term growth and stockholder returns. * Figures exclude non-recurring and one-time items. Refer to Appendix for GAAP reconciliations. 6

7 PVH IS A GLOBAL LEADER IN THE APPAREL INDUSTRY With over $8.2 BN in revenues, PVH is one of the largest global apparel companies in the world $ Revenue ($ in billions) $8.2 $7.6 $4.8 $4.8 $4.4 $4.1 $3.5 $3.4 $2.4 $2.1 $0.3 Source: Factset. 7

8 OUR 2013 WARNACO ACQUISITION EXPANDED OUR FOCUS ON CALVIN KLEIN AND TOMMY HILFIGER Calvin Klein & Tommy Hilfiger currently account for over 75% of PVH s revenues and ~90% (1) of PVH s EBIT Total Revenue by Business (2014) 43% 22% 50% 11% (1) EBIT by Business (2014) 35% 39% TOMMY HILFIGER CALVIN KLEIN HERITAGE BRANDS (1) Figures exclude non-recurring and one-time items and corporate expenses. Refer to Appendix for GAAP reconciliations. 8

9 PVH HAS SIGNIFICANT PRESENCE IN ASIA PACIFIC AND LATIN AMERICA Asia Pacific and Latin America now account for ~12% of PVH s revenues and over 20% (1) of PVH s EBIT 10% 2% 5% Total Revenue by Region (2014) 28% 16% (1) EBIT by Region (2014) 60% 26% 53% North America Europe Asia Pacific Latin America Note: North America includes Canada and Mexico; Europe includes the Middle East and Africa; Asia Pacific includes Australia and New Zealand; Latin America includes South America, the Caribbean and Central America. (1) Figures exclude non-recurring and one-time items. 9

10 PVH GLOBAL STORE COUNTS BY REGION (AS OF NOVEMBER 1, 2015) EUROPE (2) NORTH AMERICA (1) TOTAL STORES: ~615 Tommy Hilfiger: ~245 Calvin Klein: ~195 Van Heusen: ~175 LATIN AMERICA (3) TOTAL STORES: ~310 Tommy Hilfiger: ~205 (4) Calvin Klein: ~105 (5) TOTAL STORES: ~1,480 Tommy Hilfiger: ~775 Calvin Klein: ~705 ASIA PACIFIC (6) TOTAL STORES: ~2,230 Tommy Hilfiger: ~550 Calvin Klein: ~1, Includes the U.S., Canada and Mexico. 2. Includes the Middle East and Africa; includes concession locations and franchisee and distributor stores. 3. Includes Central and South America and the Caribbean. 4. All locations are licensee stores. 5. Includes franchisee and distributor stores. 6. Includes concession, franchisee and licensee stores. 10

11 $ Millions A RICH HISTORY OF SALES AND EARNINGS GROWTH $9,000 $8,000 $7,000 Revenue & EPS Growth ( ) $5.44 $6.58 $7.03 $8,216 $7.30 $8,241 $8.00 $7.00 $6.00 $6,000 $4.31 $5.00 $5,000 $4,000 $3,000 $2,000 $1,000 $3.21 $2.99 $2.79 $2.62 $1.88 $5,891 $6,043 $1.37 $4,637 $0.98 $2,425 $2,397 $2,399 $1,548 $1,641 $1,909 $2, $4.00 $3.00 $2.00 $1.00 $0.00 Note: figures not restated for change in accounting for retirement plans and figures exclude non-recurring and one-time items. Refer to Appendix for GAAP reconciliations. 11

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13 TOMMY HILFIGER BRAND OVERVIEW 2014 GLOBAL RETAIL SALES: $6.7 BN 6% 10% North America Latin America (1) (2) 42% 42% Asia Pacific Europe (4) (3) One of the world s leading DESIGNER LIFESTYLE Brands Celebrates the essence of CLASSIC AMERICAN COOL STYLE Strong GLOBAL BRAND AWARENESS (1) North America includes Canada and Mexico. (2) Latin America includes South America, the Caribbean and Central America. (3) Asia Pacific includes Australia and New Zealand. (4) Europe includes the Middle East and Africa. 13

14 TOMMY HILFIGER BRAND PORTFOLIO Target Customer 25 to 40 years old 25 to 40 years old 18 to 30 years old 25 to 40 years old Brand Aesthetic Casual sportswear for men, women and kids Emphasis on preppy with a twist classics Sophisticated, sharp style Emphasis on suits and tailored shirts Denim and related separates Classics with a modern edge The brand s most directional styles for women Includes runway pieces Distribution Domestically and internationally Owned retail stores, wholesale channel and our e-commerce websites Domestically and internationally Select Tommy Hilfiger stores and wholesale partners, and our e-commerce websites Primarily sold outside North America Owned retail stores, wholesale channel and our e-commerce websites Domestically and internationally Select Tommy Hilfiger stores and wholesale partners, and our e-commerce websites 14

15 TOMMY HILFIGER REGIONAL DISTRIBUTION OF OUR BRAND PORTFOLIO North America Europe Asia Latin America 15

16 TOMMY HILFIGER GROWTH OPPORTUNITIES PRODUCTS CHANNELS MARKETS GROWTH REGIONS WOMENSWEAR MEN S TAILORED RETAIL ASIA PACIFIC LATIN AMERICA UNDERWEAR ACCESSORIES E-COMMERCE WHOLESALE 16

17 TOMMY HILFIGER GLOBAL MARKETING & COMMUNICATIONS Approximately $150 million in global annual marketing spend Globally recognized The Hilfigers advertising campaign celebrates our Classic American Cool heritage Included in WGSN s Top 5 Luxury Campaigns of Spring/Summer 2015 (WGSN is a leading trend forecasting consulting firm) One of the most elaborate & widely covered runway shows of New York Fashion Week over 2,000 reviews by global press each season Support for key category growth: International tennis star Rafael Nadal introduced as global brand ambassador for underwear, tailored and fragrance American street style icon Olivia Palermo and her husband, model Johannes Huebl, were guest editors for the Tommy Hilfiger Summer 2015 collections; this should drive awareness for womenswear, a key growth area Investments in high profile store openings in key fashion cities: Capucines Street, Paris; Mitte, Berlin; Seoul, Korea 17

18 TOMMY HILFIGER GLOBAL MARKETING & COMMUNICATIONS Investing in Market-Leading Digital Innovation Digital Showroom: An industry first, taking the traditional wholesale buying process to the next level Digital Flagship: Omni-channel integration and e-commerce expansion E-commerce Scope: Our tommy.com websites ship to 30+ countries Democratization of Fashion: Using social media partnerships and digital technology to engage consumers around the fashion shows Industry Leaders: Ranked #8 on the 2014 L2 Digital IQ Index: Fashion Spring 2015 fashion show activations featured in Twitter Business Case Study 18

19 TOMMY HILFIGER BUSINESS OVERVIEW & FINANCIALS Tommy Hilfiger Business Summary 2014 Reported Revenues: $3.6 BN International Revenues: ~$2.0 BN North America Revenues: ~$1.6 BN 2014 EBIT Margin (1) : 14.2% (1) EBIT margin excludes non-recurring and one-time items. Refer to Appendix for GAAP reconciliation of EBIT. 19

20 TOMMY HILFIGER INTERNATIONAL OVERVIEW Europe represented ~50% of Tommy Hilfiger global reported revenues in 2014 Healthy brand with premium positioning overseas Localized management differentiates the brand from peers Continues to experience solid multi-year business trends, despite the fragile economic environment 2014 EUROPE REVENUES BY DISTRIBUTION (1) MODEL 61% 39% WHOLESALE RETAIL Operates the largest e-commerce business within PVH; Tommy Hilfiger s European website experienced ~10% sales growth in 2014 Marketing efforts focused on digital and social media Tommy Hilfiger International EBIT margins reached peak levels in 2014 of 13.6% Japan: ~5% of Tommy Hilfiger global reported revenues in 2014; Repositioning in progress, with early signs of improvement (1) Retail and wholesale split excludes licensing revenues. DÜSSELDORF, GERMANY 20

21 TOMMY HILFIGER NORTH AMERICA OVERVIEW North America accounted for ~45% of Tommy Hilfiger global reported revenues in 2014 Strong retail presence of ~245 stores (primarily outlet stores) Continued wholesale sales growth through key partners: U.S. Exclusive partnership with Macy s for sportswear 2014 REVENUES BY DISTRIBUTION (1) MODEL 28% 26% 72% WHOLESALE RETAIL Canada Retail partnership with Hudson s Bay Company Elevation initiatives are paying dividends, with continued EBIT margin expansion in 2014 Improvements in quality, styling and in-store presentations Investments in e-commerce and digital marketing driving brand relevance and consumer engagement E-commerce experiencing solid growth, driven by improvements to site design and technology, as well as social media efforts (1) Retail and Wholesale split excludes licensing revenues. 21

22 TOMMY HILFIGER LICENSED BUSINESSES OVER TIME, WE LOOK TO ASSUME MORE DIRECT CONTROL OVER VARIOUS LICENSED REGIONS ASIA PACIFIC RETAIL SALES: ~$500MM LATIN AMERICA & MEXICO RETAIL SALES: ~$550MM JOINT VENTURE CHINA INDIA AUSTRALIA BRAZIL DISTRIBUTOR INDONESIA VIETNAM PHILIPPINES LICENSE KOREA HONG KONG TAIWAN MEXICO LATAM MALAYSIA SINGAPORE 22

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24 CALVIN KLEIN BRAND OVERVIEW 2014 GLOBAL RETAIL SALES: $8.1 BN 4% 18% North America (1) 58% 20% Latin America (3) Asia Pacific (2) 6% 4% 19% 19% Europe (4) 52% ONE OF THE BEST KNOWN DESIGNER NAMES IN THE WORLD. PROVOCATIVE, MODERN, ICONIC DESIGN POSITIONING. STRONG GLOBAL APPEAL. (1) North America includes Canada and Mexico. (2) Latin America includes South America, the Caribbean and Central America. (3) Asia Pacific includes Australia and New Zealand. (4) Europe includes the Middle East and Africa. 24

25 CALVIN KLEIN BRAND OVERVIEW CALVIN KLEIN COLLECTION offers halo and inspiration to all levels of the brand, which are leveraged across multiple products, channels and price points. CALVIN KLEIN (white label) reflects the complete lifestyle of Calvin Klein offering fashion that is every bit as exciting as it is essential. 25

26 CALVIN KLEIN REGIONAL DISTRIBUTION OF OUR BRAND PORTFOLIO Calvin Klein Collection Calvin Klein (platinum label) Calvin Klein (white label) Calvin Klein Jeans Calvin Klein Underwear Calvin Klein Performance North America Europe (Outlet) Asia (including Joint Ventures) (Australia & India) Latin America Distributors (China) Brazil 26

27 CALVIN KLEIN GROWTH OPPORTUNITIES PRODUCTS CHANNELS MARKETS GROWTH REGIONS EUROPE JEANSWEAR UNDERWEAR STORES E-COMMERCE ASIA PACIFIC LATIN AMERICA SPORTSWEAR ACCESSORIES TRAVEL RETAIL SHOPS IN SHOPS 27

28 CALVIN KLEIN GLOBAL MARKETING & COMMUNICATIONS Continuing to Drive the Calvin Klein Brand Forward through a focus on global elevation, cohesion and consistency 102 Global Magazine Covers In 2014 (~$13 mm global ACE value 43+ billion impressions in 2014 ($610+ mm global ACE value) Over $400 million in global annual marketing spend Five Key Objectives: 1. Drive brand relevancy with emphasis on expanding consumer reach 2. Present the brand to consumers in a globally consistent, elevated manner 3. Consumer engagement through digital (media & commerce) 4. Develop world-class product offerings, with an emphasis on innovation 5. Grow high-potential businesses 28

29 DRIVING CONSUMER ENGAGEMENT THROUGH INNOVATIVE MARKETING CAMPAIGNS Justin Bieber featured as the new face of Calvin Klein Jeans and Calvin Klein Underwear (Spring 2015) Kendall Jenner featured in the #mycalvins Denim Series campaign in Spring 2015 and in The Original Sexy campaign in Fall 2015 Calvin Klein Jeans racy Meet Us campaign for Fall 2015 showcases the digital dating landscape L2 ranked Calvin Klein #9 on its Digital IQ Index: Fashion in 2014 Calvin Klein received the CLIO Grand Image Award Integrated Campaign for showyours.#mycalvins 29

30 CALVIN KLEIN BUSINESS OVERVIEW AND FINANCIALS SUMMARY FINANCIALS 2014 Reported Revenues $2.9 BN Despite the fact that we brought back in house our two largest apparel categories in 2013, over 50% of the brand continues to be from licensing 2014 EBIT Margin (1) 14.0% PAST TODAY Licensee 89% Licensee 57% NORTH AMERICA ~55% of 2014 Reported Revenues INTERNATIONAL ~45% of 2014 Reported Revenues Directly Operated 11% 2012 Directly Operated 43% 2014 (1) EBIT margin excludes non-recurring and one-time items. Refer to Appendix for GAAP reconciliation of EBIT. 30

31 CALVIN KLEIN NORTH AMERICA OVERVIEW Calvin Klein North America revenues accounted for ~55% of Calvin Klein global reported revenues in Healthy positioning across wholesale and retail channels REVENUES 56% 44% Solid e-commerce growth, driven by recent investments in website navigation and technology BY DISTRIBUTION MODEL WHOLESALE RETAIL Provocative 360 marketing campaigns are a driving force behind the brand, leveraging traditional and digital platforms Underwear and performance apparel experiencing strong revenue growth Sportswear and accessories posting healthy performance Jeanswear undergoing a turnaround; Investments being made in product, quality, styling, consumer engagement and product experience Note: Retail and Wholesale split excludes licensing revenues. 31

32 CALVIN KLEIN INTERNATIONAL OVERVIEW ASIA PACIFIC Represented ~20% of Calvin Klein global reported revenues in 2014 Distribution primarily through retail channel (concession shops and free-standing stores) Strong brand positioning across all categories EUROPE REVENUE BY REGION KOREA ~30% CENTRAL & SOUTHEAST ASIA PACIFIC ~30% CHINA ~40% LATIN AMERICA (PRIMARILY BRAZIL) Represented ~20% of Calvin Klein global reported revenues in 2014 Distribution ~55% retail / ~45% wholesale Biggest brand opportunity, as we turn around Calvin Klein Jeans; Calvin Klein Underwear is performing well and resonating with local consumers Represented ~6% of Calvin Klein global reported revenues in 2014 Distribution primarily through wholesale channel, with select retail stores as a complement Brand positioned well, with strong consumer relevance and acceptance across product lines 32

33 CALVIN KLEIN LICENSING CONTINUES TO BE IMPORTANT Top 7 Partnerships Represented Over 85% of Licensing Net Sales in 2014 Over time, we look to assume more direct control over various licensed businesses where we have core competencies FRAGRANCE WOMEN S APPAREL CK PLATINUM / ASIA COTY $1.4BN G-III $1.4BN CLUB 21 >$170MM FOOTWEAR EYEWEAR WATCHES + JEWELRY MEN S TAILORED LI & FUNG >$350MM MARCHON ~$140MM SWATCH ~$240MM PEERLESS ~$270MM 33

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35 HERITAGE BRANDS OVERVIEW & FINANCIALS SUMMARY FINANCIALS 2014 Reported Revenues $1.8 BN 2014 EBIT Margin (1) 6.2% HERITAGE BRANDS Underwear / Core Intimates Sportswear Dress Furnishings Swimwear LICENSED BRANDS INCLUDE: CHAPS MICHAEL Michael Kors Geoffrey Beene Michael Kors Collection Kenneth Cole Reaction Ryan Seacrest J. Garcia Ted Baker (1) Excludes non-recurring and one-time items. Refer to Appendix for GAAP reconciliation of EBIT. 35

36 HERITAGE BRANDS CATEGORIES: STRONG MARKET SHARE POSITIONS CATEGORY Neckwear UNIT SHARE > 50% Dress Shirts Woven Shirts Knit Shirts Bras and Panties 41% 17% 11% 10% (1) (1) (1) (1) Men s Swim 8% (1) Casual Pants 7% (1) (1) Based on percentage of 2014 unit volume in US Department and Chain Stores combined. 36

37 HERITAGE BRANDS STRATEGIES Brand management: We are committed to designing and marketing quality, trend-right products that offer great value to our customers Leveraging and enhancing each division s positioning in the market: DRESS FURNISHINGS: Maintaining and expanding our positioning as we introduce innovation and expand across channels SPORTSWEAR: Elevating our products through quality, detailing and fashion, while also expanding our distribution across our wholesale partners UNDERWEAR / CORE INTIMATES: Investing in our brand presentations at wholesale, and expanding our distribution, particularly within the mass channel and throughout Mexico SWIM: Continually innovating and extending our product offerings. Also, broadening the brand s customer base and relevance beyond the competitive swimmer population to reach more general fitness and recreational consumers Expanding distribution, particularly through wholesale expansion and e- commerce (third party) Growing internationally, including expansion within Europe, Asia Pacific, Latin America, Australia and New Zealand through licensed partners 37

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39 PVH FINANCIAL HISTORY Warnaco Acquisition CAGR Revenues $5,891 $6,043 $8,216* $8, % Gross Margin 52.0%* 53.8% 52.4%* 52.6%* + 60bps EBIT* $682 $752 $967 $ % EBIT Margin* 11.6% 12.4% 11.8% 11.2% -40bps EPS* $5.44 $6.58 $7.03 $ % * Figures exclude non-recurring and one-time items. Refer to Appendix for GAAP reconciliations. 39

40 PVH FINANCIAL HISTORY FREE CASH FLOW ($ in millions) GROSS LEVERAGE RATIO* $700 $600 $500 $400 $300 $200 $100 $0 61% $297 19% $110 77% $469 89% $ LTM 3Q15 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% x 2012 Pro Forma 3.3x 3.1x 3.1x LTM 3Q15 Free Cash Flow Free Cash Flow / Non-GAAP Net Income* 2012 Pro Forma LTM 3Q15 Debt paydown of ~$1.1 billion since the Warnaco acquisition NOTE: Free cash flow defined as cash flow from operations less capital expenditures, contingent payments to Mr. Klein and dividends. * Figures exclude non-recurring and one-time items. Refer to Appendix for GAAP reconciliations. 40

41 PVH CONSOLIDATED SUMMARY OF Q YTD PERFORMANCE Q YTD YoY Change Revenues ~$5.9BN reported +3% constant currency* -4% reported Non-GAAP Gross Margin* 52.0% Down 80bps Non-GAAP Gross Margin (constant currency)* 53.0% Up 20bps Non-GAAP EBIT* $659MM (including foreign currency impact) +4% constant currency -8% (including foreign currency impact) Non-GAAP EBIT Margin* 11.1% Down 50bps Non-GAAP EBIT Margin (constant currency)* 11.8% Up 20bps Non-GAAP EPS* $5.53 (including $1.02 negative impact primarily from foreign currency) +18% (when excluding the $1.02 negative impact primarily from foreign currency) * Refer to Appendix for GAAP reconciliations. 41

42 APPENDIX 42

43 GAAP to Non-GAAP Net Income Per Common Share Reconciliations ( ) GAAP to Non-GAAP Reconciliations Net Income (Loss) Per Common Share (Dollars and Shares in Millions, Except Per Share Data) Net Income (Loss) per Common Share Calculation GAAP Adjustments (1) Non-GAAP GAAP Adjustments (2) Non-GAAP GAAP Adjustments (3) Non-GAAP GAAP Adjustments (4) Non-GAAP Net Income (Loss) $ $ 6.4 $ $ $ $ 58.6 $ (12.1) $ 70.7 $ 14.7 $ (35.8) $ 50.5 Preferred Stock Dividends on Converted Stock $ Inducement Payment and Offering Costs Net Income (Loss) Available to Common Stockholders $ $ (7.7) $ $ 87.6 $ 16.3 $ $ 58.6 $ (12.1) $ 70.7 $ (5.3) $ (35.8) $ 30.5 Total Shares for Diluted Net Income (Loss) per Common Share 53.5 (3.2) (3.3) (0.7) 31.0 Diluted Net Income (Loss) per Common Share $ 2.64 $ 2.62 $ 1.70 $ 1.88 $ 1.14 $ 1.37 $ (0.18) $ 0.98 (1) Adjustments for 2006 represent the elimination of (i) a pre-tax gain associated with the sale by our subsidiary on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia; (ii) pre-tax costs resulting from the departure in February 2006 of our former chief executive officer; (iii) pre-tax costs associated with closing our apparel manufacturing facility in Ozark, Alabama in May 2006; (iv) the tax effects associated with these items; and (v) an inducement payment and offering costs incurred in connection with the voluntary conversion by the holders of our Series B convertible preferred stock of a portion of such stock into shares of common stock and the subsequent sale of a portion of such common shares by the holders. The inducement payment and offering costs resulted in a reduction of net income available to common stockholders for purposes of calculating diluted net income per common share. (2) Adjustments for 2005 represent the elimination of (i) an inducement payment and offering costs incurred in connection with the voluntary conversion by the holders of our Series B convertible preferred stock of a portion of such stock into shares of common stock and the subsequent sale of such common shares by the holders. The inducement payment and offering costs resulted in a reduction of net income available to common stockholders for purposes of calculating diluted net income per common share. (3) Adjustments for 2004 represent the elimination of (i) pre-tax charges related to debt extinguishment costs; (ii) pre-tax charges associated with the closing of certain outlet retail stores and exiting the wholesale footwear business and other related costs; (iii) a tax benefit associated with the realization of certain state net operating loss carryforwards; and (iv) the tax effects associated with these costs. (4) Adjustments for 2003 represent the elimination of (i) pre-tax charges related to integration costs associated with our acquisition of Calvin Klein; (ii) pre-tax charges associated with the impairment and closing of certain outlet retail stores and exiting the wholesale footwear business and other related costs; (iii) a pre-tax gain resulting from our sale of the minority interest in Gant Company AB; and (iv) the tax effects associated with these items. Calvin Klein integration costs consist of (a) the operating losses of certain Calvin Klein businesses, which we have closed or licensed, and associated costs in connection therewith and (b) the costs of certain duplicative personnel and facilities incurred during the integration of various logistical and back office functions. 43

44 GAAP to Non-GAAP Net Income Per Common Share Reconciliations ( ) GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) GAAP Adjustments (1) Non-GAAP GAAP Adjustments (2) Non-GAAP GAAP Adjustments (3) Non-GAAP Net Income per Common Share Calculation Net Income (Loss) $ 54.4 $ (236.0) $ $ $ 7.2 $ $ 39.1 $ (116.9) $ Total Shares for Diluted Net Income per Common Share Diluted Net Income per Common Share $ 0.81 $ 4.31 $ 2.92 $ 2.79 $ 0.75 $ 2.99 (1) Adjustments for the year ended January 30, 2011 represent the elimination of (i) the costs incurred in connection with our acquisition and integration of Tommy Hilfiger, including transaction, restructuring and debt extinguishment costs, short-lived non-cash valuation amortization charges and the effects of hedges against Euro to U.S. dollar exchange rates relating to the purchase price; (ii) the costs incurred in connection with our exit from the United Kingdom and Ireland Van Heusen dresswear and accessories business; (iii) the recognized actuarial loss on retirement plans; (iv) the tax effects associated with these costs; and (v) a tax benefit related to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions. (2) Adjustments for the year ended January 31, 2010 represent the elimination of (i) the costs incurred in connection with our restructuring initiatives announced in the fourth quarter of 2008, including the shutdown of domestic production of machine-made neckwear, a realignment of our global sourcing organization, reductions in warehousing capacity and other initiatives to reduce corporate and administrative expenses; (ii) the recognized actuarial loss on retirement plans; (iii) the tax effects associated with these costs; and (iv) a net tax benefit related principally to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions. (3) Adjustments for the year ended February 1, 2009 represent the elimination of (i) the costs incurred in connection with our restructuring initiatives announced in the fourth quarter of 2008, including the shutdown of domestic production of machine-made neckwear, a realignment of our global sourcing organization, reductions in warehousing capacity and other initiatives to reduce corporate and administrative expenses; (ii) fixed asset impairment charges for approximately 200 of our retail stores; (iii) the recognized actuarial loss on retirement plans; (iv) the operations of our Geoffrey Beene outlet retail division and the costs associated with the closing of such division; and (v) the tax effects associated with these costs. 44

45 GAAP to Non-GAAP Revenue and Gross Margin Reconciliations GAAP to Non-GAAP Reconciliations Revenue and Gross Margin (Dollars in Millions) 2014 (1) 2013 (2) 2011 (3) 2008 (4) 2003 (5) GAAP Revenue $ 8,241.2 $ 8,186.4 $ 5,890.6 $ 2,492.0 $ 1,569.0 Adjustments 30.0 (95.0) (21.0) Non-GAAP Revenue 8, , ,548.0 GAAP Gross Profit 4, , ,055.9 Adjustments Non-GAAP Gross Profit 4, , ,063.5 Non-GAAP Gross Margin 52.6% 52.4% 52.0% (1) Adjustments for 2014 represent the costs incurred in connection with the integration of Warnaco and the related restructuring and the exit of a discontinued product line in the Tommy Japan business. (2) Adjustments for 2013 represent the revenue reduction due to sales returns for certain Warnaco wholesale customers in connection with initiative to reduce excess inventory levels and the costs incurred in connection with the acquisition and integration of Warnaco and the related restructuring. (3) Adjustments for 2011 represent the costs incurred in connection with the integration of Tommy Hilfiger and the related restructuring. (4) Adjustments for 2008 represent the elimination of the operations of the Geoffrey Beene outlet retail division, which was closed. (5) Adjustments for 2003 represent the elimination of the operations of certain Calvin Klein businesses, which were closed or licensed. 45

46 GAAP to Non-GAAP Net Income Per Common Share Reconciliations ( ) GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) GAAP Adjustments (1) Non-GAAP GAAP Adjustments (2) Non-GAAP GAAP Adjustments (3) Non-GAAP Total Earnings Before Interest and Taxes $ $ (453.5) $ $ $ (91.2) $ $ $ (190.7) $ Net Income per Common Share Calculation Net Income (Loss) Attributable to PVH Corp. $ $ (437.5) $ $ $ (52.6) $ $ $ (121.2) $ Total Shares for Diluted Net Income per Common Share Diluted Net Income per Common Share $ 1.74 $ 7.03 $ 5.87 $ 6.58 $ 3.78 $ 5.44 (1) Adjustments for 2013 represent the elimination of (i) the expenses associated with our acquisition and integration of Warnaco and the related restructuring; (ii) the loss incurred in connection with the sale of substantially all of the assets of the Bass business, including related costs; (iii) the income due to the amendment of an unfavorable contract, which resulted in the reduction of a liability recorded at the time of the Tommy Hilfiger acquisition; (iv) the costs incurred in connection with our debt modification and extinguishment; (v) the interest expense incurred prior to the Warnaco acquisition closing date related to the $700 million of senior notes issued in 2012; (vi) the recognized actuarial gains on retirement plans; (vii) the tax effects associated with these items; (viii) nonrecurring discrete tax items related to the Warnaco integration; and (ix) a non-recurring discrete tax item attributable to an increase in our previously-established liability for an uncertain tax position related to European and U.S. transfer pricing arrangements. (2) Adjustments for 2012 represent the elimination of (i) the costs incurred in connection with our integration of Tommy Hilfiger and the related restructuring; (ii) the costs incurred in connection with our acquisition of Warnaco; (iii) the interest expense incurred prior to the Warnaco acquisition closing date related to the $700 million of senior notes issued in 2012; (iv) the recognized actuarial losses on retirement plans; (v) the tax effects associated with these costs; and (vi) the tax benefit resulting from the recognition of previously unrecognized net operating loss assets and tax credits. (3) Adjustments for 2011 represent the elimination of (i) the costs incurred in connection with our integration of Tommy Hilfiger and the related restructuring; (ii) the expense incurred associated with settling the unfavorable preexisting license agreement in connection with our buyout of the Tommy Hilfiger perpetual license in India; (iii) the costs incurred in connection with our modification of our credit facility; (iv) the costs incurred in connection with our negotiated early termination of our license to market sportswear under the Timberland brand and the 2012 exit from the Izod women s wholesale sportswear business; (v) the recognized actuarial losses on retirement plans; (vi) the tax effects associated with these costs; and (vii) the tax benefit resulting from revaluing certain deferred tax liabilities due to a decrease in the statutory tax rate in Japan. 46

47 GAAP to Non-GAAP Gross Debt / Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliations (2012 Pro Forma) GAAP to Non-GAAP Reconciliations Gross Debt/Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Dollars in Billions, Except Ratios 2012 PF (1) GAAP EBIT (2) $ 0.7 Pre-tax Non-recurring and One-time items (3) 0.3 EBIT excluding Non-recurring and One-time Items and Run-rate Synergies 1 Run-rate Synergies (4) 0.1 EBIT excluding Non-recurring and One-time Items 1.1 GAAP Depreciation and Amortization 0.1 EBIT excluding Non-recurring and One-time Items and Depreciation and Amortization $ 1.3 Total Debt $ 4.5 Gross Leverage Ratio 3.5 (1) Combined pro forma assumes the Warnaco acquisition was completed on the first day of PVH's 2012 fiscal year. (2) Amount includes assumed reduction in earnings due to the loss of the Chaps license. (3) Adjustments represent the elimination of one-time integration/transaction costs, restructuring costs and other items in (4) Reflects annual run rate synergies. 47

48 GAAP to Non-GAAP Gross Debt/Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliations GAAP to Non-GAAP Reconciliations Gross Debt/Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Dollars in Millions, Except Ratios Q Q LTM 2013 (4) 2014 (3) YTD (2) YTD (1) Q GAAP Net Income $ 144 $ 439 $ 388 $ 438 $ 489 Pre-Tax Non-recurring and One-time Items GAAP Interest and Taxes GAAP Depreciation and Amortization Interest Included in Non-recurring and One-time Items (1) Depreciation and Amortization Included in Non-recurring and One-time Items (83) (6) (4) (5) (7) Non-GAAP EBITDA as presented $ 1,198 $ 1,160 $ 895 $ 841 $ 1,105 Debt, Including Current Portion and Short-term Borrowings $ 3,970 $ 3,547 $ 3,367 Capital Lease Obligations Total Debt $ 3,995 $ 3,565 $ 3,384 Gross Leverage Ratio (1) Non-recurring and one-time items for the nine months ended November 1, 2015 represent (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the operation of and exit from the Izod retail business; (iii) the costs incurred principally in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; and (iv) the gain recorded on the equity investment in Kingdom Holding 1 B.V., the parent company of the Karl Lagerfeld brand. (2) Non-recurring and one-time items for the nine months ended November 2, 2014 represent (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the impairment of certain Tommy Hilfiger stores in North America; (iii) the costs incurred related to the sale of the Bass business; (iv) the costs incurred in connection with the amendment and restatement of our credit facility and the related redemption of its 7 3/8% notes due 2020; and (v) the net gain on the deconsolidation of certain Calvin Klein subsidiaries in Australia and New Zealand and the previously consolidated Calvin Klein joint venture in India. (3) Non-recurring and one-time items for 2014 represent (i) the costs incurred associated with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the exit from Izod retail business, including noncash impairment charges; (iii) the costs incurred in connection with our exit from a discontinued product line in the Tommy Hilfiger Japan business; (iv) the impairment of certain Tommy Hilfiger stores in North America; (v) the costs incurred related to the sale of the Bass business; (vi) the costs incurred in connection with the amendment and restatement of our credit facility and the related redemption of our 7 3/8% senior notes due 2020; (vii) the net gain on the deconsolidation of certain Calvin Klein subsidiaries in Australia and New Zealand and the previously consolidated Calvin Klein joint venture in India; and (viii) the recognized actuarial loss on retirement plans. (4) Non-recurring and one-time items for 2013 represent (i) the costs incurred associated with our acquisition and integration of Warnaco and the related restructuring; (ii) the loss incurred in connection with the sale of substantially all of the assets of our Bass business, including related costs; (iii) the income recorded due to the amendment of an unfavorable contract, which resulted in the reduction of a liability recorded at the time of the Tommy Hilfiger acquisition; (iv) the costs incurred in connection with our debt modification and extinguishment; (v) the interest expense incurred prior to the Warnaco acquisition closing date related to the $700 of senior notes issued in 2012; and (vi) the recognized actuarial gain on retirement plans. 48

49 GAAP to Non-GAAP Net Income per Common Share Reconciliations GAAP to Non-GAAP Reconciliations Net Income Per Common Share (Dollars and Shares in Millions, Except Per Share Data) Earnings Before Interest and Taxes Q YTD Q YTD 2014 GAAP Adjustments (1) Non-GAAP GAAP Adjustments (2) Non-GAAP GAAP Adjustments (3) Non-GAAP Calvin Klein $ $ (57.1) $ Tommy Hilfiger (5.3) Heritage Brands 71.8 (39.7) Corporate (390.3) (288.6) (101.7) Total Earnings Before Interest and Taxes (390.7) Tommy Hilfiger International $ $ (3.0) $ Net Income per Common Share Calculation Net Income Attributable to PVH Corp. $ $ (22.3) $ $ $ (73.2) $ $ $ (168.8) $ Total Shares for Diluted Net Income per Common Share Diluted Net Income per Common Share $ 5.26 $ 5.53 $ 4.66 $ 5.54 $ 5.27 $ 7.30 Negative Impact Primarily Related to Foreign Currency $ 1.02 Non-GAAP EPS Excluding Negative Impact Primarily Related to Foreign Currency $ 6.55 YoY Non-GAAP EPS Excluding Negative Impact Primarily Related to Foreign Currency 18% (1) Represents the impact on net income in the periods ended November 1, 2015 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the operation of and exit from the Izod retail business; (iii) the costs incurred principally in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; (iv) the gain recorded on the equity investment in Kingdom Holding 1 B.V., the parent company of the Karl Lagerfeld brand; (v) the tax effects associated with the foregoing items; and (vi) the tax benefits associated with non-recurring discrete items primarily related to the resolution of uncertain tax positions. (2) Represents the impact on net income in the periods ended November 2, 2014 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the impairment of certain Tommy Hilfiger stores in North America; (iii) the costs incurred in 2014 related to the sale of the Bass business; (iv) the costs incurred in connection with the amendment and restatement of our credit facility and the related redemption of its 7 3/8% senior notes due 2020; (v) the net gain on the deconsolidation of certain Calvin Klein subsidiaries in Australia and New Zealand and the previously consolidated Calvin Klein joint venture in India; (vi) the tax effects associated with the foregoing items; and (vii) the tax benefits associated with non-recurring discrete items related to the resolution of uncertain tax positions and various Warnaco integration activities. (3) Represents the impact on net income for the year ended February 1, 2015 from the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the exit from the Izod retail business, including noncash impairment charges; (iii) the costs incurred in connection with the exit from a discontinued product line in the Tommy Hilfiger Japan business; (iv) the impairment of certain Tommy Hilfiger stores in North America; (v) the costs incurred related to the sale of the Bass business; (vi) the costs incurred in connection with the amendment and restatement of our credit facility and the related redemption of its 7 3/8% senior notes due 2020; (vii) the net gain on the deconsolidation of certain Calvin Klein subsidiaries in Australia and New Zealand and the previously consolidated Calvin Klein joint venture in India; (viii) the recognized actuarial loss on retirement plans; (ix) the tax effects associated with the foregoing items; and (x) the tax benefits associated with non-recurring discrete items primarily related to the resolution of uncertain tax positions and various Warnaco integration activities. 49

50 GAAP to Non-GAAP 3Q 2015 YTD Performance Reconciliations GAAP to non-gaap Reconciliations Q YTD Performance (Dollars in Millions) Q YTD (1) Q YTD (2) % Change Including Foreign Currency Impact Impact of Foreign Currency Constant Currency GAAP Revenue $ 5,907.8 $ 6, % -7.2% 2.9% GAAP Gross Profit 3, ,255.4 Gross Profit Adjustments 19.5 (3.9) Non-GAAP Gross Profit 3, ,259.3 Non-GAAP Gross Profit Margin 52.0% 52.8% -80bps -100bps 20bps GAAP EBIT $ $ EBIT Adjustments (74.1) (194.1) Non-GAAP EBIT $ $ % -12.3% 4.1% Non-GAAP EBIT Margin 11.1% 11.6% -50bps -70bps 20bps (1) Adjustments for the nine months ended November 1, 2015 represent the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the costs incurred in connection with the operation of and exit from the Izod retail business; (iii) the costs incurred principally in connection with the discontinuation of several licensed product lines in the Heritage Brands dress furnishings business; and (iv) the gain recorded on the equity investment in Kingdom Holding 1 B.V., the parent company of the Karl Lagerfeld brand. (2) Adjustments for the nine months ended November 2, 2014 represent the elimination of (i) the costs incurred in connection with our integration of Warnaco and the related restructuring; (ii) the impairment of certain Tommy Hilfiger stores in North America; (iii) the costs incurred related to the sale of the Bass business; (iv) the costs incurred in connection with the amendment and restatement of our credit facility and the related redemption of its 7 3/8% notes due 2020; and (v) the net gain on the deconsolidation of certain Calvin Klein subsidiaries in Australia and New Zealand and the previously consolidated Calvin Klein joint venture in India. 50