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"Spanish consumers are under a lot of pressure, Spain is still a tough economy"

Jose L. De Haro/ NYSE
6/07/2011 - 2:57

Emanuel "Manny" Chirico, chief executive officer of Phillips-Van Heusen Corp., now renamed as PVH Corp, talks to elEconomista about the clothing company's acquisition strategy and growth outlook, specially in Spain, where Chirico says there is a lot of pressure for its consumers, taking in consideration a high unemployment rate and the sovereign debt crisis of peripheral countries. That said, the owner of brands like Calvin Klein and Tommy Hilfiger, discuss about the clothing company's acquisition strategy and growth outlook

On Spain and Southern Europe

"Spanish consumers are under a lot of pressure. Our Tommy Hilfiger business is growing there, gaining market share but is still a really tough economy and there are a few pockets. Southern Europe is under much more pressure than central and northern Europe where we are growing very strongly. In Southern Europe our businesses are just more challenged. They still growing but through market share gains not because of the strength of the consumer."

On acquiring Tommy Hilfiger

"In the last year we just become from a revenue point of view mucho more global. Our revenues today are about 45 to 50 per cent international, our profits are between 50 and 55 percent international, and so it really transformed the company into a global player in the world."

On the business during a soft economic recovery

"When we look to the economy overall you have to have a concern about it but the reality is our business is up in Tommy Hilfiger about 15 percent year to day and our bookings for fall and holidays are up 15 per cent. Our Calvin Klein business is also up double digits and we don?t see any reason why that business will slow down as we go back to the holiday season. Our international business is literally on fire right now. I think is attachment to the strength of the brands and at the higher end of the spectrum of two premium brands the consumer is much stronger than at some opening price points."

On expanding luxury business

"Both Calvin Klein and Tommy Hilfiger have a luxury component to their business, but the larger business is done at the premium price points and those are very high. I don?t see expanding luxury but I do see us expanding premium, affordable luxury."

On emerging markets

"For Calvin Klein our three fastest and biggest markets are Brazil, China and India. We are seeing 30 to 40 percent growth there over the last 4 or 5 years. We just entered into a join venture with Tommy to surround the China business, which is a 40 million dollar business today and growing double digits. We are in the process of entering into an arrangement in Brazil that is very similar. So those emerging markets are critical to us, clearly seeing double digits growth and those consumers love American brands and those brands are performing really well."

On high commodity prices

"We are seeing for the second half of 2011 a cost increase year over year up about 13 or 15 percent. So it is putting pressure on gross margins but at the same time we are raising our retail prices and we are growing top line so strongly that we still growing our bottom line in the range of 15 to 20 percent. It is a bit of a headwind what we are dealing with".

On competitors

"We clearly run a portfolio of brands, with Calvin and Tommy at the premium level. At opening price point we have brands like Arrow o Izod that are really big businesses in their own right. Those businesses are growing in the low single digit range where Calvin and Tommy are growing close to 10 to 12 percent top line".


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