PVH Aktie

Good morning, everyone, and welcome to today's PVH First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this call may be recorded. [Operator Instructions]

It is now my pleasure to turn today's program over to Caitlin Howard, Senior Director of Investor Relations.

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. First Quarter 2026 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer; and Melissa Stone, Interim Chief Financial Officer and Executive Vice President, Global Financial Planning and Analysis.

This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material. It may not be recorded, rebroadcast or otherwise transmitted without PVH's written permission. Your participation constitutes your consent to having anything you say appear on any transcript or replay of this call.

The information to be discussed includes forward-looking statements that reflect PVH's view as of June 3, 2026, of future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's SEC filings and the safe harbor statement included in the press release that is the subject of this call. PVH does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimates regarding revenue or earnings.

Generally, the financial information and projections to be discussed will be on a non-GAAP basis as defined under SEC rules. Reconciliations to GAAP amounts are included in PVH's first quarter 2026 earnings release, which can be found on www.pvh.com and in the company's current report on Form 8-K furnished to the SEC in connection with the release.

At this time, I am pleased to turn the conference over to Stefan Larsson.

Thank you, Cait, and good morning, everyone, and thank you for joining our call today. I want to start by thanking our teams around the world for their hard work this quarter as we build Calvin Klein and Tommy Hilfiger into their full potential.

For the first quarter, we achieved our guidance across all key metrics and delivered EPS above our guidance. Total revenue for the quarter was $2 billion, up 2% on a reported basis and exceeding guidance and down 2% in constant currency, in line with our expectations. We grew our direct-to-consumer business 3% in constant currency across both Calvin Klein and Tommy Hilfiger, driven by strength in e-commerce across both brands and all regions. As we discussed last quarter, we strategically increased our marketing spend, and this stepped up investment, together with a sharper focus on our target consumer segments is cutting through, attracting new consumers, driving online traffic up and delivering mid-single-digit e-commerce growth in constant currency.

We also grew multiple full hero categories in D2C, underwear and denim for Calvin and sweaters and outerwear for Tommy as we scale the impact of our stronger product cut through campaigns and improved consumer experience. Wholesale was down mid-single digits in constant currency driven by the timing effects we discussed last quarter, together with cautious partner positioning. Importantly, we delivered flat gross margins in the quarter versus last year, reflecting year-over-year improvement in all regions, excluding tariffs. We also delivered an operating margin of 6.5% for Q1 at the high end of our non-GAAP guidance, including the impact of tariffs.

Globally, in Q1, we further invested in the shopping experience across digital shop-in-shops and store concepts, completing more than 140 refurbishments and new store openings combined. We continue to strengthen our supply chain in the quarter with good inventory levels, down 5% versus last year, supported by improvements in availability, better on-time deliveries and going margins on plan for both brands. We also continue to make important progress in becoming more data and demand-driven, enabled by our enterprise data platform and strengthened through our partnerships with OpenAI and Salesforce. Together, these capabilities are helping us connect consumer, product and operational insights across the value chain so we can move faster, get closer to demand and make more data-driven decisions.

At the highest level for the quarter, we delivered on all our commitments across the P&L. Despite the increasingly challenging consumer and macroeconomic environment in EMEA, driven by the prolonged Middle East conflict. As we look forward, we are balancing 2 opposing forces. The first is increasing business momentum we are building in both Calvin and Tommy. When we last spoke at our full year earnings call, we have started 2026 with higher spring season sell-through trends across both brands in all 3 regions. This momentum has since continued in the Americas and APAC with strong new consumer acquisition growth and e-commerce growth in all our regions.

The second force is the prolonged effects of the Middle East conflict, now extending beyond this third month, which is putting increasing pressure on our EMEA business in 3 ways. First, our direct Middle East business is seeing notably lower wholesale demand. Second, we have seen a knock-on effect in Turkey as reduced tourism and macro factors weigh on demand there. And third, we are seeing a broader macro effect on consumer purchasing behavior in the EMEA region, including the effects of higher fuel costs, which is leading to lower consumer sentiment and fewer drives to stores. With these 2 forces at play, we are leaning into the areas where we have already built momentum. We plan to grow our APAC and Americas business overall, fuel our e-commerce strength in all regions. And continue to invest in our effective marketing, where we are increasing our spend by 50 basis points versus last year.

In our operations, we are making sure that we keep optimizing our inventory levels, further improving on-time deliveries and keeping go-in margins on plan. And we will keep investing in elevating the consumer experience across e-commerce. And this year, through our new store concepts in both brands we are significantly ramping up our upgrades to key shop-in shops and stores globally. As we shared last quarter, we did not include the prolonged effects of the Middle East conflict in our original guidance, which we now expect to feel the impact for the full 3-month period in the second quarter as well as through the back half of this year. As a result, we have to reduce our EMEA outlook, and we are updating our overall full year outlook.

We now expect the company to be flat for the full year and down slightly in constant currency. We are reaffirming our full year EBIT margin and EPS guidance, which includes offsets from tariff refunds. Melissa will share more details on this shortly. It's important to note that while we adapt to the prolonged effects of the Middle East conflict, we are continuing to fuel our business and brand momentum and keeping our long-term perspective.

Let me now come back to how we drove the business in Q1, where a key piece of how we continue to build the brand momentum for both Calvin and Tommy in the quarter, is the sharpened focus we have on our consumer power segments, the status shopper for Calvin and the style enthusiasts for Tommy. These consumers shop more often have higher order values and are more loyal. Step by step, we are bringing this strategic consumer lens and discipline to every aspect of our commercial plans. We are increasingly targeting these power segments and are focused on the hero categories where we have the right to play and win. These include underwear, denim, outerwear and knits for Calvin and sweaters, outerwear, shirts and knits for Tommy.

We continue to put innovation and newness into creating the best product franchises within those categories, and we are increasingly driving full funnel 360 activations. As we scale this disciplined approach, we see increasing commercial impact across both brands. In Calvin Klein, throughout Q1, we continue to focus on Calvin's greatest areas of brand authority underwear and denim, leveraging stronger operational execution to drive measurable commercial impact in bigger and bigger parts of the product assortment. During the quarter, we delivered a stronger and more consistent drumbeat of new product innovation and campaign moments, featuring culturally relevant talent, including Dakota Johnson, Jung Kook and FC Barcelona Star Raphinha.

These full funnel brand activations help strengthen the connection from brand impact to conversion and we delivered mid-single-digit growth in global underwear and double-digit growth in denim in our direct-to-consumer business. The strength we are building in these key growth categories is meaningful since they account for a significant portion of the total Calvin business globally. We also saw strong momentum across digital channels, particularly in share of search and e-commerce, where we continue to see our full funnel approach translate into consumer action with increased traffic across all regions.

As we discussed last quarter, we also continue to capitalize on the ongoing '90s inspired trends that Calvin Klein helped define, leaning into the iconic silhouettes and styling made current for today's consumers. In addition, just a few weeks ago, we launched Jung Kook for Calvin Klein. A capsule collaboration that blends Jung Kook's style with Calvin's iconic '90s aesthetic. This is Jung Kook's first fashion collaboration, and it's already our most successful Calvin collaboration to date. Through teaser content, immersive pop-ups, digital-first storytelling, we tapped into Jung Kook's and Calvin's global following and built excitement and authentic consumer connections. The response has been incredible across all channels, with lines forming outside stores around the world on launch day and impressive sell-through rates across all regions with 99% sell-through on Tmall in China and a complete sellout at our pop-up store in L.A.

In the marketplace, we are about to launch a new store concept for Calvin Klein, and you will see some of those new elements in the flagship store we just opened in Seoul, Korea, representing another step forward in modernizing our global fleet and bringing the brand to life in even more immersive and aspirational ways. In Tommy, we continue to make great progress in unlocking the full potential of Tommy and its classic American cool DNA. We're doubling down on our target consumer and strengthening our focus on Tommy's iconic product categories. This focus came to life with the launch of our Tommy Spring campaign in the quarter which we executed with more powerful storytelling and a more elevated consumer journey, including a stepped up digital experience, driving much higher engagement than last year and delivering mid-single-digit D2C growth in our core categories with sweaters and outerwear, both up double digits.

On a more granular level, we also expanded our product storytelling with an emphasis on our iconic product franchises like transitional outerwear, cable sweaters and sweater polos to name a few. The brand's momentum in sports culture continues through its partnership with Liverpool Football Club, Cadillac Formula 1 and U.S. SailGP. In Q1, we leveraged several exciting consumer moments, including our Miami Formula 1 activation, where we launched our Fanwear capsule, the first drop in a series inspired by the most iconic cities on the Formula 1 calendar.

When we last spoke, we had just announced Travis Kelce, American football icon and 3 times Super Bowl Champion as a global brand ambassador and creative collaborator. He's a huge star on and off the field, and we are excited to partner with him in a series of campaigns starting with our Fall '26 campaign shot at The Plaza Hotel in New York. Travis loves the Tommy brand, and we are seeing significant and sustained earned media already with the social reach of the announcement itself reaching hundreds of millions of people across social platforms.

In the marketplace, we also continue to elevate the consumer experience and are now rolling out our new Tommy shop-in-shop and store concept globally, with several new openings in Q1, including Herald Square in New York City and NK in Stockholm with additional new stores planned for this year. We will continue to dress top Liverpool Football Club players ahead of key matches, focusing on personal and distinct styling and shopability for each look. Last week, with the World Cup just about to start, Tommy and LFC unveiled the summer of football, presenting Liverpool Football Club's most recognizable players in the summer 2026 collection.

Looking ahead to Q2, we continue to maintain our sharper consumer and category focus. We are further expanding innovation and newness across our core product franchises and we are delivering cut through full funnel marketing that connects with culture and our target consumer.

Now let me turn to our regional performance, starting with Europe. Revenue decreased mid-single digits in constant currency, in line with our expectations with positive spring season momentum offset by lower D2C performance in April due to the prolonged direct and indirect effects of the Middle East conflict as I previously discussed. Despite these effects, especially on traffic to stores, we drove strong e-commerce traffic improvement in the quarter, which translated into low single-digit e-commerce growth supported by our marketing investments and enhanced execution. Importantly, while we see the effects of the Middle East conflict extending into Q2 and the full year. We have seen Europe D2C performance improve in May quarter-to-date, partly supported by positive calendar timing.

We also continue to see growth in our consumer base, increased consideration and purchase intent and stronger engagements with our key campaigns and core product stories. For both Calvin and Tommy, we continue to see that where we lean in and introduce newness and product innovation into our core categories, the consumer responds and we drive growth. Our focus continues to be on scaling this across bigger parts of the assortment while adjusting our outlook to reflect the prolonged Middle East conflict. Importantly, we expect to maintain our marketing investment plan in the region, drive higher ROI and conversion of our e-commerce traffic and strengthen the overall consumer brand experience in the region across all channels to deliver commercial impact for both today and the long term.

Next, turning to the Americas. In the first quarter, we delivered low single-digit growth in our D2C channels, driven by our e-commerce business with significant AUR gains in the high single digits. Our e-commerce channels continue to grow quarter-over-quarter and year-over-year, supported by higher traffic and average order value. This D2C growth was offset by a decline in wholesale as expected due to timing shift. And overall revenue was down slightly in the Americas year-over-year, in line with our plan. Product-wise, spring newness and seasonal categories outperformed in the high single digits across men's and women's in both brands.

We also expanded our linen lifestyle assortment launching earlier in the season this year, building upon success last year. Denim also continued to outperform, up double digits, benefiting from increased newness, more strategic investments in core fits and strong execution across consumer touch points. We will continue to focus on strengthening the in-store brand experience and further step-up remodels this year. Within wholesale, we launched Tommy Hilfiger women's sportswear in Macy's in over 200 doors with sell-through outperforming plans and are investing in building out a new shopping experience, including a remodel in the Herald Square flagship opening later this month. Importantly, while the overall wholesale channel declined year-over-year, driven by timing, sell-through with key partners was positive in the quarter.

Moving to Asia Pacific. We delivered a strong start to the year with growth ahead of plan, driven by our D2C channels. Revenue was up mid-single digits in constant currency, supported by favorable Lunar New Year timing and strong spring performance with seasonal campaigns featuring APAC relevant talent. D2C was up double digits year-over-year, led by strength in brick-and-mortar and continued high single-digit e-commerce growth, while wholesale remains more cautious. Importantly, we delivered strong double-digit growth in our core categories of men's underwear and denim. All our markets in Asia strengthened their top line growth versus last quarter, continuing the sequential improvement trends from 2025 with strong traffic and sales momentum in China and Southeast Asia. This was partially offset by headwinds in Australia, where the consumer is under pressure from high fuel prices and interest rates.

Looking ahead, we expect to sustain our momentum in APAC with growth led by D2C and strength in key consumer moments together with disciplined marketplace execution, offsetting the challenging macro in Australia. For Q2, our APAC team is continuing to drive strong consumer engagement, leveraging the excitement around key local activations. First, the Jung Kook Calvin Klein collaboration we just had, where we had over 85 in-store activations. The important upcoming 618 shopping festival in China and the Seoul flagship store opening. In our licensing business, we continue to work very closely with our long-term strategic partners who are fully aligned with our brand direction and help bring our vision to life across multiple complementary categories where they are experts from watches and fragrance to eyewear. These partnerships are a critical part of how we drive sustainable, profitable growth through the PVH+ Plan.

While revenues in licensing were lower versus last year, reflecting the transition of previously announced women's wholesale categories in North America, we still expect a go-forward licensing business to grow over the full year.

In conclusion, for the first quarter, we delivered on our guidance across all key financial metrics, reflecting our disciplined PVH+ Plan execution and the momentum we are building in our 2 iconic global brands, Calvin Klein and Tommy Hilfiger. We grew our D2C business across both Calvin and Tommy, driven by strength in e-commerce. We expanded our product strength in both brands and drove D2C growth in key growth categories like underwear and denim in Calvin and sweaters and outerwear in Tommy. We increased our marketing spend and are cutting through, attracting our power consumer segments and driving strong e-commerce traffic.

We delivered stable gross margins in the quarter, reflecting year-over-year improvement in all regions, excluding tariffs, and we continue to invest in the shopping experience. As we look forward, we continue to fuel the positive brand and business momentum in both Calvin and Tommy globally, driving growth in both APAC and Americas and driving e-commerce growth in all regions, while having to reduce our EMEA outlook to the prolonged effects of the conflict in the Middle East. In Calvin and Tommy, we have 2 of the most beloved brands in our sector globally. And every quarter, we will continue to strengthen the consumer offering as we build them into their full potential. And with that, I'll turn the call over to Melissa.

Thanks, Stefan. Good morning. For the first quarter, we delivered 2% reported revenue growth, slightly better than our guidance with constant currency revenue down 2%, in line with our plan. We drove D2C growth in total, both in stores and online across both Calvin Klein and Tommy Hilfiger.

Operating margin was 6.5% and at the top end of our previous guidance range, with gross margin stable versus last year and better than planned and SG&A roughly in line with our expectations. EPS was better than our plan, primarily driven by lower tax and interest expense. As we look forward, we are updating our full year outlook, which now includes the prolonged effects of the Middle East conflict together with offsetting benefit from tariff refunds. I will take you through these changes shortly, but first, I will discuss our first quarter results in more detail.

From a regional perspective, EMEA revenue was up 2% reported and down 5% in constant currency. Both direct-to-consumer and wholesale revenue declined mid-single digits in constant currency as we lap stronger prior year comparisons and the macro environment became increasingly challenging due to the conflict in the Middle East. The impact of the conflict in the Middle East was felt more sharply in April. And as Stefan mentioned, negatively impacted our wholesale business in the region, our business in Turkey and consumer traffic and spending more broadly across EMEA amid higher fuel costs. Wholesale revenue also reflected negative shipping timing effects as a larger portion of our spring season shipped in Q4 last year than in Q1 this year.

Revenue in Americas was down 1% as low single-digit growth in D2C was more than offset by a mid-single-digit decrease in wholesale revenue. Importantly, we continue to drive growth in our e-commerce business, which was up low double digits. The decrease in wholesale revenue reflected a first half to second half timing shift compared to 2025 partly offset by an increase in wholesale revenue driven by the North America license transitions. In Asia Pacific, revenue was up 10% reported and up 6% in constant currency, which included an approximately 4% benefit from the timing of Lunar New Year compared to last year.

We grew D2C revenue by low teens in constant currency and by mid-single digits, excluding the Lunar New Year timing effect, reflecting strong execution around key consumer moments during the quarter. Wholesale revenue declined high single digits in constant currency as our wholesale partners in the region continued to take a cautious approach. Within the region, we drove strong high single-digit growth in constant currency in our China business following a challenging first quarter last year with double-digit growth in D2C, both in stores and online, including the Lunar New Year timing impact. Growth in China and other key markets was partly offset by lower revenue in Australia, where high fuel prices and interest rates are weighing on consumer spending. In our licensing business, revenue was down 7%, primarily due to the North America license transitions. Excluding the impact of these transitions, the go-forward licensing business was down 1% due to timing that will offset later in the year.

Turning to our Global Brands. Calvin Klein revenues were up 1% as reported and down 3% in constant currency. Tommy Hilfiger revenues were up 3% as reported and down 2% in constant currency. From an overall PVH channel perspective, direct-to-consumer revenue was up 6% reported and up 3% in constant currency which included an approximately 2% tailwind from the timing of Lunar New Year compared to the first quarter last year. Sales in our retail stores were up 5% reported and up 2% in constant currency, driven by increases in Americas and APAC, partly offset by a decline in EMEA. Sales in our e-commerce business were up 11% reported and up 6% in constant currency, with growth in both Calvin Klein and Tommy Hilfiger and across all 3 regions. Total wholesale revenue was flat as reported and down 6% in constant currency, with declines in all regions, as I just discussed.

In the first quarter, our gross margin was 58.6% unchanged compared to 58.6% last year despite a significant gross tariff headwind and approximately 50 basis point impact from the ongoing North America license transitions and the impact of an increased promotional environment. Notably, excluding the impact of increased tariffs, we drove gross margin expansion in all regions, reflecting our operational improvements and supported by healthy inventory levels. Inventory at quarter end was down 5% compared to Q1 last year. SG&A as a percent of revenue increased 160 basis points versus last year to 52.1% and included a 70 basis point increase in marketing spend compared to the first quarter of last year, as well as other investments in our business and our brands. In sum, EBIT for the first quarter was $131 million. Earnings per share was $2.01. Interest expense was $16 million, and our tax rate was approximately 19%.

Now moving to our outlook. Our full year outlook reflects 2 key updates. First, recall that our previous guidance excluded any potential impact from a prolonged or expanded conflict in the Middle East. Our updated outlook now reflects the direct and indirect impacts to our revenue and earnings that we already felt in the first quarter and assumes an impact to our full year 2026 revenue and earnings with a more pronounced effect expected in the second quarter, including impacts to our wholesale business in the Middle East, to our business in Turkey as well as a broader impact to consumer spending in EMEA.

Second, we are updating our tariff outlook. Our outlook continues to assume a negative impact from tariffs on goods coming into the U.S. but now also assumes a positive impact from tariff refunds. With respect to tariff rates, there continues to be uncertainty and our assumption of a full year blended rate of approximately 15% is unchanged, as is our expectation of an approximately $195 million gross tariff cost in EBIT or an approximately 215 basis points unfavorable impact to operating margin, which we will partly offset with our planned mitigation actions. Our outlook now also includes an approximately $100 million benefit to EBIT or an approximately 100 basis point favorable impact to operating margin related to tariff refunds not contemplated in our previous guidance. We expect to record these refunds in the second quarter.

As a result of our revised expectations related to the Middle East conflict, we are revising our reported revenue guidance to approximately flat to the prior year compared to guidance of a slight increase previously. We are also revising our constant currency revenue guidance to down slightly compared to guidance of flat to up slightly previously. Our operating margin outlook remains unchanged at approximately 8.8%. Regionally, we now expect revenue for our EMEA region will decrease mid-single digits in constant currency versus last year. Our revenue outlook for Americas and APAC remains unchanged, and we continue to expect to grow in both businesses. Our revenue outlook for licensing also remains unchanged. We expect gross margin to be up approximately 100 basis points versus last year, compared to up slightly previously, including the favorable tariff refund benefit of approximately 100 basis points, not contemplated in our prior guidance, partially offset by the negative impacts of the Middle East conflict.

We expect SG&A as a percentage of revenue to be up approximately 100 basis points compared to last year compared to guidance of up slightly previously, reflecting further SG&A deleveraging resulting from our updated revenue guidance, which we will work to offset with other SG&A efficiencies. Importantly, we continue to invest in our business and our brands to drive our business in the near term where we see strength, fueling the momentum in Americas and APAC and our e-commerce business globally. And for the long term, as we continue our multiyear journey to build Calvin Klein and Tommy Hilfiger into their full potential. As such, we continue to expect that we will increase marketing by at least 50 basis points to approximately 6% of sales in the full year 2026, consistent with the plan we set forth at the beginning of the year.

Turning to below-the-line items. Interest expense is now expected to be approximately $75 million, and our expectation for taxes is unchanged from our prior guidance. Taken together, we continue to expect EPS in a range of $11.80 to $12.10. With respect to capital investment, we continue to project capital spending of approximately $250 million this year as we invest globally in e-commerce as well as store and shop-in-shop renovations. We also remain committed to returning excess cash to stockholders through share repurchases as part of a PVH+ plan. Our expectation to repurchase at least $300 million of our shares for the full year remains unchanged.

Next, turning to our second quarter outlook. We are projecting revenue to be down 3% to 4% on a reported basis and down 4% to 5% on a constant currency basis compared to 2025. In EMEA, we expect revenue to be down mid-single digits in constant currency with continued declines in both D2C and wholesale revenue as the region is expected to be meaningfully impacted by the conflict in the Middle East in the second quarter. In Americas, we are planning revenue down slightly as slight growth in D2C is offset by lower wholesale resulting from the planned first half to second half timing shift that I discussed previously. In Asia Pacific, we expect revenue to increase slightly in constant currency as growth in D2C is offset by continued caution on wholesale.

And in our licensing business, revenue is expected to be down low teens overall, driven by the previously mentioned North America license transitions with growth expected in the balance of the business. We expect our second quarter gross margin to increase approximately 470 basis points compared to last year, resulting from the recognition of tariff refunds in the second quarter. Excluding the impact of tariff refunds, gross margin is expected to be relatively flat to last year, in line with first quarter trends. SG&A expense as a percent of revenue is expected to increase over 300 basis points in the second quarter compared to last year, including an approximately 100 basis point increase in marketing spend.

As we've discussed, this year, we are more heavily weighting our marketing spend to the first half to amplify our cut-through campaigns and drive brand heat early in the year. The increase in Q2 also reflects a slight shift in timing of marketing investments from Q1 into Q2 compared to our original expectations. Overall, we expect our second quarter operating margin will be approximately 9.5%, reflecting the benefit of approximately $100 million of tariff refunds partially offset by a meaningful impact from the Middle East conflict on our wholesale business in the region, our business in Turkey and consumer spending more broadly in EMEA, which we expect to be more pronounced in Q2 than in Q1.

Second quarter earnings per share is expected to be in a range of $3 to $3.10. Our tax rate is estimated at approximately 22% and interest expense is projected to be approximately $18 million. Before we open it up for questions, I want to reiterate that while we are navigating the prolonged effects of the Middle East conflict, we are continuing to work relentlessly to unlock the full potential of our 2 iconic brands through the disciplined execution of the PVH+ Plan. We are strengthening our data and demand-driven operating model, improving inventory productivity and balancing a disciplined approach to managing expenses with continued high-value brand accretive investments to support the long-term growth of Calvin Klein and Tommy Hilfiger.

And with that, operator, we would like to open it up for questions.

[Operator Instructions] Thank you. Our first question is coming from Jay Sole with UBS.

Stefan, I want to ask about the PVH+ Plan. It sounds like you're scaling the Plus plan across the business, applying it to different categories, having success. Can you just talk about where you are in that journey? How much of the assortment has been -- is now being executed the way that design and the PVH+ Plan? How much more is there left to go? And also on inventory, I think with the slowdown in the EMEA region, it would be fair to think that maybe there would be an inventory overhang that you'd be looking at some pretty significant markdowns and discounts over the next couple of months, if not next couple of quarters.

But based on the inventory being down 5% and the guidance that Melissa just gave, it sounds like that inventory is in pretty good shape. So if you can just talk about the PVH+ Plan in that demand-driven supply chain that you've been using to keep inventory under control and if you do expect markdowns? And if not, like how have you been able to avoid that?

Yes, thank you, Jay. Let's start with the progress of the PVH + Plan because you're right, this quarter, I would say it's one of the quarters where we put the most proof points on the board. So it's really tough to see the prolonged effect of the war hitting us.

But if we look at the underlying strength and the momentum we are driving in Calvin and Tommy, it's really seen in D2C for both brands up 3%. E-commerce up mid-single digit both brands and all regions. And what's really -- how we are driving that connecting to the PVH+ Plan is we are leaning into the strength we have built over the past few years with the Gen Z and young millennial consumers. So we are really leaning into the power segment. And we see that in the quarter, underlying the performance, we see significant strength in e-commerce traffic and then we translate that to e-commerce growth. And then from a product innovation perspective, to your point, we continue to scale it in the quarter.

So when we in Calvin prior to this quarter, we're able to give you proof points of saying part of underwear that we drove innovation is growing, part of denim is now scaled. So it's all of underwear in Calvin is up mid-single digits. This is D2C. All of denim is up double digit. Same in Tommy, so leaning into spring sweaters, transitional outerwear, both those power categories are up double digit. So it's really the connection between the increased consumer focus and winning with the Gen Z and young millennials, scaling the product innovation investing more in marketing. So we are investing 50 basis points more in marketing this year and really see the effect of the traffic.

And then we see the effect, not only in revenue in D2C up, but we see gross margin, as Melissa shared, gross margin outside of tariff effect is up across the company. And then we invest in the shopping experience. So you'll see our social and e-commerce experience continue to improve. But you also see a growing number of rebuilds and new stores. So combined for the quarter, we had 140 rebuilds and new stores. And then back to your question about the inventory, yes, so we feel really good about the way we strengthen our supply chain, we get closer to demand. So inventory now is down 5%. So we feel really good about the inventory now and how we are positioned going forward.

We worked hard last year on improving on-time deliveries. We worked hard to improve the growing margin across both brands. So it's really the 2 forces we are talking about. You see that the positive effect beyond what we have seen in any other quarter in the underlying momentum we are driving for Calvin and Tommy. And then you see the big effect given our size and disproportionate exposure to the Middle East and Europe.

We'll now move on to Brooke Roach with Goldman Sachs.

Stefan, can you unpack the trends that you're seeing with the consumer in both Europe and the Middle East today and the plans that you have to mitigate this pressure. And Melissa, as a follow-up, you laid out 3 key areas of pressure, the Middle East, Turkey and core Europe. Can you quantify the headwind that you're seeing from each as well as your assumptions for these businesses going forward?

Yes. Thanks, Brooke. So let's start with taking a step back. And so what's changed since last quarter. The only thing that has changed which is the European outlook is the prolonged effect of the war. So we didn't have that last quarter. And since then, we have, to your point, seen it in 3 different ways. We see the effect directly on the Middle East region, where we see lower wholesale demand. We see a knock-on effect on Turkey, which is a big and important market for us. reduced tourism macro slowdown. And then we see it in the EMEA consumer.

So coming back to last quarter, again, we started spring season, including in Europe, better than last year. Then we saw a big slowdown in April. And then since April, as I mentioned, we have seen an improvement in the D2C trends in May. But when we look at the take down in Europe because of the prolonged effects, you can see it in 2 different buckets. The first one is the direct effect from the Middle East and Turkey, approximately half. And then approximately half is the indirect effect on the European consumer backdrop. And we see it most pronounced in traffic to physical stores and doors. So we saw it in April, again, better in May, but in May, we also had a few positive calendar shifts, but it's improved in May.

But we then take a prudent outlook and say we will most likely live with these effects for the rest of Q2 and the rest of the year. And we look at the way we have estimated the effects is we look at April and May and then extend it. So -- and then, of course, we work really hard in Europe and across the company to mitigate this. So first of all, leaning into the momentum we have in APAC and Americas. So continue to drive growth with both APAC and Americas. And we see the consumer in America holding up well, we see the consumer strengthening in APAC. We lean into fueling the e-commerce strength because even though we see the overhang of the war, having an effect in Europe, we see e-commerce up in Europe and traffic to e-commerce up. We continue to invest in the marketing.

And as I shared to Jay's question, we see increasing effect on how we lean into our power consumer segment. And then we are very disciplined on keeping our inventories in check. We keep improving our on-time deliveries. So when we come into fall, our on-time deliveries are better, and the go-in margins are on plan for both brands. So that's at large how we mitigate it.

Yes. Yes. And I think Stefan mentioned it, but we're thinking of the overall impact of the 3 reasons that he mentioned is about half directly in the Middle East as well as the overhang in Turkey and then about half the impact to the broader European region. And I would just add, from a total top line perspective for PVH, we are maintaining our expectation for growth in Americas and APAC. We really see the momentum continuing in those businesses, we expect to grow D2C in both Q2 and for the full year. And we do see strength in e-com in all 3 regions, continuing.

We'll move on now to Bob Drbul with BTIG.

This is Jake Katsikas on for Bob. Just maybe keeping with the EMEA region. Can you talk about how the trends progressed in the quarter, maybe by brand specifically. And then that May DTC improvement that you cited, was that kind of broad-based across both brands? Or would you maybe call out Calvin or Tommy as kind of leading that?

Thanks, Jake. We see the positive momentum in e-commerce, we see across both brands. So when we look at what's fully in our control, the brand momentum and continuing to increase that we see that for both brands. And we see, despite the overhang from the prolonged war we see, including in Europe, growth in our consumer base, growth in e-commerce traffic, increased consideration, increased purchase intent. But then we see the 3 effects, which are real for Q2 and the back half. And that's why we have to take down our outlook to adjust for that.

But it's really -- I keep coming back to those 2 different forces. The force of brand momentum that we are driving ourselves, including in Europe, and then the force of the direct Middle East effect and the indirect effect. And then as I mentioned, we have seen May strengthening to April but we are prudent looking out at the rest of the year. So we are not extending May for the rest of the year. We look at April and May together.

We'll move on now to Michael Binetti with Evercore.

Melissa, would you talk us through the bridge to the margin improvement in the second half? I think EBIT margins are guided to get back to about flat year-over-year after being down maybe 300 basis points or more in the second quarter if we exclude the tariff refund. Anything you could give us on the pieces to the bridge or if any ways we can try to think about quantification of that bridge. And then if you wouldn't mind, if you could talk through some of the mechanics on how the tariffs will work, how you think the best use of the refund funding and the cash that you're going to get from that?

Yes. Sure, Michael. Thanks for your question. So on the bridge first. So for the year, like we talked about, we're maintaining our overall operating margin guidance at 8.8%, and that outlook now includes the benefit of tariff refunds, enabling us to absorb the prolonged effects of the Middle East conflict, which we had not factored into our previous guidance while continuing our planned investments in our brands and our business.

So as we think about the trajectory for the first half versus the second half, what's new is that we see the pressure related to the effects of the prolonged conflict with the most acute deleverage impact in Q2, and that's offset by the benefit from the tariff refund, which is also in Q2. Otherwise, I think what we shared when we met last quarter still really holds. So I'll break it down into 3 main pieces. First, on the top line, we have some timing shifts, which we have spoken about, particularly in wholesale for Americas, which will benefit us in the second half as well as the ramping impact of our strategic initiatives.

And then second, in gross margin. The first half is burdened by tariff costs, which had really only a very small impact in the first half last year. And then in inventory cost, we see the favorable impact, including FX building as the year progresses, and that comes through as strength in our gross margins. And then third, in SG&A, Overall, for the year, as we've talked about, we're increasing our marketing investment, and that's going to be up over 50 basis points as a percentage of sales to about 6%. And in line with what we had originally planned, we really strategically weighted that investment to the first half to drive brand heat early in the year. So you remember that in the second half of 2025, we had already stepped-up our marketing investment. And so that step-up continues into this year, and then we lap that in the second half.

And then as we work to offset the effects of the Middle East conflict with our ongoing very strong cost discipline, you'll see those SG&A efficiencies start to grow and the impact in the second half as well. And so overall, as you mentioned, our guidance implies about year-over-year second half EBIT margin to be flat. And I think we have clear line of sight into the seasonality of our business and these gross margin and SG&A impacts that will get us there. And then on your question on tariff refunds. So yes, our outlook now includes approximately $100 million benefit from tariff refunds to our EBIT, and that's about 100 basis point favorable impact to our full year operating margin, which was not contemplated in our previous guidance. Important to note that we expect to fully recognize that in Q2, which is worth about 470 basis points to our gross margin and our operating margin. So I think that really enables us in this difficult backdrop to balance our disciplined approach to managing costs with the need to continue to invest behind our strategy and our brands and build for the future.

So we expect to continue our marketing investments and our other investments in the consumer shopping experience across all channels and all regions. And in terms of the cash, we'll follow our standard capital allocation approach, balancing our investments with return to shareholders. Our current outlook assumes at least $300 million of share repurchases for the year. And we're also planning $250 million in capital expenditures, which is a stepped-up investment in digital stores and shop-in-shops, and that remains unchanged.

We'll move on now to Dana Telsey with Telsey Group.

As you think about the marketing, Stefan, that's helping to drive the funnel of sales in the back half of the year, number one, what do you see as most impactful for Calvin and Tommy in the back half of the year? And then also the marketing spend in the back half of this year versus last year? And then just any progress update on the license take-backs and how you're progressing with those.

Yes. Thanks, Dana. When it comes to the first half, second half for both Calvin and Tommy, you'll see a continuation of the marketing that's really effective for us and really works for us. So if you look at look at the first quarter in Calvin Klein that's why it's so important that we drive growth in all of the world of underwear, the world of denim, mid-single-digit growth, double-digit growth, it's really connected to, one, a stronger and more consistent drumbeat of new product innovation. And then how we can -- how we build campaigns around those product innovation, and we leverage it with talent to shape culture whether in Q1, it was Dakota Johnson, Jung Kook, Raphinha, the soccer star from Barcelona. So you'll just see us continue to do this. And you see -- you will see us in Calvin how we build out the dimensions of the campaign.

But they will all be focused on our power consumer segments, our key growth categories, product innovation within those categories and then full funnel activation. And one really exciting example from Q1 is Calvin has done a lot of collaborations over the years, but the most successful ever was a few weeks ago when we collaborated with a superstar from BTS, Jung Kook. So we invited him in as a co-creator but very focused around the key growth categories, the denim jackets, the hoodies, the logo, et cetera. So very true to the iconic '90s Calvin with the fresh take and the eyes of Jung Kook, and it sold out too fast. But you will see us do more and more of that in a very consistent way.

And then in Tommy, what was really exciting to see is that we built out a bigger and more dimensional lifestyle campaign, more product storytelling, more elevated, and you can really see how that drove the growth in our core categories. So core categories in D2C was up mid-single digits, but then transitional outerwear, sweater polos, like hyper-relevant new innovation in product up double digit. And then you see us in the fall, you see us continue to lean into the sports franchises that we have with Tommy, Liverpool Football Club, Cadillac Formula 1. And then we have Travis Kelce. So we just shot the Travis Kelce campaign, as I just shared for fall. And Travis loves Tommy. He is a great ambassador for us. First season, we come out together with him in a campaign this Fall '26, and we just shot it at Plaza Hotel.

But just the announcement in itself drove hundreds of millions of mentions on our social platform. So you'll see a steady -- what you should look for is a steady drumbeat of building out our 360 campaigns, just reinforcing the beloved brand DNA to those power consumer segments in a very disciplined way with the right categories and the right product innovation.

And that's -- if I look at Q1, that's what I'm most proud of are that the team that we are now -- that's work that started over a year ago that we are putting the different pieces together for the consumer flywheel.

And on the licensing piece, Dana. So this year, we are through the biggest part of the take-back of our North America women's wholesale license. And this quarter, I'm excited to share that we launched together with Macy's, our women's Tommy product, and we have had better sell-through than planned, very well responded by our partners, the consumers, and we are investing in the shopping experience as well. So this year, you see the biggest part will have been taken back. And then we continue to grow the licensing, the go-forward licensing business that we have. That's very strong. And we also bring in talent -- leadership talent to help bring in best-in-class experience when it comes to licensing and partnerships. So you will see us continue to grow that already today the go-forward license business is growing for this year.

We'll move on to Blake Anderson with Jefferies.

So I wanted to ask one on Europe to start. So you mentioned Europe D2C had improved in May, I think, partially impacted by calendar timing. Can you elaborate more on that rate and what it was excluding the calendar timing and how that compared to April? And then related to that, what are you assuming for Europe D2C for the rest of the year. And any color on stores versus e-com would be really helpful, too.

Yes. Thanks, Blake. Yes, what we have seen in May is an improvement versus April. And some of that improvement is connected to Easter shift and different holidays that come after a certain period of time after Easter that have shifted. So that was positive in the beginning of May, but it's underneath of there, there is an improvement versus April.

But as I shared, the outlook for the rest of the year, we have taken a prudent approach with looking at both April and May trends, but definitely encouraging in May. If you look at stores versus e-commerce, as I mentioned, we see the consumer backdrop. And we saw it broad-based in the market in April that traffic where the consumer has to get into their car, we are the most -- we see the most effect. But when we lean into our brand momentum in e-commerce, we see that we are still able to drive growth. So we are leaning into the back half of the year in Europe and supercharging our e-commerce growth.

Yes. I would just add that we are expecting growth for e-com in Europe for the full year.

And with that, I got a sign that we are -- thank you, Blake. I got a sign that we are on time. So thank you, and thanks, everyone, for being on this journey.

The 2 biggest takeaways for us right now is the increased momentum we are driving in Calvin and Tommy globally in all the different proof points that we were able to put on the board for Q1. We'll continue to expand those positive proof points towards the rest of the year, while we mitigate the prolonged effect of the war. And taking 2 steps back is the journey we are on is to build into the consumer love and the strength we have in Calvin Klein and Tommy Hilfiger, 2 of the most beloved brands globally in our sector. And every season, no matter what the external headwinds are -- or positive, we will continue to build relevance into our brands and win more with that Gen Z and young millennial consumers. So with that, we say thank you, and looking forward to speaking next quarter.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, everyone, and welcome to today's PVH Fourth Quarter 2025 and Full Year Earnings Conference Call. [Operator Instructions] Please note this call may be recorded [Operator Instructions] -- it is now my pleasure to turn today's program over to Sheryl Freeman, Senior Vice President of Investor Relations.

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. Fourth Quarter and Full Year 2025 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer; and Melissa Stone, Interim Chief Financial Officer and Executive Vice President, Global Financial Planning and Analysis. This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material.

It may not be recorded, rebroadcast or otherwise transmitted without PVH's written permission. Your participation constitutes your consent to having anything you say appear on any transcript or replay of this call. The information to be discussed includes forward-looking statements that reflect PVH's view as of March 31, 2026, of future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's SEC filings and the safe harbor statement included in the press release that is the subject of this call.

These include PVH's right to change its strategies, objectives, expectations and intentions and the company's ability to realize anticipated benefits and savings from divestitures, restructurings and similar plans such as the actions undertaken to focus principally on its Calvin Klein and Tommy Hilfiger businesses and its initiatives to drive more efficient and cost-effective ways of working across the organization. PVH does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimates regarding revenue or earnings.

Generally, the financial information and projections to be discussed will be on a non-GAAP basis as defined under SEC rules. Reconciliations to GAAP amounts are included in PVH's fourth quarter 2025 earnings release, which can be found on www.pvh.com and in the company's current report on Form 8-K furnished to the SEC in connection with the release. At this time, I'm pleased to turn the conference over to Stefan Larsson.

Thank you, Sheryl. Good morning, everyone, and thank you for joining our call today. I want to start by thanking our teams around the world for delivering a strong fourth quarter and finish to the year on our multiyear journey to build Calvin Klein and Tommy Hilfiger to their full potential and make PVH one of the highest performing brand groups in our sector. While there is, of course, more work to do, we have made important progress on this journey, and I will discuss this more in a moment. In the fourth quarter, we exceeded our guidance across revenue, operating profit and EPS. Total revenue for the company was up mid-single digits on a reported basis, above our guidance and flat in constant currency.

Importantly, we drove better-than-expected gross margin performance in the quarter with sequential improvement across all regions. We continue to manage our operating expenses thoughtfully while strategically increasing marketing spend behind our 2 iconic brands, and we drove a 10% non-GAAP operating margin, which would have been 11.7% without the gross tariff impact. For the full year, we delivered on our financial guidance across both the top and bottom line.

And as planned, we returned to revenue growth for the year. Despite the choppy consumer and macroeconomic environment, we delivered a non-GAAP operating margin of 8.8% for the full year, above our guidance, including the impact of tariffs. When excluding the impact of gross tariffs, operating margin was 9.6% -- we continue to simplify our operating model and drive more efficient ways of working, generating over 200 basis points of annualized cost savings.

We further strengthened our supply chain, ending the year with a good inventory position, up 5% versus last year or up 1% when adjusted for tariffs, positioning us well for spring 2026. Finally, we returned over $560 million of capital to shareholders through our share repurchases, representing 15% of our shares outstanding. Looking ahead, while the macroeconomic environment remains uncertain, we have started 2026 with positive momentum and higher spring season sell-through trends across both brands and all 3 regions. While wholesalers remain cautious and the consumer macro environment continues to be uneven, our fall 2026 order books for Europe are positive.

As we speak, we're in the middle of some of the most important weeks of the quarter with Easter this coming weekend, which falls 3 weeks earlier than last year. For Calvin Klein, we have strengthened our global product capabilities and have addressed the transitory operational challenges we faced in 2025. Our deliveries are now on time and our growing margins are back on plan.

This year, we will strategically increase marketing spend and further invest in the shopping experience across digital, shop-in-shops and store concepts.

For fiscal 2026, we expect to grow total revenue slightly on a reported basis and be flat to up slightly in constant currency with planned growth in direct-to-consumer across both brands and all 3 regions. We expect our non-GAAP operating margins to hold steady at 8.8% or 11%, excluding the gross impact from tariffs. Additionally, we intend to continue to return capital to shareholders with a target of at least $300 million this year.

Now let me share a brief update on what drove our performance for the fourth quarter and full year 2025. Starting with Calvin Klein. In 2025, we continue to drive strong brand relevance for Calvin in both product and marketing. We sharpened our focus on our core categories, strategically infusing innovation and newness in the worlds of underwear and denim supported by full funnel 360 marketing. We reinvented our biggest underwear franchises with the launch of the icon Cotton stretch amplified with Bad Bunny and Rosalia, which grew 20% in men's and 13% in women's, driving our broader underwear business up low single digits versus last year. We also grew our fashion denim category, which represents over 50% of our denim business with high single digits. In addition, Calvin returned to the runway, creating a strong halo for the brand. And during the year, we opened new Calvin Klein flagship stores in both Tokyo and New York City. In the fourth quarter, we leveraged key consumer moments and delivered strong engagement and results, generating higher full price sales versus last year and sequential improvements in gross margin. Turning to Tommy Hilfiger. Throughout the year, we took Tommy's iconic DNA of classic American cool and cut through in major cultural moments from the Met Gala to F1 the movie.

We also launched our new partnership with Cadillac Formula 1 in Q4 with a positive consumer response. In addition, we announced one of the most significant new global partnerships for Tommy, our first football partnership with Liverpool Football Club. This news was the #1 most engaged post ever to go out on Tommy's social channels with strong resonance across Europe and driving immediate spikes in e-commerce traffic. In the marketplace, we further improved our e-commerce experience, opened new stores globally and in wholesale, we unveiled our new shop-in-shop concept at the iconic Gallery Lafayette in Paris. And finally, in the fourth quarter, just like in Calvin, we leaned into our best product categories where we drove strong growth for our iconic cable knit sweater franchise with sales up over 50%

Overall, when I look at our global business for the holiday, we navigated an uneven macro environment across both brands, and I was particularly pleased to see that where we brought newness into key product categories, we were able to drive growth with higher full price sell-through. Now I will turn to our regional performance, starting with Europe. For the full year, the region declined 1% in constant currency with 2 quarters of strong D2C growth in the first half, followed by a more muted consumer in the second half. In wholesale, we delivered sequentially improving order books each season in Europe, returning to growth beginning with our fall '25 season.

In the fourth quarter, revenue was down low single digits in constant currency, in line with guidance and against a muted backdrop. In constant currency, wholesale was down 1% as positive order book growth was offset by lower in-season replenishment and D2C was down mid-single digits. For both Calvin and Tommy, the areas where we have introduced the most product innovation into key categories continue to drive growth, and our focus continues to be on scaling that innovation across bigger parts of the assortment. We also continue to work more closely than ever with our wholesale partners. And in January, we held our second annual Global Partner Day to kick off the fall '26 market launch.

We had over 500 key partners in attendance and received the strongest and most positive feedback yet. Next, turning to the Americas. For the full year, we delivered mid-single-digit growth driven by our wholesale channel and strength in our e-commerce business. The consumer backdrop has been uneven. And in stores, industry traffic trends were increasingly challenged, resulting in our total D2C business down low single digits for the year.

In the fourth quarter, we grew overall revenue by 4%, driven by wholesale as well as continued growth in digital. D2C declined mid-single digits due to lower store traffic, partially offset by AUR growth. Product-wise, we saw strength in denim for both men and women. Our wholesale business increased high teens, partly driven by the takeback of our women's sportswear and jeans business with underlying growth in wholesale up mid-single digits. Despite lower traffic, we drove greater full price selling for the region and over 200 basis points in sequential year-over-year gross margin improvement.

Moving to Asia Pacific. For the full year, revenue declined mid-single digits in constant currency or down low single digits, excluding the timing impact from the Lunar New Year calendar shift. But importantly, we delivered sequential improvements in our top line performance each quarter over the course of the year. In the fourth quarter, excluding the Lunar New Year calendar shift, our APAC revenue returned to growth and was up low single digits in constant currency. In digital, we delivered the second consecutive quarter of high single-digit growth as we successfully concluded Double 11 and the holiday period. Overall, we are seeing good conversion and positive traffic improvements across key markets, including China and Japan. We continue to execute with discipline in the region, driving gross margin improvements and reinvesting into marketing with key local talent. Both brands were proud to participate as first-time exhibitors at the China International Import Expo, building on our long-standing presence and commitment to the market.

Before we turn to 2026, I would like to take a moment to reflect on the progress we have made through our multiyear PVH+ Plan journey to date. While we have important work still ahead of us, since 2022, we have navigated a series of external headwinds, including exiting our Russia business, the introduction of tariffs, and we have also navigated specific geopolitical dynamics. Throughout this period, we have remained steadfastly focused on executing our plan and delivering significant operational progress across all 5 critical areas of the PVH+ Plan, winning with our hero products and categories, driving strong consumer engagement, strengthening our distribution in the marketplace by deepening our partnerships with key wholesale partners and expanding our D2C business, building a global demand-driven operating model and driving operational efficiencies to power our investments in growth and in marketing.

Through this work, we have built a more systematic, repeatable approach, which is a powerful foundation as part of our continued journey to build Calvin Klein and Tommy Hilfiger into their full potential. As we said we would, we divested profit-dilutive noncore businesses, putting 100% of our attention behind our 2 globally iconic brands, Calvin and Tommy. And on an underlying basis, ex divestitures, we have grown those brands at 2% CAGR in constant currency since 2021. At the same time, we have built a strong leadership team with experience to unlock our brand's full potential.

Across our regions, we increased our Americas profitability to double digits ex tariffs. We drove higher quality of sales through our initiative in Europe, and in APAC drove a 5% growth CAGR in constant currency over the period. And as our important work continues, one of the biggest accomplishments is how we have driven brand relevance with the consumers who matters the most going forward. Our most recent consumer research not only confirms that Calvin Klein and Tommy Hilfiger are 2 of the most recognized and loved brands globally, both brands also outperform with the Gen Z and younger millennial consumers. And within these, both brands are performing strongly with the highest value consumer segments, the status-oriented shoppers and style enthusiasts.

This is important because these consumers shop more often, have higher order values and are more loyal. This is a direct result of our multiyear work to ignite Calvin's and Tommy's brand DNA and make them even more relevant for today. A key part in our consumer engagement is the strength we have built on social, where Calvin has the most followers and the highest engagement of our competitive set with 44 million followers across our 4 biggest platforms. Tommy has the third largest following in the industry with 31 million and the same leading engagement levels as Calvin, approximately 4x higher than most of our competitors. In addition, our consumer insights confirm clear product authority in some of the biggest and growing categories in the market. For Calvin, this means the right to play and win in underwear, denim, outerwear and knits. And for Tommy, it means the right to play and win in outerwear, sweaters, shirts and knits.

The strength we have built with the consumer guides our path forward. We are increasingly targeting the best consumer segments for each brand as we expand our product strength across the top 5 categories. We put innovation and newness into creating the best product franchises, and we drive our consumer engagement with a full funnel 360 approach. To make this possible, we are leveraging the strong global product and marketing capabilities for both brands that we have worked to establish. We are also well underway to successfully transitioning the licensed women's sportswear business in the U.S. wholesale channel for both brands to ensure that our product creation across both men's and women's are brand right and positioned to drive sustainable profitable growth.

In the marketplace, we have both increased our focus on our key wholesale partners and have meaningfully strengthened our D2C execution, which now represents approximately half of our sales, up from 44% in 2021. We have done this while elevating the brand experience across digital and stores, delivering digital penetration that is nearly double pre-COVID levels. We have also made significant operational progress in our journey to become a more data and demand-driven company, improving inventory management and building new capabilities, including in AI. Our new collaboration with OpenAI, which we announced in January, will accelerate that progress. Importantly, we drove over 300 basis points of cost savings, including 200 basis points of annualized cost savings from our cost efficiency initiatives.

Over the past few years, through the disciplined PVH+ execution and despite the multiple external headwinds, we have built a strong foundation in both Calvin Klein and Tommy Hilfiger to be able to drive sustainable profitable growth with increasing pricing power across our 3 regions. As I've said before, every season, you will see us expand on this further.

Now as we look ahead, I want to share our actions for 2026 that will help us do just that. Let me start with Calvin Klein. We can't talk about Calvin Klein today without referencing Love Story, the TV show. The cultural resonance of Love Story reinforces the timeless power of the Calvin Klein brand and its authentic place in American fashion with a premier driving a surge in online interest in Calvin. We're capitalizing on the Love Story effect in multiple ways that are true to the brand, leveraging the '90s focus in our product assortment and marketing and supercharging it in e-commerce and stores with a spring '90s edit on calvinklein.com that is driving above-average social engagement and click-through rates.

We are also styling key talent, including actress Sarah Pidgeon, who placed Carolyn Bessette-Kennedy at the recent Vanity Fair Oscar Party. And we hosted a New York Magazine pop-up collaboration at our new SoHo store, achieving our highest daily sales and visitors to date. We are continuing to lead the 90-style conversations globally, a look that we help define by leaning into the styles driving the trend today across our platform. You will see this across our Spring campaign featuring global ambassador Jung Kook, which pairs cultural influence with hero product storytelling to drive consumer demand. Here, strong social engagement is driving fantastic sell-throughs with sales of campaign items up over 50% after launch and the jackets Jung Kook wore reaching 60% sell-through in just 2 weeks.

In March, we launched a new Spring campaign featuring FC Barcelona and Brazilian national team soccer star Raphinha, debuting our most recent underwear innovations, Icon Active Mesh and Icon Cotton Stretch with a stitch-free Infinity Bond waistband, we drove social engagement up 62% and sales of featured products were up 11% versus a similar campaign last year. Our most recent runway show at New York Fashion Week once again placed Calvin Klein at the center of the cultural conversation, supported by top global talent, including Jennie, Dakota Johnson, Brooke Shields and Lily Collins. The fall 2026 show was once again the #1 in share of voice and #1 in earned media value from all of New York Fashion Week. Finally, we just unveiled Calvin's latest Spring campaign, starring after Dakota Johnson, styled in new underwear and denim styles. Since the campaign launch, website traffic has been up double digits versus last year in Europe. Sell-through has also been strong. Sales in key featured items showed up 4x versus the time prior.

For Tommy in 2026, we are doubling down on our core product categories and set out to create the best product franchises in the market. Moving forward, you'll see us expand our category acceleration across sweaters, outerwear and knits and shirts. We have started the new fiscal year with a healthy momentum with the launch of the brand's Spring 2026 campaign, which features an invitation to Tommy's aspirational world. The campaign has been very well received across markets, serving as both a brand beacon and amplifying our 2026 product priorities. We will continue to leverage our partnerships with Liverpool Football Club and Cadillac F1 throughout the year with a steady drumbeat of consumer engagement. As part of our new multiyear Liverpool partnership, Tommy Hilfiger will dress the full team from match arrivals 6 to 8 times per season, and each tunnel walk represents an opportunity to drive scaled brand visibility and product sales as we style players in our most aspirational Tommy icons and offer shop the look access.

In our first tunnel walk, we drove a 200% increase in sales for these products in Europe compared to the prior week. For Cadillac Formula 1, we are activating the partnership with store pop-ups, driver appearances and local influencer styling. Following the first 2 races of the season in Melbourne and Shanghai, where we activated with Valtteri Bottas and Chinese driver, Zhou Guanyu, together with local Tommy ambassadors, our China Tommy D2C sales were up double digits in March versus last year. Our expanded partnership with Sergio "Checo" Perez also continues to drive a consistent uplift in traffic. And in the U.S., the Tommy icons Checo has won so far this season, such as our cable knit polo have seen double-digit sales increases. Overall, our exclusive Tommy partnerships are driving scaled global engagement with our consumers, generating over 700 million impressions and an increase of over 300% in media value versus prior campaigns.

And earlier this week, Tommy announced Travis Kelce, American football icon, 3-time Super Bowl Champion as a global brand ambassador and creative collaborator, one of sports biggest stars on and off the field. Kelce will bring his unique perspective to Tommy Hilfiger as part of the series of campaigns kicking off in fall 2026. Looking ahead for our regions, we have started fiscal 2026 with momentum, which has continued through quarter-to-date, where we see spring product season do better than last year same time.

In Europe, following a tough second half last year, this year, we are expecting a gradual improvement in top line trajectory as we progress through the year. You will see our investments in marketing and the consumer experience start to cut through in the marketplace. In wholesale, we closed our fall 2026 order book up low single digit, marking the third consecutive season of growth. When taken all together, we expect our overall revenue for the region to be up slightly in 2026 compared to 2025. In the Americas, we continue to work towards unlocking our full potential and expect to grow across all channels by elevating the brand experience, including targeted remodels, strengthening the marketplace distribution and driving pricing power.

Overall, we expect modest growth for D2C 2026, and we expect continued growth in e-commerce as we continue to further strengthen our digital position. And in wholesale, we expect to see growth driven by the transition of previously licensed Tommy Hilfiger women's sportswear in-house. In Asia Pacific, we're off to a great start with Lunar New Year, where we launched a dedicated capsule featuring brand ambassador and global K-pop Superstar, Jisoo, exceeding expectations. We expect to continue to drive growth in the region in 2026, up low single digits in constant currency, powered by D2C. The region will continue to be a growth engine for us long term, and we expect to return to growth for the full year.

Turning to our licensing business. We continue to build out our already strong licensing business, where our licensing partners help bring our vision to life across multiple lifestyle categories from watches and fragrances to eyewear and are critically important to how we drive sustainable profitable growth. In conclusion, our focus is clear to unlock the full potential of Calvin Klein and Tommy Hilfiger by building on the strong foundation we created and drive next-level execution of our PVH+ Plan. While we are seeing early momentum in 2026, we remain conscious of the current macroeconomic environment, and we are laser-focused on building out further strength in the consumer offerings in both of our brands.

And with that, I'll turn the call over to Melissa.

Thanks, Stefan. Good morning. My comments are based on non-GAAP results and are reconciled in our press release. As Stefan discussed, our fourth quarter and full year results delivered or exceeded expectations across key financial metrics. In the fourth quarter, we generated 6% reported revenue growth, flat in constant currency, drove sequential improvement in our year-over-year gross margin percent and continued our focus on strong SG&A discipline. We drove significant sequential improvement in our operating margin, reaching 10% for the quarter despite a negative 170 basis point gross tariff impact and ahead of plan. EPS was 17% higher than the prior year.

For the full year, we delivered 3% reported revenue growth, up slightly in constant currency, both in line with our guidance, with 8.8% operating margin for the year despite a negative 80 basis point gross tariff impact and EPS of $11.40. Throughout the year, we drove quarterly sequential improvements in our gross margin comparisons as we set out to do and exited the year with over 200 basis points of annualized cost savings from our Growth Driver 5 cost savings actions. We ended the year with healthy inventory levels, up 5% compared to last year and 1% excluding the impact of tariffs, well positioned heading into 2026.

We delivered strong free cash flow for the year of over $500 million and returned over $560 million to shareholders through the repurchase of nearly 8 million shares of common stock through our accelerated repurchase program and open market purchases. Looking ahead to 2026, we are planning full year reported revenue up slightly compared to 2025 and flat to up slightly in constant currency. We project operating margin to be approximately 8.8%, in line with 2025, even with a negative 215 basis point gross tariff impact as we drive underlying gross margin strength and tariff mitigation actions while investing in our brands through full funnel marketing.

I will now discuss our 2025 results in more detail and then move to our 2026 outlook. Reported revenue for the fourth quarter was up 6% and flat in constant currency, exceeding our guidance. From a regional perspective, EMEA was up 8% reported and down 3% in constant currency. Direct-to-consumer trends from Q3 generally continued in Q4, down mid-single digits in constant currency with wholesale down 1%. Revenue in Americas was up 4%, driven by high teens growth in wholesale, reflecting a mid-single-digit increase in the base business, the impact of bringing Calvin Klein women's sportswear and jeans wholesale in-house and initial shipping related to the Tommy Hilfiger women's sportswear and performance wholesale transition in-house. D2C revenue in Americas was down mid-single digits in total and in stores, partially offset by continued growth in our e-commerce business.

In Asia Pacific, revenue was flat as reported and down 2% in constant currency, which included an approximately 4% headwind from the timing of Lunar New Year compared to the fourth quarter last year. Excluding the Lunar New Year impact, Asia Pacific returned to growth in the fourth quarter. D2C revenue was down low single digits in constant currency, but up excluding the Lunar New Year timing effect, with continued growth in our e-commerce business, driven by strong Double 11 performance in China. Wholesale revenue was down mid-single digits in constant currency as our wholesale partners in the region continued to take a cautious approach. In our licensing business, revenue was up 10%, primarily due to the impact of nonrecurring contractual royalties in the quarter.

Turning to our global brands. Tommy Hilfiger revenues were up 7% as reported and up 1% in constant currency. Calvin Klein revenues were up 3% as reported and down 1% in constant currency. From an overall PVH channel perspective, our direct-to-consumer revenue was up 1% as reported and down 3% in constant currency, which included an approximately 1% headwind from the timing of Lunar New Year compared to the fourth quarter last year. Sales in our retail stores were flat as reported and down 4% in constant currency. Sales in our owned and operated e-commerce business were up 5% as reported and flat in constant currency as strong growth in Asia Pacific and Americas was offset by the decline in EMEA.

Total wholesale revenue was up 11% as reported and up 4% in constant currency, which reflects the North America license transitions, partially offset by the decreases in EMEA and Asia Pacific. In the fourth quarter, our gross margin was 57.6%, stronger than planned, reflecting significant sequential improvement across all regions as compared to the third quarter. The decrease of 60 basis points compared to last year includes a decrease of approximately 170 basis points due to the gross impact of tariffs, a decrease of approximately 50 basis points from our North America license transitions, as we've previously discussed, and a marginally higher promotional environment.

These decreases were largely offset by our proactive tariff mitigation actions, enabling us to mitigate over 40% of the increased tariffs in the quarter and our efforts to lower product costs as well as favorable foreign exchange. Importantly, we saw significant sequential improvement in Calvin Klein gross margins in the fourth quarter as we steadily work through the previously discussed transitory operational issues. SG&A as a percent of revenue improved 20 basis points versus last year to 47.7%, reflecting efficiencies from our Growth Driver 5 cost savings actions, partially offset by our increased full funnel marketing investments to build momentum heading into 2026.

EBIT for the fourth quarter was $250 million and operating margin was 10%, roughly in line with 10.3% operating margin in 2024 despite the 170 basis point negative gross tariff impact. Fourth quarter EPS was $3.82, a 17% increase over $3.27 last year, reflecting a negative $0.70 growth impact related to tariffs and a positive $0.33 benefit related to exchange. Interest expense was $19 million, and our tax rate was approximately 23%. For the full year 2025, we delivered our overall revenue plan. Regionally, EMEA was down low single digits in constant currency with positive first half D2C trends offset by muted consumer activity in the second half, driven by a tougher backdrop in the region.

In the Americas, we delivered a mid-single-digit increase in revenue, driven by the North America license transitions and strength in e-commerce. And in Asia Pacific, we drove steady quarterly sequential top line improvement after a challenging start to the year, ending the year overall down mid-single digits in constant currency, including a low single-digit impact from the Lunar New Year timing. While gross margin of 57.5% was lower than last year, including the approximately 80 basis points negative impact of gross tariffs, of which we mitigated approximately 30% for the year, it was stronger than planned. SG&A as a percentage of revenue improved 70 basis points over the prior year to 48.7% as we drove meaningful savings from our Growth Driver 5 cost savings actions. We achieved operating margin of 8.8%. Interest expense was $79 million, taxes were approximately 22% and EPS was $11.40, which included a negative impact of $1.10 from gross tariffs and a positive impact of $0.56 from exchange. This compared to last year's record high non-GAAP earnings per share of $11.74.

And now moving on to our 2026 outlook. As Stefan discussed, in 2026, we will build on the strong foundation we've created and drive the next level execution of the PVH+ Plan. While wholesalers remain cautious and the consumer macro environment continues to be uneven, our European order books are positive, and we are expecting growth in D2C in both brands and in all 3 regions for the full year. At the same time, we expect to absorb the full impact of U.S. tariffs in 2026. Our outlook assumes a 15% tariff rate on goods coming into the U.S. starting from February 24 of this year, with inventory receipts prior to that at tariff rates previously in place.

Our guidance does not assume any tariff refunds. We expect an approximately $195 million gross tariff cost and EBIT or approximately $3.30 per share based on these assumptions. We continue to take tariff mitigation actions with the benefit of our actions planned to increase quarter-by-quarter throughout 2026 as we work to fully mitigate tariffs over time. It's important to highlight that significant uncertainty remains around the conflict in the Middle East as well as evolving global trade policies, the broader macroeconomic environment and consumer spending behavior. Our business in the Middle East, excluding Turkey, is about 1% of our total revenue and solely a wholesale business, so the profit impact is disproportionate at approximately 7%.

Our guidance is based on current macro and geopolitical conditions and excludes any potential impacts from a prolonged, expanded or more intense conflict in the Middle East. For the full year, our overall reported revenue is projected to be up slightly versus 2025 and flat to up slightly in constant currency. We expect full year operating margin will be approximately 8.8%, in line with 2025 and up excluding the impact of tariffs in each year as we drive operational gross margin improvements and annualize our Growth Driver 5 cost savings, some of which we will reinvest in the business, particularly in marketing. We are projecting earnings per share in a range of $11.80 to $12.10 compared to $11.40 in 2025.

Regionally, in EMEA, where we saw lower traffic and weaker consumer sentiment in the market in the back half of 2025. For 2026, we are planning for a gradual top line improvement as we progress through the year. We expect the first half to continue to be tougher within this backdrop with second half improvement as our investments in marketing and in elevating the consumer experience drive even greater strength in the region. In wholesale, as Stefan mentioned, we closed our fall 2026 order books up low single digits. At the same time, the overall macro environment remains choppy, and we are planning our revenues prudently. We expect our overall revenue for EMEA will be up slightly in constant currency compared to 2025.

In the Americas, we are planning revenue up low single digits compared to 2025 with growth in wholesale driven by the Tommy Hilfiger women's sportswear and performance wholesale transition. And in D2C, despite the choppy consumer backdrop and lower traffic trends in stores in 2025, we entered 2026 with momentum, which has continued in the first quarter to date. We also expect continued growth in e-commerce as we continue to further strengthen our digital position. Overall, we are planning modest growth in D2C for 2026.

Next, in Asia Pacific, we are planning 2026 revenue up low single digits in constant currency, led by growth in D2C, partially offset by a decrease in wholesale as we expect our partners in the region to continue to take a cautious approach. Our licensing business is expected to be down low teens, reflecting the North America license transitions. Excluding the impact of these transitions, we expect low single-digit growth in the balance of the licensing business. Overall, the impact of the licensing transitions, net of the increase in wholesale is expected to result in a less than 1% net increase in our total revenue.

We expect gross margins to be up slightly compared to 2025 as we plan to more than offset an approximately 215 basis point impact of gross tariffs in 2026, which compares to approximately 80 basis points in 2025 and an approximately 50 basis point impact from the North America license transitions, with gross margin improvements driven by our tariff mitigation actions, favorable product costs, including foreign exchange and other business improvements. We expect to mitigate approximately 60% of the tariff impact for the full year with the impact of our mitigation strategies becoming progressively more meaningful as we move through the year, exiting the year with over 75% mitigation on an annualized basis heading into 2027.

We expect SG&A as a percentage of revenue to be up slightly as we reinvest savings from our Growth Driver 5 cost savings actions back into the business, including an over 50 basis point increase in marketing as a percentage of sales compared to 2025. We expect our full year operating margin will be approximately 8.8%, including the 215 basis point growth headwind from tariffs and in line with 2025. Interest expense is projected to be approximately flat compared to $79 million in 2025. Our tax rate is estimated at a range of 22% to 23% and EPS is projected to be a range of $11.80 to $12.10. Looking at the balance sheet, we are projecting capital spending of approximately $250 million as we invest globally to refresh our stores and our shop-in-shops in our wholesale partner stores and continue to strengthen our digital position. And we are planning at least $300 million of share repurchases in 2026.

Now turning to the first quarter. We are projecting first quarter reported revenue to increase slightly versus 2025 and decreased low single digits in constant currency, with growth in D2C offset by lower wholesale. Importantly, as Stefan mentioned, we have started 2026 with positive momentum and higher spring season sell-through trends across both brands and all 3 regions. In EMEA, we expect revenue to be down mid-single digits in constant currency overall and in both channels, reflecting the choppy macro environment that has continued into 2026 and wholesale shipping timing, including a slightly larger portion of the spring season shipping in Q4 last year than in Q1 this year.

In Americas, we expect revenue to be down slightly as growth in D2C is expected to be more than offset by lower wholesale, reflecting a first half to second half timing shift compared to 2025. And in Asia Pacific, we expect revenue to be up low single digits in constant currency as growth in D2C, including the favorable timing of Lunar New Year compared to the prior year is offset by lower wholesale as our wholesale partners in the region continue to take a cautious approach. In our licensing business, revenue is expected to be down mid-single digits, driven by the previously mentioned North America license transitions. The balance of the license business is expected to grow low single digits.

Tariff impacts will weigh more heavily on our year-over-year gross margin comparisons in the first half due to the timing of when the tariffs were effective in 2025 as well as the sequentially increasing impact of our mitigation strategies. In Q1, we project a gross tariff impact of approximately 230 basis points, about half of which we expect to offset through our tariff mitigation actions in the quarter. Despite this significant negative impact, we are projecting first quarter gross margin to be nearly flat compared to the prior year as our operational improvements to drive gross margin expansion, including our tariff mitigation actions and favorable product costs, are offset by the negative tariff impact and the gross margin differential from transitioning license categories in North America back in-house.

We are projecting first quarter SG&A as a percent of revenue to be up approximately 150 basis points versus 2025. We are reinvesting a portion of our Growth Driver 5 cost savings back into the business, including an approximately 100 basis point increase in marketing spend compared to Q1 last year. In the first quarter of 2025, we reduced our marketing spend due to the Calvin Klein product delays and the environment in China. This year, we are more heavily weighting our marketing spend to the first half to amplify our cut-through campaigns and drive brand heat early in the year.

While this will drive our first quarter operating margin down, we'll see sequential improvement each quarter throughout 2026. In total, we are projecting our first quarter operating margin to be in a range of 6% to 6.5%, including the 230 basis point gross tariff headwind compared to 8.1% last year, which did not include the higher tariff. Earnings per share is projected to be in a range of $1.65 to $1.80 compared to $2.30 in the prior year. Our tax rate is estimated at approximately 22% and interest expense is projected to be approximately $20 million.

Before we open up for questions, I want to reiterate that while we continue to navigate macro uncertainty, we have a clear focus on what is within our control and driving the next level execution of the PVH+ Plan. We have started 2026 with positive momentum and are expecting growth in D2C in both brands and in all regions for the full year. We are continuing to invest in our brands and our business throughout the year and expect to drive gross margin up despite the impact of tariffs with operating margin for 2026 at approximately 8.8%, in line with 2025 and reflecting underlying strength.

And with that, operator, we would like to open it up to questions.

[Operator Instructions] We'll take our first question from Bob Drbul with BTIG.

Stefan, I was just wondering, can you talk about how you leverage the information about your consumer and the brand health across the PVH plan throughout the business?

Yes. Bob, thanks for the question. It's a really important one. So as we shared in our prepared remarks, we do extensive consumer research and really exciting to see that the work that we have done over the past few years result in standing stronger with the Gen Z and young millennial than our peer group. And within the Gen Z and young millennial, it's really the combination between the strength with the Gen Z and young millennial. And within those groups, the segments that the status interested segments, the style-driven consumer segments because we know that they shop more often, they spend more and they're more loyal.

So the way we deploy that knowledge is through social, through e-commerce, expanding, we target these consumers and we build out our category strength from the 2, 3 categories where we see real strength already today in both Calvin and Tommy to the top 5 category. Top 5 categories, it's over 60% of the business. So it's really targeting the consumers where we are the strongest that spends the most and the most interested in style and status and then driving 360 consumer engagement with that consumer. And then that's how we are starting to turn the consumer flywheel. And that's part of why we delivered a stronger-than-expected Q4 and why we are off to a strong start despite the uncertain macro, that's why we're off to a strong start in the beginning of '26 as well.

We will move next with Michael Binetti with Evercore.

I guess this might be for Melissa, but maybe on the EBIT margins. So we entered the year with margins down 160 to 200 basis points in the first quarter, but then we get to flat in the year. So -- and I think you said EBIT margin improves each quarter. Could you just clarify, is that the level or the year-over-year? Maybe just give us a little bit of help on how to think about the cadence of EBIT margin through the year after first quarter?

And then I guess backing up, Stefan, on Americas, the revenues planned down slightly in the first quarter, D2C growth, but I think you said wholesale negative. And I would think you would have about a mid-single-digit lift from the licenses. So maybe just a bigger picture thought on why you think -- and we can see all the marketing and we can see everything with Calvin going viral. I'm just -- I'm curious why you think wholesalers have such a gap to what you're seeing and some of the successes and growth in D2C at this point and if that can reconcile itself as we move through the year?

Yes. Thanks, Michael. Let me start and then Melissa will be able to take you through there is timing shift in wholesale, to your point, Michael, in Q1, and there are a number of other shifts as well like the tariff impact that starts off higher and then goes down. So -- but let me start from a business perspective and just say, so we are quite far into Q1 by now, and we have a positive momentum in the spring season sell-through for both Calvin and Tommy across all regions. So we see the stronger D2C trend across both brands, all regions. And in Q1, one factor that also impacts Q1 is that we are strategically increasing our marketing spend. And some of that spend is somewhat front-loaded in the year. So full year basis, marketing spend is up double digit.

But the first quarter, as Melissa mentioned, there are shifts from the market conditions last year to this year that gives us the confidence to invest more early. And we see that in Calvin through the strength in the Spring campaign. We see it with the fashion show with the amplification of the Love Story interest. In Tommy, we see it through Cadillac Formula 1. We see it with the Liverpool partnership. We see it with the Spring campaign. So we're really leaning in to turn that consumer flywheel. But Melissa will be able to take you through more of the quarter-to-quarter timing.

Yes, sure. Thank you, Stefan. So as we think about the trajectory for the year, there's several moving parts. Just on the top line, we have started the year, as we talked about, with positive momentum, with spring season product selling up versus last year in both brands in all 3 regions. And while the macroeconomic environment remains uncertain, we do expect growth for the full year. But in the first half, we're lapping the stronger comparisons in Europe and the Americas from last year.

While in the second half, we expect to drive improvement as we continue to focus on what is within our control and see our investments drive strength to the consumer. And I would just add that in Q1, when you look at our overall revenue on a 2-year stacked basis, which takes out some of the wholesale timing that's impacting our comparisons, our total revenue growth in constant currency is sequentially improving from Q3 to Q4 and then from Q4 to Q1.

And then when we look at the profit cadence, there are also 2 main parts that I'd highlight. I mean first, as Stefan mentioned, there's the tariffs. And in the first half, we are burdened by tariffs, which only had a very small impact in the Q2 last year. And at the same time, we expect that our tariff mitigation actions will become increasingly impactful as the year progresses, and we expect to exit the year with over 75% of the tariff mitigated on an annualized basis.

And then the second piece, as Stefan mentioned, is marketing, where we've strategically weighted our investment in the first half, particularly Q1 ahead of the key consumer moments to align with our commercial plan and activate the full funnel and drive that heat early in the year. And you'll remember that in the second half of 2025, we had already stepped up our marketing investment versus our original plans and so that we lapped that in the second half of '26. And then lastly, from an FX perspective, there's just 2 things I'd highlight. With translation, we see a favorable impact year-over-year, more heavily weighted to the first half, and you can see that effect in our Q1 revenue guidance.

And then on our inventory costs, it's actually the opposite, where we see the favorable impact building as the year progresses, and that comes through a strength in our gross margins. And importantly, I would just add that on inventory costs overall, we're starting to see the benefit in our product costs as we leverage the scale and the power of PVH and our 2 global product kitchens. And we saw that benefit start to come through in Q4, and we'll continue to see that benefit in 2026. So a lot of parts. But overall, we expect progressive year-over-year improvement in our operating margins.

We will move next with Jay Sole with UBS.

I want to ask you about Love Story. I mean it really was a phenomenon. I just want to ask about the learnings from it just because it was it bigger than you expected? And how did it play out? And like I said, what are the learnings that you'll take going forward?

Yes. Thanks, Jay. It's almost impossible to have a conversation about Calvin right now without Love Story. So it's also a really, really great question. So could we anticipate it? I don't believe anyone could have anticipated the magnitude of the hit it has become globally and across generations. So if you look -- we just got the data yesterday that over 40 million people have watched Love Stories, Hulu's most streamed show ever. So what's the learning for us and what's the effect?

When the show launched, we could see the search increase for Calvin Klein, e-commerce traffic, B2C is positive. The consumer is looking for iconic Calvin, starting with iconic underwear and iconic denim. The most sold denim style right now is the '90s fit. So some of the key learnings here is you can't plan for these things. But what I'm really excited about and is what the team has done over the past 3, 4 years is we have gone back to the DNA of what made Calvin collide with culture back in the '90s when that happened and really taking 100% of that iconic DNA and then working hard to make it 100% current. So when something like Love Story hits, we -- it's just a really nice sync up with where we are with the brand.

So it also shows the power of the brand. So we are talking about since we started the PVH+ journey that there is something special in Calvin and Tommy because they are one of a handful of brands that have collided with culture and become globally iconic. This is a good example of this because the interest we see spans generations. And then one of the biggest audience parts of Love Story is also where we have built the most strength, which is within the young millennial and the Gen Z consumer. So Calvin really helped shape American fashion and the '90s look. And yes, just -- we see it in the demand. We see it in the interest for the brands, but this is something that has been built over the last 3, 4 years, and we just appreciate it. And for those of you who haven't watched Love Story, please do. It's a great show.

We will move next with Brooke Roach with Goldman Sachs.

Stefan, I was wondering if I could get your latest thoughts on the path to deliver sequentially and sustainably stronger sales momentum in your Europe business. Beyond the easier compares, what are the most important drivers of that sequential improvement that's planned throughout the year? And what is a more appropriate medium-term algorithm for European growth on a go-forward basis?

Yes. Thanks, Brooke. As we mentioned, there are 2 big factors here. One is that the spring product season in both Calvin and Tommy in Europe is up versus last year. We're still relatively -- sorry, relatively early in the spring. So we are 1 week away from Easter. Last year, it was 3 weeks later. But we have a very good read on early spring product up versus last year. And that is both in D2C and wholesale.

And then the forward-looking wholesale order books for fall is up low single digits. So you will see that -- you will see it the combination of keep building the D2C momentum powered by our increase because also in Europe, we are stepping up the marketing investments, and we see the effect of that. And we will see the effect of that gradually improve over the year. So you will see our market presence for Calvin and Tommy step-by-step through the year improve. And then we build on the positive start to spring, and then we have the belief from our partners in the forward-looking order books.

We will move next with Dana Telsey with Telsey Group.

As you think about the uptick in the marketing spend as we go through the year, the first quarter having the most pronounced impact, how do you think of Tommy and Calvin, what we should be watching for, for newness moving through? And the addition of Travis Kelce to the platform, are there other new celebrities or sports icons that we should be watching for also? And Stefan, how do you think this as sales drivers for the brand?

Yes. Thanks, Dana. What -- so let me start with Tommy this time. So I'm really excited that earlier this week, as you alluded to, we revealed that American football icon, 3-time Super Bowl winner, Travis Kelce is becoming our Tommy brand ambassador and creative collaborator. And we know when we have done these collaborations in the past, how much power there is because there is a lot of love for Travis Kelce out there, a lot of love for Tommy and then combining those really creates energy and interest. And the way we build that collaboration is, again, going back to the DNA of Tommy's classic American cool.

And then as I mentioned, for Tommy, we are building out the -- and putting innovation into our strongest franchises into our 5 most important categories. So when looking at categories for Tommy, it's outerwear, sweaters, shirts, knits, as an example. So it's putting innovation in newness. It's almost like internally, it's very clear, and I push it all the time with the teams is it has to be 100% iconic and 100% current. So that's what we're going to do through the collaboration with Travis. We are also doing it in Tommy. So what you will see more of is building out the Cadillac Formula 1 partnership and the Liverpool Football Club partnership.

So Liverpool became, as I mentioned, the #1 engaged social post ever in the history of the brand. And what's really exciting about how the brand makes these collaborations shoppable is Cadillac Formula 1, we were able to launch the fanwear, the Tommy Cadillac Formula 1 fanwear at around the Super Bowl. And for a few days there, 50% of the sales in our U.S. e-commerce was Cadillac Formula 1 Tommy. So there is an enormous interest in that. And then through the races, we work with the drivers, we work with local influencers and then we have shop the looks. So when you see Tommy show up with your Formula 1 team that you follow or you see Tommy with some of the best footballers in the world in Liverpool, you can shop the looks starting from social all the way to e-commerce to e-mails.

So some of the biggest impressions we have had since we launched Cadillac Formula 1 and Liverpool. So you'll just see us build out Tommy's presence through those partnerships. And then in Calvin, what you will see in Calvin is starting this spring, you just -- already, you have seen the Spring campaign with Jung Kook, the famous K-pop star, campaign items. So what we -- if you look closer at those campaigns, we build out newness and innovation in underwear, in denim, in outerwear, in knits, and you start to see how that drives sales. So if you look at the Jung Kook featured products prior to the campaign and after the campaign, they are up 50%. And the outerwear that he wore had a 60% sell-through in 2 weeks. Dakota Johnson, same thing. What she war in innovation in underwear was shop the look and became one of the highest selling underwear styles that we have.

So when we introduce innovation and newness into our icons, whether it's underwear or denim, et cetera, that's how we drive this 360 engagement. So you will just see a consistent drumbeat of that towards that consumer target, the Gen Z, the young millennial and the standard shopper and the style enthusiasts. So that's -- over time, you'll just see us build that out.

We have time for 1 more question. I look at Sheryl now, I get to signal 1 more question.

We will take our last question from Tom Nikic with Needham.

Just want to ask about the expectations for direct-to-consumer growth this year. And I'm wondering how much of that is driven by pricing in order to mitigate tariffs and how much is driven by expectations for improvement in traffic or unit volume?

Yes. Thanks, Tom. So let me start and then hand over to Melissa. But overall, we are pleased to see in North America, how we are able to take pricing by offering the consumer great value. So you see that in D2C, in -- you see that across channels really, but your question was about D2C. So you see the pricing power and the tariff mitigation that coming out of this year, we will have mitigated 75% of the tariffs. And then across the board, we make sure that we drive pricing power in multiple ways. But it starts by being really focused on these 4 or 5 categories that we accelerate and then putting innovation in the franchises and then cutting the long tail of product. There is a lot of pricing power and margin gain over time that we will tap into more and more.

And then when we drive the consumer engagement on top of that product strategy and then make it come to life all the way through, that's when we see we're able to drive pricing power. So it's very much connected to where we strengthen the consumer offering. So in Calvin Klein, underwear, denim, we're able to drive pricing power because we offer something that's more valuable to the consumer.

Yes. And I would just add to that, Tom, that from a D2C perspective, we're planning our overall D2C business up low single digits in 2026, and that includes growth in both brands and across all regions for the full year, not just in our North America business where we're faced with tariffs.

All right. Thank you very much, Tom, and thanks, everyone, for joining our call today. Looking forward to reconnecting after Q1, and we are heads down ready for the big Easter period here. So we're going to get back to business and looking forward to speaking with you in a quarter. Thank you.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, everyone, and welcome to today's PVH Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please note this call may be recorded. [Operator Instructions].

It is now my pleasure to turn today's program over to Sheryl Freeman, Senior Vice President of Investor Relations.

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. Third Quarter 2025 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer; and Zac Coughlin, Chief Financial Officer. This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material. It may not be recorded, rebroadcast or otherwise transmitted without PVH's written permission. Your participation constitutes your consent to having anything you say appear on any transcript or replay of this call.

The information to be discussed includes forward-looking statements that reflect PVH's view as of December 3, 2025, of future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's SEC filings and the safe harbor statement included in the press release that is the subject of this call. These include PVH's right to change its strategies, objectives, expectations and intentions, and the company's ability to realize anticipated benefits and savings from divestitures, restructurings and similar plans such as the actions undertaken to focus principally on its Calvin Klein and Tommy Hilfiger businesses and its current multiyear initiative to simplify its operating model and achieve cost savings.

PVH does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimates regarding revenue or earnings. Generally, the financial information and projections to be discussed will be on a non-GAAP basis as defined under SEC rules. Reconciliations to GAAP amounts are included in PVH's third quarter 2025 earnings release, which can be found on www.pvh.com, and in the company's current report on Form 8-K furnished to the SEC in connection with the release. At this time, I'm pleased to turn the conference over to Stefan Larsson.

Thank you, Sheryl, and good morning, everyone, and thank you for joining us today. I want to start by thanking our Calvin Klein, Tommy Hilfiger and PVH teams around the world for your hard work this quarter as we continue to make important progress on our multiyear journey to build Calvin and Tommy into 2 of the most desirable lifestyle brands in the world.

For the third quarter, we exceeded our guidance across reported revenue, operating profit and EPS, and we delivered constant currency revenues in line with our guidance. Total revenue for the company was $2.3 billion, down less than 1% in constant currency and in line with our expectations. Third quarter direct-to-consumer revenue was also down 1% in constant currency, partially offset by 1% growth in our wholesale revenue. For the full year, we are reaffirming our constant currency revenue and operating margin outlook and narrowing our reported revenue and non-GAAP EPS outlook to the high end of our previous ranges, reflecting our confidence in our brands and execution despite the continued uneven global consumer backdrop and the impact of tariffs in North America, which Zac will share more details about.

We remain disciplined in our execution of the PVH+ Plan, where we lean into the iconic global power of Calvin and Tommy, and focus on the key growth categories where each brand has the right to play to win with the consumer. We continue to expand innovation and newness across our core product franchises and amplify that in both brands with cut-through full funnel marketing that connects with culture and our target consumer.

In Europe, revenues declined low single digits in constant currency. And coming into the fourth quarter in Europe, we had an unplanned start to Black Friday and the important holiday period. In the Americas in Q3, our digital channels continued to outperform, driven by strong customer engagement. And also here, the Black Friday and holiday start was on plan. And in APAC, we exceeded expectations again this quarter with strong D2C performance and a notable improvement in China.

We continue to build our data and demand-driven supply chain, reflected in healthy inventory levels, which are up 3% versus last year, including the impact of tariffs. We are also investing in key growth initiatives, especially in marketing, and we have freed up over 200 basis points in SG&A efficiencies over the past 18 months. As we lean into the holiday season, I just came back from visiting 7 of our biggest markets across Europe, U.S. and Mexico. I visited over 100 Calvin and Tommy shop-in-shops, met with key partners and walked our owned and operated stores.

What's clear from these visits are the underlying strength of the consumer love for our brands and the power and potential of our teams and partners. A common thread you will hear me talking a lot about today is that when we lean into the iconic strength of our brands and combine that with innovation and newness in product, marketing and the shopping experience, we win. I look forward to sharing how we did this in Q3 and how we will expand our impact quarter-by-quarter.

Let me start with Calvin Klein, where we continue to build relevance and desirability by connecting Calvin's core DNA to the consumer and cultural conversation. This quarter, we again drove momentum with high-impact full funnel execution in underwear and denim, 2 of Calvin's biggest categories. Building on the strong launch of our new men's Icon Cotton Stretch product franchise, which we amplified through global mega talent, Bad Bunny. This quarter, we brought the same level of product innovation and newness to our largest and most successful women's underwear program. Together with global music superstar, Rosalia, we introduced our new Icon Cotton Modal franchise, driving double-digit growth in these styles globally. Repeating this model, we launched new campaigns with NBA star, Jalen Green, and Real Madrid footballer Trent Alexander-Arnold, driving 20% growth in Icon Cotton Stretch underwear, making our third consecutive quarter of strong growth, and growing total men's underwear mid-single digits.

In denim, we continue to infuse innovation in fashion denim and make it easier for consumers to shop their favorite looks, and we delivered strong growth this quarter, continuing the momentum from Q2. Last month, global brand ambassador and K-pop mega talent, Jung Kook, launched our newest campaign featuring Calvin's iconic denim lifestyle. The campaign went viral globally, driving deeper consumer engagement in one of our most important pillars of the brand. In September, we continued to build the brand's aspirational halo through Calvin Klein runway with our Spring 2026 fashion show in Calvin's hometown of New York City. The show drove record social media engagement, earning the #1 spot among all participating brands, and Calvin alone had a 75% share of voice for the entire New York Fashion Week. As we look ahead to holiday, we're engaging the consumer with seasonal Calvin fashion essentials from social and e-commerce to our stores.

In the marketplace, when we last spoke, we were just opening our Tokyo flagship in Harajuku, representing the ultimate Calvin brand expression and further strengthening our premium positioning. The opening went very well, and we have seen high-quality traffic and conversion. Next week, we'll further advance Calvin's global retail expansion with the opening of the Calvin Klein flagship store here in SoHo, New York, another iconic brand-building location and a true homecoming for the brand.

We also continue to make progress as planned on the transitory operational challenges we previously discussed as we stood up the Calvin Klein global product capability in New York. The challenges created an expected headwind this quarter, but we continue to see the planned improvements in delivery timing and go-in margin we set out for spring 2026.

Turning to Tommy. We continue to take Tommy's iconic DNA of classic American cool and connect it to today's consumer and culture. Every season, through our brand campaign, we invite the consumer into Tommy's aspirational world. We then lean into key growth categories and hero our best product franchises, which are both iconic and infused with newness. In the third quarter, we launched our Hilfiger Racing Club fall brand campaign with talent like Claudia Schiffer and Nicholas Hoult, which followed the success of Tommy's partnership with the global blockbuster film, F1 the Movie.

Connected to the campaign, we executed high-impact full funnel activations, including global events across key cities. For the campaign, global brand ambassador, Jisoo, from Blackpink was featured by Vogue, igniting broad organic reach and engagement. This is a great example of how we convert influence into brand relevance and consumer excitement, both globally and regionally.

This fall, Tommy opened its newest shop-in-shop concept at Galeries Lafayette in Paris, reflecting our multiyear elevation plan to evolve and invest in our shop-in-shops and stores. These investments bring a step change improvement in the consumer experience. And in our test store, we already see the positive impact of the elevated experience with a higher AUR sell-through. Tommy will close the year with this Hilfiger holiday campaign, reimagining iconic Tommy style for the holidays, and we are excited for Jisoo to lead the campaign.

Lastly, I'm excited for the next step in our marketing execution. For spring 2026, we are taking Tommy's aspirational world to the next level, with Tommy himself inviting a strong group of global talent into his world, all wearing Tommy's powerful style icons in seasonally relevant growth categories across both men's and women's. I can't wait for you all to see it.

Now let me turn to our regional performance, starting with Europe. Reported revenue increased 4%, but was down low single digits in constant currency. Wholesale was down less than 1% as positive fall order book growth was offset by lower in-season replenishment and D2C was down mid-single digits. A few factors drove this. First, after an unplanned start to the quarter and 2 consecutive quarters of D2C growth in Europe, in September, we observed a tougher backdrop with more muted activity from our European consumers. Secondly, the expected delays from the transitory Calvin global product challenges put extra strain on our European distribution center, impacting shipments for both Calvin and Tommy, which made us lose a few critical weeks of full price selling. Thirdly, we had an especially tough season for cold weather outerwear, a big fall category for both Tommy and Calvin.

Importantly, we are directly addressing these factors with what's within our control. Independent of the consumer backdrop, where we have driven the most product innovation and newness for this fall in categories such as sweaters and pants for Tommy or underwear and fashion denim for Calvin, we drive positive growth. And season by season, you will see us expand iconic innovation and newness across bigger and bigger parts of the assortment.

As I shared previously, we remain on plan to resolve the transitory challenges from the setup of the Calvin Klein global product capability. And for spring, we are on time from our suppliers, and we have captured the go-in margin improvements we targeted. And in cold weather outerwear, even without the delays, the full price selling window is becoming shorter as consumers every season lean more into lighter transitional outerwear that can be worn for a longer period of time. And even though our transitional outerwear across both brands performed well, and we have increased its share of total outerwear, going forward, we need to accelerate this shift even further. In regions where we have already done that, like in APAC this season, it has performed very well.

As I mentioned earlier, in Europe, the holiday season and important Black Friday week is on plan. And in parallel to keeping this momentum up, we are preparing for our biggest Partner Day yet in January, where we will bring over 500 of our global partners to Amsterdam to show how we, for spring and fall 2026, are amplifying the increased innovation in product with marketing to cut through even more with the consumer. This includes the next level Tommy Lifestyle campaign, further strengthening of Europe-focused talent and increased shop-in-shop rebuilds.

Next, turning to the Americas. We grew overall revenue by 2%, in line with our plan of low single-digit growth, driven by wholesale growth. In a continued choppy macro backdrop, D2C declined low single digits. Within D2C, we drove higher AURs and digital continued to outperform, delivering double-digit growth. This was supported by another quarter of double-digit traffic growth and driven by product strength and elevated mid-funnel marketing.

Our team continued to lean into the next level execution of the PVH+ Plan as we work to unlock the full growth potential of both brands in the region. A great example is the denim category, where we grew across both brands and included newness in product, stronger presentation, improved fit guide and enhanced associate training. Looking ahead, we continue to build brand desirability in the region through increasing our refits of our North America retail fleet.

Moving to Asia Pacific. For the second consecutive quarter, we delivered better-than-expected performance. Revenue was flat in constant currency, a sequential improvement from Q2, driven by an improvement in both D2C and wholesale with gross margin up versus last year. Importantly, D2C turned to positive growth with notable improvements in China, Japan and Australia. Highly relevant global activations across both brands, amplified by regional talent, drove continued e-commerce growth up high single digits. Driven by our hero products, Tommy delivered double-digit growth in key categories with transitional outerwear and sweaters both up approximately 20% across men's and women's. Calvin saw sequentially stronger growth in fall product, driven by the newly launched underwear programs in both men's and women's.

We generated strong results during key consumer moments such as Golden Week and Chinese Valentine's Day, and we just finished Double-11, the largest consumer moment of fiscal 2025, where we drove gross merchandise revenue 15% higher than last year, and Calvin and Tommy again ranked among the top international brands on Tmall. Through strong execution, we continue to deliver sequential improvements in performance. We have increased investments in marketing to activate the full funnel and continue to expand new stores across APAC, all reflecting the importance of the region as one of our key growth drivers. In addition, both Calvin and Tommy were proud to participate as first-time exhibitors at the China International Import Expo, building on our long-standing presence and commitment to the market.

Turning to our licensing business. Revenues in licensing were lower versus last year, reflecting the transition of previously announced women's North America wholesale categories. As we have shared before, our large and diversified global licensing business is a key competitive advantage. When we ourselves lean into our core categories to turn the brand-building consumer flywheel, our long-term partners bring their expertise across multiple complementary categories. Consistent with the outerwear category classification business for the U.S. wholesale channel, we recently entered into a new licensing agreement for the women's dress classification with an expected launch in spring 2027. Both categories live outside of our brand-specific lifestyle pads. Additionally, in Q3, we held a Global Licensing Summit here in New York with all our partners, where each of our brands shared their key growth strategies and where our key partners showcased how they, from those brand strategies, drive consumer engagement and growth in the categories they are the experts in.

Next, a quick moment on leadership. We are excited to welcome Patricia Gabriel, who joined us last month as Chief Supply Chain Officer and Global Head of Operations. She is succeeding David Savman, who earlier this year took over the Global Brand President role for Calvin Klein. Patricia is a consumer-centric leader with a strong proven track record, and she will help further accelerate our PVH+ Plan progress. And a few weeks ago, we announced that Zac Coughlin, our Chief Financial Officer, will be departing for a new opportunity outside of our industry.

I want to thank Zac for his partnership and contributions to the business and to me personally. Over the past several years, Zac has played an integral role in advancing our PVH+ Plan progress and driving important efficiencies across the company. Thank you, Zac, and we wish you all the best in your next chapter. Zac will stay with us through the end of December, and we have already begun a global search for our next CFO. In the interim, Melissa Stone will serve as our CFO. Melissa has over 2 decades of PVH financial leadership experience across accounting, controlling and FP&A, giving her a deep understanding of our global business. And I would like to thank her and our full finance leadership team for stepping up during this time.

In closing, we are fully geared up to deliver the rest of the holiday season and the full year as we continue to step-by-step and season-by-season build Calvin Klein and Tommy Hilfiger into their full potential. There are only a small handful of globally iconic brands like Tommy Hilfiger and Calvin Klein, and we have 2 of them. In any consumer backdrop, we remain relentlessly focused on the levers within our control to keep leaning into our iconic brands, and through our PVH+ Plan, continue to strengthen our product, marketing and marketplace experience in a systematic and repeatable way. Everywhere we do this, combining our iconic brand strength with innovation and newness, we're already driving increasingly profitable growth with the consumer today.

And with that, I'll turn the call over to Zac.

Thanks, Stefan, and good morning. First, on a personal note, as this marks my last earnings call at PVH, I want to thank the PVH team as well as our customers and shareholders. I am truly grateful for the time that I have spent at PVH, working closely with Stefan and all our colleagues around the globe to help drive our two iconic brands forward through the execution of the PVH+ Plan. My comments are based on non-GAAP results and are reconciled in our press release.

As Stefan discussed, this quarter, we continue to make progress on our multiyear journey to build Calvin Klein and Tommy Hilfiger into the most desirable lifestyle brands in the world, delivering or exceeding expectations across nearly all key financial metrics for third quarter, maintaining our strong cost discipline to offset a slightly higher-than-anticipated tariff headwind in the quarter. We delivered our overall revenue plan and a sequential improvement in operating margin despite some choppiness in the quarter and an uneven global consumer backdrop. As a result, our EPS was better than expected.

Looking forward, following our third quarter results and on-plan start to holiday, we are reaffirming our full year constant currency revenue and operating margin guidance and narrowing our reported revenue and EPS guidance to the high end of the previous ranges. Importantly, we also ended the quarter with inventory up 3% compared to third quarter last year, including a 2% increase due to tariffs. This reflects a significant improvement as compared to the increase in the second quarter of 2025, as we continue to tightly manage inventories. Our inventory is fresh and current and well positioned headed into holiday, and we remain on track to land the year with inventory aligned to our sales plan, excluding tariffs.

I will now discuss our third quarter results in more detail and then move on to our outlook. Revenue for the third quarter was up 2% on a reported basis and down less than 1% on a constant currency basis, in line with our guidance. Starting from a regional perspective, our EMEA business was up 4% on a reported basis and down 2% in constant currency for the quarter. As Stefan discussed, sales were on track through August, but coming into September, we saw a tougher start to the fall season. The lower trend continued through the balance of the quarter with the overall result for the quarter being sales in the direct-to-consumer business down mid-single digits in constant currency.

Our wholesale business was down less than 1% in constant currency as positive fall order book growth was offset by lower-than-planned in-season replenishment. As Stefan discussed, EMEA results reflected a combination of factors, including muted consumer activity driven by a tougher backdrop in Europe, lower cold weather outerwear performance, and delays related to the transitory Calvin global product challenges.

In our Americas business, revenue was up 2%, driven by mid-single-digit growth in wholesale due to the impact of Calvin Klein women's sportswear and jeans wholesale transition in-house. Excluding this impact, wholesale shipments were lower than last year as expected due to a more balanced timing of first half, second half shipments versus last year when shipments were more heavily weighted to the back half. On a normalized basis, wholesale sales, excluding the impact of licensing transitions, are planned up low single digits for the second half.

Direct-to-consumer revenue in the Americas business was down low single digits. While we exited Q2 with modest sales growth in stores, the consumer backdrop in the third quarter remained choppy with store revenue down low single digits for the quarter. This was partially offset by robust performance in both our Tommy Hilfiger and Calvin Klein digital commerce businesses, which in total delivered another quarter of double-digit growth. This marked our fifth consecutive quarter of year-over-year growth, fueled by the investments we've made to elevate the online consumer experience.

In our Asia Pacific business, we delivered revenue better than planned and flat on a constant currency basis, showing the strength of our Asia Pacific business and marking another quarter of sequential improvement in the region. Notably, direct-to-consumer revenue grew low single digits in constant currency in both brands with a return to growth in our retail store business and continued growth in our digital commerce business. Direct to consumer revenue also grew mid-single digits in China, driven by strength in digital commerce. Higher DTC revenue for the region was offset by lower wholesale revenue. Revenue for our Asia Pacific business was down 1% on a reported basis. In our licensing business, revenue was down 11% versus last year, primarily due to the previously mentioned transition of Calvin Klein women's sportswear and jeans in-house.

Turning to our global brands. Tommy Hilfiger revenues were up 1% as reported and down 2% in constant currency. Calvin Klein revenues were up 2% as reported and flat in constant currency. The decrease in revenue on a constant currency basis in EMEA weighed more heavily on our Tommy Hilfiger business, as Stefan discussed. From an overall PVH channel perspective, our direct-to-consumer revenue was flat as reported and down 1% in constant currency.

Sales in our retail stores were flat as reported and down 2% in constant currency, as modest growth in APAC was more than offset by low single-digit declines in Americas and EMEA. Sales in our owned and operated e-commerce business were up 1% as reported and flat in constant currency as strong growth in APAC and Americas was offset by a decline in EMEA. Total wholesale revenue was up 4% as reported and up 1% in constant currency, which reflects the previously mentioned transition of Calvin Klein women's sportswear and jeans in-house, partially offset by the decreases in EMEA and APAC.

In the third quarter, our gross margin was 56.3%, a decrease of 210 basis points compared to last year. Progress on working through the Calvin Klein operational challenges continued, but our third quarter gross margin was lower than planned due to the unfavorable impact of timing and mix of the new higher tariffs. In third quarter, gross margin reflected approximately 110 basis points due to the unmitigated impact of tariffs. And as we have previously discussed, approximately 50 basis points of the decrease in gross margin was the impact of our North American license transitions. The remaining 50 basis point decrease was primarily due to higher promotions and the impact of Calvin Klein product shipment delays, which included a shorter full price fall selling season in Europe, as Stefan discussed.

SG&A spending was down in constant currency and SG&A as a percent of revenue was lower than planned, improving 40 basis points versus last year to 47.5%, reflecting both our Growth Driver 5 Actions and a favorable impact from the timing of expenses. As we discussed last quarter, we will invest more into marketing in the second half of this year to capitalize on key consumer moments and to support our brand building cut-through campaigns amplified by mega talent.

Marketing was up in third quarter versus last year, but lower than we initially planned as we decided to shift some of the spending into fourth quarter to maximize our holiday impact and build positive momentum into 2026.

EBIT for the quarter was $202 million and operating margin was 8.8%. Earnings per share was $2.83, reflecting a negative impact of $0.37 related to tariffs and a positive impact of $0.14 related to exchange. Interest expense was $21 million, and our tax rate for the quarter was 25.5%.

Additionally, during the quarter, we were pleased to complete our previously announced accelerated share repurchase program, reducing our share count by 2.3 million additional shares and bringing the total amount of shares purchased under the agreement to 6.9 million and bringing our year-to-date total, including open market purchases, to 7.7 million shares.

And now moving on to our outlook. Starting with the fourth quarter, we are projecting revenue to be up slightly to up low single digits on a reported basis and down slightly on a constant currency basis compared to the prior year, in line with Q3 trends. Overall, for the Americas, we are planning fourth quarter revenue up mid-single digits with growth in wholesale, partially offset by low single-digit decline in DTC sales. In EMEA, we expect third quarter trends in constant currency to continue into fourth quarter. And in Asia Pacific, we expect revenue to be down slightly in constant currency.

While underlying DTC trends are expected to remain positive, growth is muted by an unfavorable impact due to the timing of Lunar New Year compared to last year. We are expecting fourth quarter gross margin to decline approximately 200 basis points versus the prior year, including an unmitigated tariff impact of approximately 150 basis points, partially offset by the impact of planned mitigation actions. As we discussed last quarter, the impact of tariffs will be felt much more heavily in the fourth quarter than the third quarter as more inventory sells through at the new higher rate.

We expect SG&A as a percentage of revenue to be down 50 basis points compared to last year, reflecting the increased marketing investments I spoke of earlier more than offset by our Growth Driver 5 Actions, which will continue to deliver efficiencies. Overall, we are projecting our fourth quarter operating margin to be approximately 9%, down approximately 100 basis points compared to last year. Earnings per share is expected to be in the range of $3.20 to $3.35. Our tax rate for the third quarter is estimated at approximately 22%, in line with our tax projection for the full year, and interest expense is projected to be approximately $20 million.

And now moving on to the full year. We continue to operate in an uneven global consumer backdrop. As such, we are reaffirming our constant currency revenue and operating margin guidance and narrowing the range of our reported revenue and EPS guidance to the high end of the previous ranges. On the top line, we are narrowing our reported revenue outlook to up low single digits compared to increase slightly to low single digits previously. We continue to project revenue to be flat to increased slightly in constant currency. We are reaffirming our operating margin outlook of approximately 8.5% and narrowing our EPS outlook to a range of $10.85 to $11 compared to $10.75 to $11 previously.

We continue to expect the tariffs currently in place to have an overall net negative impact on our earnings in 2025, including an approximately $65 million unmitigated impact to EBIT or approximately $1.05 per share compared to previous guidance of $70 million and $1.15 per share. We have begun to mitigate some of these costs through strategic actions this year and expect to fully mitigate the impact over time. But for this year, some we will need to absorb. The net impact of the tariffs and these mitigation actions are embedded within our guidance.

Regionally, our revenue outlook remains unchanged for Americas and APAC. In the Americas, we are planning revenue up mid-single digits, including the positive impact of the Calvin Klein women's sportswear and jeans wholesale transition in-house. And in Asia Pacific, revenue is planned down mid-single digits in constant currency. In EMEA, we expect the lower third quarter trends to continue in the fourth quarter and, as a result, we are now planning full year revenue and constant currency to be down slightly compared to last year.

We continue to expect gross margin to decrease approximately 250 basis points versus last year. On SG&A, we continue to expect expense to be lower in constant currency in 2025 compared to 2024 and our SG&A expenses as a percentage of revenue to decrease approximately 100 basis points, reflecting significant cost savings connected to our Growth Driver 5 Actions. Our interest expense projection is unchanged at approximately $80 million, and our tax rate for 2025 continues to be estimated at approximately 22%.

Before we open up for questions, I just want to conclude by saying that while we are navigating a dynamic and uneven global consumer backdrop, within that, we continue to focus on taking proactive actions within our control and making progress across all dimensions of the business through execution of the PVH+ Plan, building momentum into 2026 to deliver sustainable and increasingly profitable growth for the long term.

And with that, operator, we would like to open it up for questions.

[Operator Instructions] Our first question comes from Bob Drbul with BTIG.

Zac, best of luck, congratulations, and thanks for everything in the last few years.

Thanks, Bob.

I guess -- I was wondering, I think, Stefan, just when you look at the geographic performance of the business this quarter, can you just spend a few more minutes and just unpack a bit more sort of the dynamics that you're seeing across the Americas, across Europe and APAC and, I guess, just how you think about it a little bit more into '26?

Absolutely, Bob, and thank you for your question. You're right. Each region this quarter had its own dynamics. So starting with Europe, as I mentioned in my remarks, we started off the quarter on plan. September, we saw a more muted consumer backdrop. And then internally, we worked through our Calvin transitory challenges that was related to setting up the Calvin Klein product capability. And we worked through those as planned, but they had an effect in the quarter. So we had strain on the DC, all expected, but that cut some full price selling a few weeks. Those were the main drivers and then critically coming into the fourth quarter and the start of the holiday season. And looking at Europe now, Black Friday, Thanksgiving week is as important as it is in the U.S. as an indicator for holiday. So we had an on-plan start there. So the consumer came back for the start of the holiday.

Switching to the Americas, revenue grew 2%. E-com was the big driver there. So we drew e-commerce double digits. Strong conversion, strong consumer recruitment. Americas also had an on-plan Black Friday and Thanksgiving week. Then switching into APAC. That's a really great story because we saw this quarter again that we exceeded our plan performance-wise. Notable improvements in China, Japan and Australia.

And what we saw during the quarter was D2C returned to positive growth, driven by digital. Both Calvin and Tommy had very strong Double-11 activations, up 15% versus last year. And we keep seeing Calvin and Tommy at the top of the ranking in Tmall during the big weekend. So very strong execution by our APAC and China team.

Yes. And Bob, just to add some financials to Stefan's comments, when you bring all of that together from a total PVH perspective, our third quarter operating margin ex tariffs was almost 10%. And in our guidance as well for 4Q, our operating margin is 10% ex tariffs as well. And so if you compare that to approximately 8% in the first half, the financials are also following those sequential improvements that Stefan has talked about.

We'll take our next question from Jay Sole with UBS.

Great. Two-part question for me. First, Stefan, can you talk about marketing a little bit more and the impact you're seeing from the stepped-up spending that you've done in marketing? And then maybe, Zac, one for you. With the nice control on inventory that you're showing now, how do you think about operating cash flow for the full year? And what kind of impact on working capital do you see kind of going forward? Do you think you have to step up working capital? Or do you think the operating cash flow trend will continue into 2026?

Thanks, Jay. Starting with your marketing question, so we are very disciplined in how we approach marketing and where we put additional investments, because every season we invite the consumer into the aspirational world of Calvin and Tommy at the top of the funnel. And we do that connected to our key growth categories and increasingly connected when we expand our innovation into our key product franchises, we build the marketing around that.

So in Calvin, we have done this now for a number of quarters where we lean into underwear and denim. And if you look at underwear, you will hear me talk a lot about underwear and denim in Calvin. But if you look at the world of underwear and world of denim together, it's more than 2/3 of Calvin Klein. So when we do these marketing campaigns cut-through at the top of the funnel, this season with Rosalia introducing our newest innovation in our biggest product franchise in women's, then we see a double-digit growth.

And then the good news as well is looking at men's. So we had Bad Bunny introduce our innovation in our biggest product franchise in men's underwear previous quarter, in the second quarter. In the third quarter, we continued to bring that product franchise to line with NBA Star, Jalen Green, with European footballer Trent Alexander-Arnold, and we saw the 20% growth in that product franchise. And overall underwear is now up mid-single digit.

And similar in denim, so worked with Jung Kook, one of the biggest, if not the biggest K-pop star in the world. And he anchored our denim lifestyle campaign. And we saw it going viral with billions of impact in social within 24 hours. And then we see it driven down to sales increase in our fashion denim.

So you will see, both from a Calvin and a Tommy perspective, every season the continued innovation, because part of it is the discipline of driving the brand awareness and consideration into culture and into the front of the eye of the consumer, and then in the middle of the funnel, recruit that consumer with very strong product storytelling and then lower funnel conversion and then building the consumer base, building our target consumer base. And we are starting to build that flywheel and having some real proof points across both Calvin and Tommy.

And Jay, on your second question, we feel great about where inventory is. We ended Q3 up 3% compared to last year, and that includes 2% impact of tariffs, so effectively flat to last year. We've also spent a lot of time on our inventory purchases over the next couple of seasons. And so we're confident that, that metric will stay a great place well into 2026. And as that translates to cash flow, we expect to have another strong free cash flow year this year. And we'll enter 2026 with a lot of cash, which we think that gives us optionality as we plan to build on the strength Stefan talked about into 2026 as well.

We'll move to our next question from Michael Binetti with Evercore.

Let me add my congrats to Zac on the new opportunity. I wish you the best of luck at Sirius. As you guys work through the Calvin Klein product design consolidation process, maybe talk to us a little bit about the proof points you've seen around the right path here, and any early feedback you have from wholesale partners that gives you confidence in the work you're doing?

And then can you just help us think about the margin recapture opportunity from that work in the spring from the transitional issues that, Stefan, you mentioned a few times now that are on track for spring?

And then just last quick one for me. Can I just ask if the weather improving in Europe now in fourth quarter to date, it sounds like, does that create an opportunity to get caught up on some of the outerwear sales that were a bit of a drag in 3Q?

Thanks, Michael. We're trying to keep track of the 3 parts of that question. Let me start on the product.

The first season product capability build-out effects, the challenges that we have had to go through when we set up the global product capabilities in New York. So as you mentioned, yes, we are on track, both from on-time delivery coming into spring '26 and the margin recapture that we set out to take back. So on both fronts, we are on track, which is really good.

And why we need it? Because when we ran into these initial transitory challenges for the team to learn, to get it going, I mentioned that it's painful now, but we had to do it, because in order to build premium products, differentiated product franchises with innovation, we need the global capability to do that. And now we have it for both Calvin and Tommy, so do our -- all of our best competitors in the premium space also have it. But we had to build that. And now you start to see it.

Where do we start to see it, back to your question? We see it in underwear. And I was -- just yesterday and the day before, I was with the Calvin product team, David and the Calvin product team, and they took me through how they, in a very strategic way, build out new expanded product franchises around the product franchises that we already have. And then -- so think about it as the 2 big product franchises that we put innovation into, and think about it season by season, how we will expand that into new and neighboring product franchises that are hyper relevant to the customer.

And then we bring that to market with the cut-through marketing and the product storytelling, and then in the marketplace. So what David and our regional leaders are doing now is -- and Lea as well on the Tommy side, working very strategic with here is how we are driving product strength, and then all the way into the shop-in-shops and our stores. And one highlight this quarter for me being out in all these key markets we have is, beyond engaging with our great team and our partners, is to seeing the new shop-in-shops coming into play. So it's a 360.

And in order to drive that 360 consistently, and that will drive revenue growth that we see in both underwear and denim. And we see it in style icons and key categories in Tommy like sweaters, cable-knit franchise, very successful. But in order to build that 360, we need that strong global product capability. So yes, very promising what I see from the teams on how they are leveraging the strength now of having 2 global product capabilities.

Yes. And I think, Michael, if we think about gross margin, I think it's actually worth looking at 3Q. We know we've got improvements ready for coming in spring '26. But if we take a look at third quarter, margin was down 210 basis points versus last year. 110 basis points of that is tariffs, 50 basis points is the women's sportswear license take-back, and then 50 basis points of headwind of those other performance drivers. As you look ahead at 4Q, the guidance here 200 basis points down. That's 150 basis points of tariffs and 50 of the women's take-back. And so really 0 other performance drivers.

And I want to sort of put that in context. If we look at the first half, gross margin was down 260 basis points. 60 basis points was tariff and women's take-back, 200 basis points was those other elements of performance. And so we've gone from down 200 basis points of performance in first half to 50 in third quarter to now flat to last year in the fourth quarter. So we've talked earlier this year about that steady sequential improvement. So yes, we'll see it in spring '26. We're absolutely seeing it already this year.

Sorry. Go ahead, Michael.

Just the last question. I was just wondering if the weather in Europe improving is helping at all in the fourth quarter?

Yes. So yes, clearly, and I saw it when I was traveling in Europe a few weeks ago that the weather has changed. And that's sounding like we use the farmer's almanac here, but it's, of course, helping, when it gets cold, to sell cold weather categories. But I believe the most important learning for us and what we see with the consumer is that the consumer is shopping more and more transitional products, outerwear, very prominently in outerwear as well. And we switched more into transitional outerwear and had good performance, but we see the consumer shifting even more.

We'll move next to Dana Telsey with TAG Advisors.

Stefan, and also Zac, you've talked a lot about -- a little bit Black Friday holiday. I'd love some more thoughts what you saw from the consumer, how does it differ, whether stores, online or wholesale? And how does what happened Black Friday globally in each of the different regions inform you for planning for '26, whether it's first quarter, first half, what you saw, product, pricing, promotionality and channel?

Thanks, Dana. Yes. So if I look at Black Friday, and I started Black Friday this year being out at 6:00 a.m., not a lot of traffic going out of New York at 6:00 a.m. on Black Friday, but shopping center almost full parking lots before 7:00 a.m. And walking around in the centers, walking around seeing the consumer, it's really exciting to see that both our brands have a consumer base of wide range in incomes, wide range in generation, but really seeing the Gen-Z consumer being out there 7:00 a.m. in the brands that they love. So always great, best day of the year to see the consumer and see what they are interested in and shopping.

And then as we said, in both Europe and North America, we saw that we were on plan. And as I mentioned earlier, that week in itself has become really important, both in North America and equally important in Europe.

And we'll take our next question from Matthew Boss with JPMorgan.

So Stefan, maybe on the Calvin brand, beyond the operational issues and the time line that you've laid out, could you speak to the pace of underlying improvement for the brand, new customer acquisition metrics, and just performance KPIs or target opportunities you see from enhanced marketing over time at Calvin?

And then, Zac, with cost savings ramping in the fourth quarter, could you walk us through any high-level puts or takes to consider for '26 operating margins relative to performance this year?

Yes. Thanks, Matt, and thanks for your question. So yes, so starting on Calvin and the brand desirability that we are building quarter-by-quarter. From a consumer recruiting perspective, you see -- in e-commerce it's the easiest to see and the first to see that we build the consumer base in e-commerce. And you see that growth in both North America and APAC.

And then on the slower moving metrics, you see us moving on the strength of awareness, consideration, and then you build that consumer base. And where we see the strength is coming back to the key categories. And again, I speak a lot about underwear and denim, but those 2 worlds are, again, over 2/3 of Calvin Klein. And we see the progress both in terms of consumer acquisition, how we get that consumer to want to engage in the mid-funnel product storytelling, and we also improve that product storytelling, and then we see it in the conversion and the sales.

And so you'll see us consistently build that target consumer base and then engage that base through the funnel. And then you will see us build out strength. Right now, you see it in the world of underwear and the world of denim. And in Tommy, you'll see it in key growth categories for Tommy, key categories for Tommy and key style icons. And you see that across sweaters, you see it in shirts, you see it in pants, and you see it in especially transitional outerwear out of the outerwear category. But that's how we build the relevance full funnel and then engage the consumer. And in Calvin, last quarter, one thing we did as well was that we refreshed our loyalty program so that we are getting better at taking care of that consumer that we already have.

Yes. And Matt, thanks for the question on cost. I think middle of last year, we announced the PVH+ Value Driver 5 initiative, which was meant to drive 200 to 300 basis points of improvement in SG&A. And I think we're happy to say we've already confirmed greater than 200 basis points of that by the end of 2025. And so that will flow through into 2026, and there'll be more to come next year on that. So a lot of progress on the teams around the world around those initiatives. And for the rest of 2026, we'll have more to talk about, obviously, at the fourth quarter earnings call.

Thank you. This concludes the Q&A portion of today's call. I'll now turn the call back over to Stefan Larsson for any additional or closing remarks.

Again, I just want to thank Zac for the partnership over the past 4 years. It's been a great journey. Wishing you all the best. And then I want to thank you all for joining us on this journey where we build Calvin and Tommy into their full potential. And you see us, everything we do is going to go into the strengthening of the consumer offering and driving relevance into these iconic beloved brands.

So looking forward to giving you all an update in the beginning of the year. But before that, wishing everybody a great holiday.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, and welcome to another session of our GS 32nd Annual Global Retailing Conference. My name is Brooke Roach, and I cover the apparel, accessories and brand sector here at GS. And I'm thrilled to introduce our next session with PVH Corp. Here today are Stefan Larsson, CEO; and Zach Coughlin, CFO. Welcome, Stefan. Welcome, Zach.

Thank you.

Thank you.

Stefan, you've been executing the PVH plan for several years now. As you look across regions and brands, where have you seen the most tangible proof points of the strategy resonating with consumers?

Yes. So for those of you who are new to our story, so we are PVH, 140 years, one of the longest traded on New York Stock Exchange. What we have is Calvin Klein and Tommy Hilfiger. And that's what led me to PVH. So we have 2 of the most iconic brands in the world. We have 50% of our business roughly in Calvin, 50% in Tommy. And we have strength globally. So we have the strongest and biggest business in Europe. We have the second strongest in -- here in the U.S. and North America. And then we have the biggest growth potential in APAC.

But -- so what we have set out to do for 3.5 years now is to tap into the brand power of these iconic brands. And why that is so important and such a big value-creating opportunity coming from that is because we see 2 things happening in the fashion industry. The first is the barriers of entry coming down. Anybody can start a fashion brand. I'm sure you see a lot of these brands. But the barriers of entry have become the barriers of growth. The noise level has come up. So if you are one of these few, there are only 5, 7 -- 5 to 7 globally iconic beloved brands, and we happen to have 2 in Calvin and Tommy. It's Calvin, it's Tommy, it's Ralph, it's Levi's. You have a few of those, and we have 2. And you go back to the DNA of what made Calvin and Tommy collide with culture, and you make it more and more relevant. You make it current. So you go into what's iconic and what's current. And that's what I'm most proud of, what we have done.

We have connected into the DNA, the beloved DNA of Calvin and Tommy and then connected that to the consumer and connecting it to culture. So what you see for those of you who are here, you see 2 images. And it's summer and the beginning of fall. So the Calvin image is Mingyu. So he's a K-pop star. Some of you might know him. First 24 hours on Instagram, his post got over 1 million likes. 7,000 customer comments, 7,000 individual comments. His denim jacket and denim became one of the top 1, top 3 sellers globally. He's wearing the icon cotton stretch, our biggest innovation in underwear. So we are very systematic in tapping into that brand love through leaning into the biggest product categories. So for Calvin, it's underwear, it's denim, it's outerwear. So biggest innovation into the biggest product franchises within those categories and then amplify by cut-through campaign.

And for those of you who follow Calvin closely, you'll see that we are starting to have the strongest talent lineup we have ever had for a fall. So we have Mingyu, we have Trent Alexander-Arnold, up-and-coming soccer star in Real Madrid. We launched with him yesterday. We have Jalen Green, the NBA shooting guard from Phoenix. We launched him today. We have the biggest -- one of the biggest female music stars globally, similar -- like an equivalent of a female Bad Bunny. That kind of stature. So we have her coming out in 1 to 2 weeks, amplifying our biggest product innovation yet in women's underwear. So we lean into the iconic brand love. We lean into the biggest and most iconic categories. We put a lot of innovation into the most important products. We amplify it with cut-through campaigns.

And there, you see in Calvin in Q2, you saw where we have put innovation into underwear, we're up 14%. Where we have put innovation into new denim, we're up 19%. And Tommy, you see Damson Idris. For those of you who can see the image is from F1 The Movie. How many here have watched F1 The Movie? A few of you. Thank you, Brooke. Tommy, partner -- we partnered with Apple Studios. When we heard that they were going to make a blockbuster around Formula 1. Why did we do that? Because Formula 1 is true to the DNA of Tommy's lifestyle. Tommy's dream has always been about classic American style connected to pop culture. And he has been the first -- he was one of the first brands that partnered with Formula 1. So he partnered with Ferrari, then Mercedes and here comes Apple.

So the Formula 1 movie this summer became the biggest blockbuster. It's the biggest grossing sports film ever. Brad Pitt's biggest success ever, biggest viewed movie. I asked ChatGPT this morning on -- give me a back of the envelope of how many people have seen it in cinema? And we all know, sometimes it can be correct, sometimes not. But this is what ChatGPT said. 50 million to 60 million people have watched the movie so far. So -- and it's right into the core of Tommy's lifestyle. Tommy himself, he lives that lifestyle. So it's Formula 1, it's the movie, it's Formula 1 collaboration.

We just launched with Cadillac. So Cadillac, 2 American icons, Tommy and Cadillac coming together on the grid U.S. first team on the Formula 1 grid. And also why Formula 1 is important commercially is the fastest-growing sport in the world from a viewership and the fastest-growing sub-consumer categories, the Gen Z consumer, Gen Z female, actually.

So and then we tap into the lifestyle of Tommy Hilfiger, the Nautical with U.S. SailGP. We have a multiyear collaboration with them. It's like Formula 1 on the water. So you'll see us expand Tommy's presence in culture, in music, entertainment, sports. So that's -- sorry to be lengthy, but that's what excites me the most to see that we are able to tap into this unique DNA and the strength of having global consumer love, global distribution, global supply chain, global talent engine and then translate that into not only relevance at the top of the brand funnel, but what you can see in Q2. So every quarter, we are aiming to deliver better and better.

So Q2 was better than Q1. We drove 4% growth. We drove growth in both Calvin and Tommy. And what excites me the most with that is how we did it. We did it with stronger products. We did it with stronger consumer engagement. We did it with better marketplace execution. So if you look at Q2, the rest of the year, we were able to reaffirm our earnings guidance despite tariff rates coming up almost 2x. And part of that is also because we have 70% of our business outside the U.S. So 70% is international, 30% U.S. So bigger international business for Tommy and Calvin than most competitors.

So our goal is to quarter-by-quarter expand the impact of the PVH+ execution. But what personally excites me the most is when I'm out traveling, when I'm in a wholesale door or a store and see the windows and taking that iconic brand love and driving relevance in the window. So like Calvin just had a very strong underwear in denim window. And then you see the culturally relevant talent. Then you walk in further into the store and you see that we lean into the key categories that matters the most. You see how we -- then put innovation into those categories. We improved the presentation, the inventory matching with what the consumer wants to buy, the customer experience. It's like, because I know that every improvement we make that the consumer sees in the consumer offering will drive shareholder value. And that's what excites me the most.

Very clear. Let's shift to the execution of the strategy by geography. Starting with Europe, you've talked about a path to get back to high single-digit growth in the Europe business and you've indicated that wholesale order books are on the right -- heading in the right direction, up in the low single digits for the spring. What gives you confidence in that improvement in trend? What are you seeing in the macro backdrop in Europe today? And where is the biggest opportunity over the course of the next 1 to 3 years?

Yes. So if you'll -- again, Europe, our biggest market, have the strongest and uniquely strong brand position for Tommy and for Calvin. And to your point, we started in fall driving high-quality growth in our wholesale forward-looking order book. So we're coming into fall with increased strength in product, increased relevance in the cut-through campaigns, more -- even more disciplined marketplace execution. So we're coming in with that strength, the wholesale partners, some of the best partners in the world we have in Europe. They are showing their belief in us and in the brands and the work we do by the growth in the order books to your point.

And then for spring, we're also already being able to share that we secured growth -- continued growth in the forward-looking order books. And then what you can see in Q2 in D2C was a sequential improvement in D2C performance as well. So uniquely strong brand positioning in the European market, driving high-quality sales growth in wholesale and driving through these brand improvements in the D2C channels as well. So we are very encouraged by the strength we have and how we are building. And it's going to be about high-quality long-term growth.

Very clear. Let's shift to North America. And before we dive into the PVH+ strategy there, let's ask a few questions that we're asking nearly everyone at the conference. Looking forward, what are your expectations for the environment in the back half of '25 versus recent results? Do you expect things to be the same, better or worse? And as you look ahead into 2026, is there anything that would change your answer relative to what you are about to say about '25?

So if we look at the fall is we see the same as you all see and all our competitors see. There is an uncertainty, of course, around the tariff situation. We -- when we look at the North America consumer, we were encouraged by the response to, again, our brands, our products, our experience in Q2. So we had a strength in D2C. We had a strong first half in wholesale. We lean in with our key wholesale partners. So we focus on building the consumer offering stronger and stronger. And then with the tariff overhang, it's going to be really important to be a brand. And in our case, to have 2 aspirational premium brands because -- and it's also going to be really important on how you execute the customer promise with those brands.

So PVH+ has, for 3 years, been about stronger, more relevant product. Every time we combined something that the consumer sees as iconic with Calvin or Tommy and we put innovation in that, it works, like in underwear and denim. So we are confident in our ability to continue to win with the consumer in the U.S., and then we'll work through the tariff situation like everyone else.

Very clear, very clear. From a competition perspective, do you expect market share consolidation to speed up, slow down or get the same? Thus, will the competitive environment get more difficult, easier or about the same?

I believe it comes back to the brand strength and brand relevance and how good you are as a brand to translate that into more relevant product, more aspirational product, better consumer engagement, better experience so that you can take share and you can do it with margin expansion and with pricing power. So I believe we are heading into a world where brands will matter even more.

Let's dig into the channel dynamics in North America a little bit. From a DTC perspective, that's been an area of a little bit softer performance relative to what you've seen elsewhere. Can you discuss the drivers that you expect to return this business to sustainable growth and the time line that you expect to achieve this?

Yes. So what [ second ] I saw in Q2 was really encouraging. So we saw a sequential improvement of D2C. And one thing -- one proof point that is really important to share is how we drove the improved D2C performance in the U.S. this past quarter because it's a reflection of the improvements we have made in the customer offering, and we can see it now in -- we grow the consumer base. So we have more new consumers coming to the brand. We have more of those new consumers shopping again with us within a certain time period. We keep our consumers longer and we recover more of those consumers who moves between brands.

So really encouraging to see that we are building strength in the consumer base. And we are increasingly focused on being clear on the consumer segments, being clear on taking that consumer into the improvements that we make. What do I mean with that? I mean that we have been initially -- this is a step-by-step journey, and we were initially very fast, successful in driving cultural relevance. What we then realized is that we need to build out the middle of the funnel of the -- if relevance is in the top consideration in the middle and then conversion. So what we saw in Q2, we were very successful in taking that top of funnel, this brand is relevant to this is product storytelling that's relevant to me where I want to shop your brands. So if you engage with our brands, you will see that we are getting better and better at taking that aspirational brand halo and driving into product storytelling that drives conversion and then builds the consumer base. So that's our focus. And Q2 was a great proof point of that.

Are there any other changes that we should be expecting and how you are bridging that -- bridging to consideration and thus purchase as you drive product stories?

It's the strength of the middle of the funnel because what we realized when we started to build this out and executed was we had incredible awareness and relevance at the top. And then we saw how do we -- we saw the opportunity. How do we turn that into building the consumer base and driving down to conversion. And the biggest opportunity we had was to build out. So you will see more and more product storytelling. So if you look at this fall versus last fall, the connection between -- here are the key categories for Calvin underwear, denim outerwear. And here are the key hero products and here is the innovation. And here is the story we tell you about that when you are contemplating buying new underwear, new denim, new outerwear. So you will see more and more of the building blocks come into place. And you will see us being more systematic and repeatable in how we approach that.

Let's talk about how this applies to wholesale. As you engage with your key wholesale partners in North America, how are those conversations trending today? Are you seeing a much more cautious order book? Or are you starting to see some opportunities ahead into '26?

Yes. We see opportunities for the rest of this year. We see opportunities for '26. We have great partnerships with some of our strongest partners in the market. Exciting to see what Tony is doing in Macy's. I've always been a big believer in Tony's approach to brands matter, product matters, real value matters. So really exciting to see that. Working with all our strategic partners that way and tapping into their strength because we know that the consumer wants to shop our brands D2C and wholesale. They want to shop multi-brand as well.

So it's very much the same of looking at our top 150 doors and with wholesale partners across the world and saying, how do we make sure we invest in shop-in-shops? How do we make sure we invest in the presentation, in the customer service? How do we make sure that we have the strength of the assortment that you see in social media and in our e-commerce that you see that in wholesale? So it's a very strong and close partnership. It's an increasingly close partnerships globally.

Very helpful. Let's shift back to your global business and specifically look at APAC and China. What are you seeing there today? And how are you adapting your approach to the current backdrop that you find yourself in? And then for APAC broadly, what gives you confidence in delivering your guidance for this year and a return to sustainable growth?

So let me start and then, Zach, feel free to jump in as well. But Q2 was encouraging for us because we saw a stabilization of our business in APAC, the biggest markets. We have a very strong team there. And we have a great positioning. So what we were able to do in Q2 was to focus in on the big consumer moments. So if we look at China's in 06/18 summer -- one of the biggest summer events, we were able to drive significant growth versus last year on significant growth the year prior and both Calvin and Tommy ranked as top 5 on Tmall of international brands. So we were able to see that we were able to, despite the choppy macro, the consumer response to the work we do with bringing the brands to life stronger and stronger.

Yes. And I think just in general, Asia Pacific for us is our highest DTC market. And inside of there, by far, it's heavily weighted toward fall price. And so I think the confidence that we're building the stabilization was step 1. As you move now into the back half of the year, the marketing that Stefan was talking about earlier, we know drives quick in responsiveness from there. So a lot of the fall campaigns coming have amazing Asia talent that responds very well inside of there. And I think we've seen some of that recently with what we see on the screen here as well as the Harajuku sort of store that we opened last week as well. So I think that we're putting the investment behind to continue to build on that momentum to go from eventually stabilization driving back the growth from there. We're seeing some of the returns on that already coming here in the third quarter.

Harajuku is a great example. So we opened our biggest -- globally, the biggest flagship for Calvin that we have in the world. We opened on Thursday last week. And 36 hours before we opened, and this is Harajuku. Most of you know the importance of Harajuku from a brand building. It goes way beyond Japan and a fantastic consumer base, both domestic, international. 36 hours before we opened, we had thousands of people in line. So -- and what you see in Harajuku is the best brand expression. So you see the world of underwear, the world of denim. You will see the world of collection, the runway collection, the first season. And you can really see the Gen Z consumer. You can see the more brand-focused consumer. And it's been an incredible opening.

And what's exciting? Maybe the most exciting is when we opened Harajuku and we had the influencers and the talent and John Cook was wearing a Calvin Tokyo Harajuku cap when he was traveling in Asia. He wasn't there for the opening, but it created a complete frenzy. But -- and the Harajuku collection sold out in a very short period of time. But the most exciting is it drove the business across Japan, wholesale, D2C, outlet. So it created a halo that drove the business across all channels. And that's brand building in practice because we need a few of those flagships globally and create that ultimate experience, and then that then drives all the different parts of the distribution. So incredible start so far. And then...

I was just going to say beyond the influence in Japan, I think importantly for us, significant instantaneous positive result in China as well. So as much as Asia Pacific is a collection of different markets for us, I think when we do big things in the most important places within the region, we see a ripple effect even outside of the countries themselves that it is in.

Yes. That's why we opened SoHo. We opened Calvin Klein's first flagship in the U.S. in SoHo here in New York at the end of the year. Equally same purpose as in Harajuku, a few flagships globally, a few regional really strong expressions of the brand where you see, "Aww". This is the ultimate expression of Calvin Klein or Tommy Hilfiger.

Let's stick with Calvin for a moment. There's some operational improvements that you're executing in the brand as you think about the centralization of the global product creation team. Stefan, you mentioned -- you talked a lot about this on the call. So maybe for this question, Zach, can you give us a financial perspective of this? How much opportunity do you see ahead as you cycle this for sales and margins given the impact that you have this year?

I'll let -- I promise I'll let Zach speak. But I want to continue to speak about it as well. It's for us -- nothing is more frustrating than when we try something and it doesn't work. But here's what happens. So Calvin Klein 2, 3 years ago had a completely decentralized product creation. So we pulled it together and build a global product creation capabilities, same as we already have for Tommy. And we were overconfident -- took too many parts of this together in one season. And the team realized it that they were on their heels in the middle of a product season, and it had a big negative impact on the gross margin this year. It's super frustrating.

What's exciting by what followed from there is that we leaned in and we said -- so it's, of course, frustrating to have to share this with investors and everyone else that we didn't fully succeed see Season 1 to get that right. To see the team leaning in to fix this, and I was personally involved in working with fixing that and seeing how -- what we said we were going to do last quarter, we have done. So we are now fully back on track. So fall, so this is what -- the negative effect was in the first half of this spring.

The second half of this year fall that we're going into is significantly improved, as we said we were going to do. Spring '26 is fully back on track. So fully back on track timing-wise and fully back on track margin-wise. And now we have the capabilities. So -- but it's still frustrating, of course. But it shows that sometimes we -- it gets harder than what we expected. But the only way then it's through it to fix it, lean in, roll up your sleeves and fix it. And that's the excitement now. We had a big Calvin Klein strategic follow-up meeting yesterday, and I was just thanking the team because they rolled up their sleeves and now we have the global capability. There is no way we can do what we have set out to do. There is not a single successful competitor that doesn't have a global product capability. We had to do it, and we hit some turbulence and then we fixed it. But that's why I wanted to just shout out to say, it was painful to share last quarter. It's less painful today because we have fixed it.

And I think from a financial perspective, this was all felt most predominantly in gross margin percent. As Stefan said, the pain of that really most heavily impacted the first half of the year. And as we progress now through the back -- second half of this year and the first half of next year, I think we're already seeing some of those improvements in our third quarter gross margin rate being sequentially better versus last year than the first half. That's predominantly coming from things coming -- arriving more on time. And so avoidance of air freight and some of the discounting with wholesale partners. So that's in the plan already for the second half. And you can see that in the third quarter.

Fourth quarter gets a little murkier with tariffs coming in. And then as Stefan said, as we move into the spring season, a little bit of a longer tail of actually being able to have the time to design in margin to the product, what we refer to as go-in margin, a significant step forward. And we're confident of that as well because we placed the buys recently here for spring season. So we've had a chance to see that explicitly. So I think we know things are on time. So we're confident there. We know the go-in margin will be a dramatic step upward in the first half of next year. And so the stabilization that we've talked about last quarter that we had planned to do, we've now delivered in the financial implications of that will then positively step back up over the next sort of couple of quarters sequentially.

And the learning -- the bigger learning here is the biggest frustration comes out of when you see something not go right and you see it too late. So what this has led to is when we now build the growth plan forward-looking, when we build the consumer offering, we have the brands and the regions working together to set the commercial plan to win with the consumer in each of the regions, in each of the channels. We have then the forward-looking product creation to build strength at the right time in this commercial plan and the right going margin and the right timing.

Then the marketing, the cut-through marketing, the right talent. So it was a really good learning. So the benefit of this challenge was that we stepped up our forward-looking steering across the board because to do what we have set out to do and to do what some of our best competitors are doing, we have to become very, very good at the forward-looking steering on creating that consumer offering, that's -- you have to start planning and building that out a year, 1.5 years in. And then you keep checking like are we landing the plane where we said we were going to land it. Because when we land the plane, is 14% up in the part that we have innovated in underwear. It's 19% up in fashion denim.

So it's not like when we land it, it sometimes work. When we land it, it works. That's the most frustrating part as well. I'm out 55% in the stores in markets, and I visit the stores in the same way every single time. So I have a 1 page, which very simple, just sales and margin by men's, women's, by category, by product. And you see like plus 14%, plus 19%, but then there are too many categories where we haven't yet had that kind of discipline and impact.

But it's one-to-one where we lean in, we deliver and it's just getting the discipline of forward-looking doing that. And the Calvin Klein challenge of the -- that first season led us to improve our steering across the board.

Very clear. There are several margin comments made in that last comment. So let's stick with margin for a moment. Tariffs have been the topic of the year. You've provided a lot of color on this on your last call. But Zach, can you help us understand the annualization of the tariff impact into 2026? And how you're thinking about the timing of fall mitigation? And then kind of alongside that, pricing and promotionality, how are you thinking about that importance? And how much of the promotionality is a function of what can be recaptured because of what happened with CK this year?

Yes. I think we've said last quarter, we started with wave 1 of the tariffs, and that would look like for us around $65 million of unmitigated impact. And we had commented then that we expected this year to mitigate around half of that. Obviously, a lot has happened since then in terms of new announcements. And so we've increased the amount of unmitigated to $70 million the last. With that, because it comes in later in the year by size, our mitigation percent is dropping a little bit below the 50% for this year.

So essentially, we're running the same process we did for the first wave. Now as we look at the second wave, looking across the levers that we have to play with working with our vendors and the supply base, working across the rest of the P&L, contemplating from a marketplace perspective as well. So we don't have a sort of a full annualization number to communicate there, and we're working through from timing. I think that at the end of the day, some of that is due to, as Stefan said earlier, there's an ambient amount of uncertainty we're all steering at. I think we've got our plans in place for fall season. We're executing those.

We'll read and react to what that is while we build the ongoing plan for next year. We'll have more to talk about at that point in time. But at the end of the day, the core of this is going to come down to driving the other improvements on the PVH+ Plan and delivering for the consumer an elevated offer. Out of that is going to come the best outcome for us that we'll take advantage of wherever the marketplace happens to move towards.

I would say to build on that, just taking a step back, 70% of our business is international, which puts us in a competitive advantage versus most of our U.S. competitors and peers. Being 2 of the most beloved brands in the U.S. is a tremendous advantage. And thirdly, the execution of the PVH+ Plan is about improving the customer offering so that we can drive pricing power and margin expansion. But it's uncertainty for all of us. But those are 3 really important context letters to what Zach took us through.

Your guidance currently calls for 8.5% operating margin. You have a target with the PVH+ Plan to get to 15%. How do you protect that 8.5% if the environment gets a little bit worse? And is 15% still achievable in the medium term?

Yes. Absolutely, margin expansion is definitely achievable. And what Zach mentioned is we have already locked in spring for '26 because half of our business is wholesale. And what we see there is the margin expansion we set out to drive, we have been driving. So the margin expansion coming out of improving the consumer offering season by season through the PVH+ execution and then a disciplined -- very disciplined cost efficiency work. So Zach, perhaps you want to mention a little bit of that because...

Yes, I think what gives us confidence is that the building blocks ahead of us from where we are today moving forward up towards 15% are very much in our control. We've talked about the sort of locking in the product margins, tied to the CK work that we're doing. That is in hand that we have from there. We have the European order books that we have confirmed for low single-digit growth for the first half of next year. That's a big block.

And then the last piece is what Stefan said is the part on sort of the SG&A work that we're doing, which is really evolving an increasing amount of our SG&A spend from, I guess, you call it expense towards investment. And so some of that work, we've said 200 to 300 points publicly, we've been working on that over the last year, 1.5 years with the execution now largely behind us and the financial benefits now coming into the second half. That will be around 200 basis points by the fourth quarter of this year versus last year, with the remainder of that 200 to 300 coming next year. Those plans are also in hand and executed.

So I think the major building blocks of margin expansion in this medium-term period, we have not just plans to do them, but many of them executed and locked in as we start to take those stair steps. We'll adapt to where the rest of the external market goes to, of course. When that clears, those building blocks will be there and so the stepping stones moving forward are not -- if they're not in place already, the plans are in place and executed and the financial piece will be coming next.

Very clear. Well, thank you, Stefan. Thank you, Zach. I'm afraid we're out of time.

I'll just say one thing. First, thank you for having us. And thank you for listening in, those of you who listened in. Again, I believe taking a step back, having Calvin Klein and Tommy Hilfiger and building them into their full potential towards a brand love that already exists. And expanding day by day, every day, we are leaning into expanding our impact. And the way we will see it is for you as customers to see it. If you see it in our e-commerce through our partners in our stores, that's how we evaluate our progress. So thank you for listening in.

Thanks.

Good morning, everyone, and welcome to today's PVH Second Quarter 2025 Earnings Conference Call.

[Operator Instructions] Please note this call may be recorded, and that I will be standing by should you need any assistance.

It is now my pleasure to turn today's program over to Sheryl Freeman, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. Second Quarter 2025 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer; and Zac Coughlin, Chief Financial Officer. This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material. It may not be recorded, rebroadcast or otherwise transmitted without PVH's written permission. Your participation constitutes your consent to having anything you say appear on any transcript or replay of this call.

The information to be discussed includes forward-looking statements that reflect PVH's view as of August 26, 2025, of future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's SEC filings and the safe harbor statement included in the press release that is the subject of this call. These include PVH's right to change its strategies, objectives, expectations and intentions and the company's ability to realize anticipated benefits and savings from divestitures, restructuring and similar plans such as the actions undertaken to focus principally on its Calvin Klein and Tommy Hilfiger businesses and its current multiyear initiative to simplify its operating model and achieve cost savings.

PVH does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimate regarding revenue or earnings. Generally, the financial information and projections to be discussed will be on a non-GAAP basis as defined under SEC rules. Reconciliations to GAAP amounts are included in PVH's second quarter 2025 earnings release, which can be found on www.pvh.com, and in the company's current report on Form 8-K furnished to the SEC in connection with the release.

At this time, I am pleased to turn the conference over to Stefan Larsson.

Thank you, Sheryl, and good morning, everyone, and thank you for joining our call today. I want to start by thanking our teams around the world for delivering a better-than-expected second quarter. We beat our guidance on both the top and bottom line as we grew revenue 4% on a reported basis, achieved our 1% revenue growth guidance on a constant currency basis and drove better-than-expected gross margin performance and EBIT margins.

Total direct-to-consumer revenue was flat in constant currency, a sequential improvement compared to the first quarter, including a sequential improvement each month throughout the quarter. We grew wholesale revenue by low single digits in constant currency benefiting from the intake and relaunch of the Calvin Klein women's businesses in North America. Looking ahead, we are reaffirming our earnings guidance for the full year and raising our reported revenue guidance despite tariff rates effectively doubling and a continued uneven global macro. And for the rest of the year, we have also increased our strategic investments in marketing to generate even higher visibility and customer impact.

Since we last spoke, our focus has been to further strengthen our PVH+ execution. And for both brands, this means continue to strengthen our brand-building consumer flywheel across products, marketing and marketplace execution. We drive performance by leaning into the strong consumer love for our iconic brands, focusing on our biggest product categories then bringing innovation and newness into our most iconic product franchises, amplifying them through powerful cut-through marketing and supporting it by next level execution across all our channels, and we have already made significant progress.

Regionally, in Europe, we delivered another quarter of positive D2C growth and finalized our spring '26 forward-looking wholesale order books up low single digits, marking our second consecutive season of growth. In North America, we drove stronger D2C performance and again drove double-digit EBIT margins. And in APAC, we exceeded our plan, and we started to stabilize the business in key markets. We are also successfully working through the transitory operational issues we experienced as we set up the Calvin Klein global product capability in New York. Already now for fall '25, we are delivering the sequential improvements we set out to achieve. And for the spring '26 product season, we have already locked in the important go-in margin improvements we targeted, as well as got them back to on time for our deliveries. David and the Calvin team have done a great job making this happen.

Let me now share concrete examples of the actions we took that drove our performance in the second quarter. And let me start with Calvin Klein. The biggest and most iconic product categories in Calvin Klein are underwear and denim. And this quarter, we further drove powerful momentum in both these categories. When we last spoke, we had just launched our spring campaign with superstar Bad Bunny to amplify the newness and innovation in our new men's icon cotton stretch hero product franchise. It's been incredibly successful. And across all regions, this franchise is driving significant commercial impact.

The combination of a powerful product category of funds tied to strong product innovation, connected to a cut-through campaign with globally relevant talent is a repeatable model that we know works. The Bad Bunny campaign has increased brand awareness driving stronger traffic and conversion. It's also creating a strong halo effect across men's underwear.

Sales of our cotton stretch styles were up 14% globally in the quarter, following the 25% growth we delivered last quarter. Building on this success for this fall, we are bringing that same next level product innovation and newness to our largest and most successful women's underwear program with the launch of our Icon Cotton Modal franchise. It will also be supported by a global campaign featuring one of the most exciting global superstars in music. And we will again drive commercial impact by activating a full-funnel approach across all regions.

Next, in denim, we have continued to build on Calvin's strong spring momentum. We focused on newness through 90 styles and fashion fits to capture consumer demand for looser fit silhouettes and delivered 19% growth in fashion denim this quarter. We're also innovating with new tools to drive conversion, and we recently introduced a new Lookbook style denim fit guide to make it even easier for consumers to shop their favorite denim look with styling inspiration that captures iconic Calvin lifestyle.

And last week, leveraging our proven combination of hero product amplified by mega talent, we launched the denim focus collection featuring K-pop megastar Mingyu. already, we have seen more than doubling of our engagement rate on social media from this campaign with the key denim products featured rising to the #1 and 2 best-selling products in their categories and markets. This is just the beginning of what we believe will be the strongest Calvin Klein fall campaign so far. With a combination of strong product innovation, amplified with a lineup of global mega talent from the world of music and sports.

We build relevance and desirability when we connect Calvin's brand DNA to the global cultural conversation. And this quarter, we have repeatedly done that. We connected the inspirational halo of our Calvin Klein collection to key cultural moments with talent, including Dua Lipa, Pedro Pascal and A$AP Rocky. And we took this to another level when Beyoncé wore custom Calvin Klein collection underwear in her Cowboy Carter show, a moment she shared with her over 300 million followers on Instagram. We are building strong connectivity between collection and our main line to extend the halo that Veronica Leoni is creating. You will see this next at our upcoming runway show at New York Fashion Week on September 12.

Finally, in the marketplace, we are making key investments in stores around the world to bring the full Calvin ambition to life for the consumer. Tomorrow, we'll open our newest flagship store in Tokyo in the center of Harajuku, a hub for youth culture, fashion and high traffic from both local and international shoppers. The new flagship marks the next chapter in our global retail expansion in major markets around the world. And later this year, we look forward to opening our next flagship in the heart of Soho, New York, one of the most iconic retail destinations globally.

Turning to Tommy. Throughout the quarter, we continued to take Tommy's iconic DNA, our classic American style with Tommy's unique twist and connecting it to culture and driving strong commercial impact. In the world of sport, Tommy was 20 years ahead of his time in building early partnerships with Formula One. Our latest partnership with Apple Studios took this to the next level. With Tommy the brand playing a key part in the global summer blockbuster film F1 The Movie. It's already become the highest grossing sports film in history, and it's also Brad Pitt's highest grossing film to date. And for those who have seen it, you know that Tommy is impossible to miss.

To support this major brand moment, we launched a full funnel global campaign, the movie premiere at the Landmark Radio City Music Hall in New York City. And it was incredible to see the iconic Tommy Hilfiger brand on the big screen, embodying the fearless drive and effortless style that define both the sport and the brand. This continued in London, where Tommy was featured on the massive 3D screen in Piccadilly Circus ahead of the Global Premier contributing to double-digit lifts in both brand perception and Net Promoter Scores in that market.

Globally, we have seen an incredible consumer response to our limited edition APAC GP collection of key Formula One styles with strong sell-through around the world. We'll continue building on this momentum with Cadillac as the official apparel sponsor of the Cadillac Formula One racing team, where 2 of the biggest American icons are coming together to support the first U.S. team on the grid. And staying in the world of sport as the official lifestyle partner of the U.S. SailGP team, Tommy recently launched a capsule collection, which blends high-performance sport and modern style. The partnership is at the heart of Tommy's unique DNA and opens up a new consumer and commercial opportunity for the brand around the world.

Throughout the quarter, we executed across the full funnel, this included celebrating the Tommy's Summer lifestyle through the Hilfiger resort campaign, where our iconic hero product and strong category offense was amplified with top-tier talent including Madeline Klein and Patrick Schwarzenegger. This led to strong sell-throughs across channels for spring and summer 2025 seasons in featured key product categories. Within our summer shop styles, we drove womenswear up 10% globally and menswear up 3%.

We continue to focus on the full Tommy lifestyle by expanding both our core men's and women's business. In men's, we recently expanded into dress casual, an important category in the consumer wardrobe. We previewed the collection in Milan to more than 350 wholesale partners at Pitti Uomo, one of the biggest men's fashion events in the world, and we are encouraged by the strong initial sell-in for spring '26. Category expansion is an important strength of the Tommy brand and we are excited for this new category to launch early next year with key wholesale partners globally as well as in premium stores and on tommy.com.

In women's, building on the recent collaboration with Sofia Richie Grainge. This quarter, we launched the Tommy Girl Capsule, which drove strong sell-through across regions and attracted a younger consumer. Tommy Girl has been an important fixture in pop culture since the '90s, and we are tapping into that deep consumer love for the Tommy DNA. In North America, over half of our capsule purchasers were new consumers to the site and 1/3 became repeat purchases within 30 days.

Looking to the fall season, yesterday, we launched a global lifestyle campaign featuring a cast led by supermodel, Claudia Schiffer and Nicholas Hoult, the star of the summer hit film Superman. To maximize amplification, we have increased our marketing investments, which includes a global activation of the full funnel with multiple high-impact brand moments and sustained product storytelling.

Now let me turn to our regional performance, where we also continue to make strong progress. Starting with Europe. We drove another quarter of total D2C growth, and we delivered our fourth consecutive quarter of store revenue growth. D2C growth was offset by a decline in wholesale from shipment timing that we mentioned last quarter, which benefited the first quarter. While overall revenue was down low single digits in constant currency for the quarter, importantly, we ended the first half with revenue up slightly versus last year.

I'm also pleased to share that we drove growth in our wholesale order books for spring '26, up low single digits compared to the prior year, building on our growth in fall '25. This performance reflects our ability to further strengthen our product offering season by season, combined with our strong sales teams and wholesale partnerships in the region. Importantly, across the region, our stepped-up execution and product improvements drove growth in our largest category businesses in the quarter. In Tommy, we grew menswear up 3% versus last year, and in Calvin, we grew underwear up 6% versus last year.

Turning to the Americas. We grew revenue by low double digits, including above-plan D2C performance across both brands. Our disciplined execution again drove double-digit EBIT margins. We delivered strong growth in our digital channels, supported by a double-digit increase in traffic, fueled by our product strength and cut-through campaigns, and driven by our investments that continue to further elevate the online shopping experience. This quarter, both brands had positive consumer growth across new, retained and reactivated consumers across our digital platforms.

The consumer is choosing iconic products with newness, and is showing up in our performance with strong trend improvement across both brands and across our D2C channels as we deliver products that are iconic to our brands with innovation and relevant newness. We also saw higher sell-through of newness with our key wholesale partners. While there is still uncertainty in the back half of the year tied to tariffs, we are focused on continuing to deliver iconic fashion with newness to our consumers.

Moving on to Asia Pacific. For the second quarter, we drove better-than-expected top line performance with revenues declining low single digits in constant currency, representing a significant sequential improvement. This was driven by performance in our own channels, high-quality consumer engagement across the full funnel and strong execution of key holidays. We again won in the big consumer moments such as 618, where we delivered high single-digit GMV growth, outperforming our expectations adding to our double-digit GMV growth last year.

During 618, both Calvin and Tommy ranked among the top 5 international brands on Tmall. While the macro remains choppy through our strong execution, we have started to stabilize performance. This summer, I visited our teams in Japan and Korea, and it was incredible to see the brand love we have in these markets, whether it's Calvin's presence at [indiscernible] Gen Z store or the strength of Tommy's flagship store in Tokyo. Each quarter, we continue to build out the strength of our brands leveraging the combination of our category offense and iconic hero products amplified with locally relevant talent.

We still have significant untapped opportunity to grow our brands in APAC. And also here, we are increasing our investments in marketing to activate the full funnel and drive new store expansion, reflecting our long-term commitment to the region, which remains an important growth driver for our global business.

Now turning to global licensing. Our licensing revenue, excluding the licenses that we are transitioning continues to grow. As we have shared before, our large and diversified global licensing business is a key competitive advantage. Our licensing partners help bring our vision to life across multiple complementary categories and are critically important to how we drive sustainable, profitable growth through the PVH+ Plan. In collaboration with our licensing partner, Coty, we are deep into preparations for our biggest fragrance launch since CK One. While we are preparing for the big launch next year, we have already had early success in recent new product launches, especially with younger Gen Z consumers.

In closing, the second quarter marked another step forward on our multiyear journey to unlock the full potential of Calvin Klein and Tommy Hilfiger, a step-by-step building them into the most desirable lifestyle brands in the world. In a choppy macro environment, we delivered by intensifying and expanding the impact of our PVH+ execution, and we are making significant progress. We continue to demonstrate that where we lean in to execute, we deliver. And I'm proud of how the team stepped up their execution again this quarter to drive the business forward. The areas we said we were going to lean into last quarter we delivered on.

While the global macro landscape continues to evolve and remain uncertain, we are focused on what's within our own hands, which is building our brands and business for the long term. We continue to take concrete action to build on the momentum we created in the first half to drive our performance in the back half, continuously learning and improving to become stronger and stronger over time.

And with that, I'll turn the call over to Zac.

Thanks, Stefan, and good morning. My comments are based on non-GAAP results and are reconciled in our press release. As Stefan discussed, this quarter, we took another step forward on our multiyear journey to build Calvin Klein and Tommy Hilfiger into the most desirable lifestyle brands in the world, delivering or exceeding expectations across all key financial metrics for the second quarter.

In Q2, we delivered another quarter of revenue growth. We drove a sequential improvement in year-over-year gross margin percent and continued our strong SG&A discipline. And while our EPS for the quarter was lower than last year, it was better than expected. As we look forward, we are reaffirming our full year guidance for constant currency revenue operating margin and EPS in spite of new tariff rates, which have effectively doubled since our last call.

I will now discuss our second quarter results in more detail and then move on to our outlook. Revenue for the second quarter was up 4% on a reported basis and up 1% on a constant currency basis. Starting from a regional perspective, our EMEA business was up 3% on a reported basis and down 3% in constant currency for the quarter. In constant currency, we delivered growth in the direct-to-consumer business, which was up slightly, and notably, sales in our retail stores were up mid-single digits, the fourth consecutive quarter of year-over-year growth. Our wholesale business was lower by mid-single digits, reflecting the timing shift to Q1 of this year that I discussed last quarter.

And looking at the first half overall for EMEA, which normalizes for the wholesale timing effect, our total EMEA business was up slightly in constant currency driven by growth in the direct-to-consumer business and wholesale revenue in line with the prior year. In our Americas business, revenue was up 11%, driven by double-digit growth in wholesale, which includes the impact of Calvin Klein women's sportswear and jeans wholesale transition in-house.

As I discussed last quarter, the wholesale shipments this year were planned to reflect a more balanced first half, second half weighting versus last year when shipments were more heavily weighted to the back half. Direct-to-consumer revenue in the Americas was flat, a sequential improvement versus Q1. We delivered double-digit growth in our digital commerce business, which marks the fourth consecutive quarter of year-over-year growth, fueled by the investments we've made to elevate the online consumer experience. And while stores were down low single digits for the quarter, we delivered a sequential improvement compared to Q1 and exited the quarter with modest sales growth in July.

Revenue in our Asia Pacific business was down 3% on a constant currency basis, a significant sequential improvement compared to the first quarter. Growth in our owned and operated digital commerce business was more than offset by declines in the wholesale business and in our stores, reflecting the choppy consumer environment in the region, particularly in China. And while direct-to-consumer revenue in China was down compared to last year, we saw a sequential improvement in our bricks-and-mortar stores compared to the first quarter and drove growth in our digital commerce business. Revenue for our Asia Pacific business was down 1% on a reported basis. In our licensing business, revenue was down 3% versus last year, more than explained by the previously mentioned transition of Calvin Klein women's sportswear and jeans in-house.

Turning to our global brands, Tommy Hilfiger revenues were up 4% as reported and flat in constant currency. Calvin Klein revenues were up 5% as reported and up 3% in constant currency. From an overall PVH channel perspective, our direct-to-consumer revenue was up 4% as reported and flat in constant currency, a sequential improvement over the prior quarter. Sales in our retail stores were up 4% as reported and flat on a constant currency basis, driven by mid-single-digit growth in EMEA, offset by low single-digit declines in each of Americas and APAC.

Sales in our owned and operated e-commerce business were up 3% as reported and flat in constant currency as strong growth in Americas and APAC was offset by a decline in EMEA. Total wholesale revenue was up 6% as reported and 2% in constant currency, which reflects the previously mentioned transition of Calvin Klein women's sportswear and jeans in-house.

In the second quarter, our gross margin was 57.7%, a decrease of 240 basis points compared to last year but better than planned, largely due to a delayed impact of tariffs. As we have discussed previously, approximately 50 basis points of the decrease was the impact of our North America license transitions. And in Q2, gross margin reflected the initial early impact of tariffs of approximately 20 basis points. The remaining 170 basis point decrease was largely a continuation of the 3 main factors we felt in Q1, including higher promotions, the mix of shipments in wholesale, which has a negative impact on gross margin but not our overall profitability, and the impact of Calvin Klein product shipment delays.

SG&A spending was down in constant currency and SG&A as a percent of revenue improved 140 basis points versus last year to 49.5%, reflecting our strong cost discipline and our Growth Driver 5 Actions. EBIT for the quarter was $178 million, and operating margin was 8.2%. Earnings per share was $2.52, reflecting a negative impact of $0.06 related to tariffs and a positive impact of $0.16 related to exchange. Interest expense was $22 million, and our tax rate for the quarter was approximately 22%.

As a reminder, our earnings per share of $3.01 in the second quarter last year included a benefit of approximately $0.55 related to the favorable settlement of a multi-year international tax audit, which drove our tax rate to 0% for last year's quarter. Absent this benefit, Q2 2024 (sic) [ 2026 ] EPS would have been $2.46. The Inventory at quarter end was up 13% compared to Q2 last year, including a 1% increase due to tariffs and reflects a planned improvement compared to up 19% in Q1. The rest of the increase in the current quarter was primarily due to a purposeful investment in best-selling core product categories and an increase to support our projected sales in the third quarter. Availability also improved across all regions and channels as we make strategic investments in the most essential styles. Our inventory is fresh and current and we remain on track to land the year with inventory aligned to our sales plan, excluding tariffs.

And now moving on to our outlook. We are encouraged by our Q2 results, but we also recognize there continues to be significant uncertainty around global trade policies and the impact on the broader macroeconomic environment and consumer spending behavior. Our outlook is based on our best assessment of current conditions and currently announced tariff levels.

Starting with the third quarter, we are projecting revenue to be flat to a slight increase on a reported basis and down slightly on a constant currency basis compared to the prior year. Our revenue outlook for the third quarter reflects the impact of wholesale shipment timing in the Americas I spoke of earlier, with this year reflecting a more balanced first half, second half weighting versus last year when shipments are more heavily weighted to the back half. Overall, for the Americas, we are planning revenue up low single digits with growth in wholesale and DTC sales approximately flat. In EMEA, we expect continued growth in DTC and wholesale approximately flat. And in Asia Pacific, we expect revenue to decline by low single digits, in line with the second quarter.

We are expecting third quarter gross margin to decline approximately 175 basis points versus the prior year, a sequential improvement compared to the first half trend as we begin to stabilize the Calvin Klein operational challenges we have discussed previously. Our gross margin guidance includes an unmitigated tariff impact of approximately 80 basis points, partially offset by the impact of planned mitigation actions. The impact of tariffs, we felt much more heavily in the fourth quarter given when new rates take effect and the timing of sell-through.

We expect SG&A as a percentage of revenue to be up approximately 75 basis points compared to last year. As Stefan mentioned, we are investing more into marketing in the third quarter to capitalize on key consumer moments and to support our brand building cut-through campaigns amplified by mega talent. And at the same time, our Growth Driver 5 Actions will continue to deliver efficiencies. Overall, we are projecting third quarter operating margin to be approximately 8%, down approximately 250 basis points compared to last year.

Earnings per share is expected to be in a range of $2.35 to $2.50. Our tax rate for the third quarter is estimated at approximately 25%, higher than our tax rate projection for the full year due to timing items, and interest expense is projected to be approximately $22 million.

And now moving on to the full year. We remain on track to deliver the overall business outlook we shared last quarter despite the recently announced incremental tariffs on goods coming into the U.S. We are reaffirming our full year constant currency revenue guidance of flat to increase slightly. Our operating margin outlook of approximately 8.5% and our EPS outlook in the range of $10.75 to $11.

Our guidance reflects an incremental tariff impact compared to our prior outlook and increased marketing investments, which are being offset by the impact of favorable exchange. We expect the tariffs currently in place with an overall net negative impact on our earnings in 2025, including an approximately $70 million unmitigated impact to EBIT or approximately $1.15 per share compared to previous guidance of $65 million and $1.05 per share.

We expect to mitigate some of these costs through strategic actions in the second half of the year and fully mitigate the impact over time. But for this year, some we will need to absorb. The net impact of the tariffs and these mitigation actions are embedded within our guidance. We are confident that we are well positioned to navigate the fluid tariff situation. We have a strong globally diversified revenue base with 70% of our revenues coming from outside the U.S., and we work closely with an established network of global sourcing partners across more than 30 countries where we continue to leverage our deep, long-standing relationships to further optimize our sourcing and production costs.

We are evaluating and actioning a variety of steps looking at every point along our value chain to mitigate the impact over time. On the top line, while we are reaffirming our constant currency revenue guidance, we are now projecting reported revenue to increase slightly to low single digits, reflecting the favorable impact of exchange compared to our previous guidance of flat to a slight increase. Regionally, our revenue outlook remains unchanged. Europe was planned to return to growth. In the Americas, we are planning revenue up mid-single digits, including the positive impact of the Calvin Klein women's sportswear and jeans wholesale transition in-house. And in Asia Pacific, revenue is planned down mid-single digits in constant currency.

We continue to expect gross margin to decrease approximately 250 basis points versus last year, with the incremental headwind from increased tariff rates, offset by the improvements we realized in the second quarter. On SG&A, we continue to expect expense to be lower in constant currency in 2025 compared to 2024, and our SG&A expenses as a percentage of revenue to decrease approximately 100 basis points, reflecting significant cost savings connected to our Growth Driver 5 Actions. These actions will simplify our operating model to drive more efficient ways of working, focus on our global technology stack, our global distribution network, our operating model in Europe and our support functions.

And through the end of the second quarter, we have already made meaningful progress in each of these areas. We continue to expect these actions to deliver 200 to 300 basis points of operating margin expansion over time with nearly 200 basis points of that benefit expected to be realized in the fourth quarter by the actions we have completed to date. Interest expense is now projected to be approximately $80 million, and our tax rate for 2025 continues to be estimated at approximately 22%.

Before we open up for questions, I just want to conclude by saying that while we are navigating a dynamic and uncertain macroeconomic environment, within that backdrop, we continue to focus on taking proactive measures on what is within our control, and making progress in all dimensions of the business through our execution of the PVH+ Plan, building momentum into 2026 to deliver sustainable and increasingly profitable growth for the long term.

And with that, we would like to open it up to questions.

[Operator Instructions] We'll take our first question from Jay Sole with UBS.

Great. Stefan, just interesting to hear you talk about marketing investments. What are you seeing that drove that? And Zac, one for you, how do you think about marketing investments in the shape of the P&L?

Thanks, Jay. And yes, as I shared in my prepared remarks, the step-up in execution in Q2, combined with our increased strength in products where we were able to lean into our biggest categories, most iconic categories, and then drive product innovation within our biggest franchises within those categories and then amplify that with our unique approach to marketing. And that's why you see our investments we come up in the back half because we are, for the back half, continue to build on the momentum you saw in Q2. So you will see -- in Calvin Klein, you will see us leaning into the iconic strength of 2 of the biggest categories, underwear, denim, build in men's on the Bad Bunny, positive Bad Bunny, product innovation, Bad Bunny amplified effect we had in the spring. We continue in the fall.

I believe we have the biggest and strongest lineup of global mega talent to do that in men's and in women's. So what you will see also is the same approach as we took with men's underwear and put innovation in our biggest franchise, we do the same in women's. And if you look at Tommy, you have -- there are 2 ways we do it. One is strengthening the seasonal campaigns full funnel. And you saw yesterday, we just launched our fall campaign. And then for Tommy, we also have the lifestyle collaboration with Formula One. So very successful on the F1 movie collaboration and then now building into the F1 with Cadillac. And then we have the SailGP's like Formula One racing on water.

So -- but it's leveraging the strength of the product with the strength of the cut-through marketing and doing that full funnel. And that gives us the confidence to invest more than what we had originally planned.

Jay, thanks for the question. On the second half, in terms of SG&A, we'll continue to make significant progress on our value Driver Actions, we previously talked about. We've committed to delivering 200 to 300 basis points of improvement over time with 200 basis points of that exiting this year. That's all on track. And including in Q2, we saw significant SG&A leverage with over 100 basis points coming from these actions. As we then look into Q3, those savings continue. But as Stefan mentioned, we are also investing in marketing to build that momentum for the second half and for holiday. So we will see deleverage in SG&A in Q3 but that's more than explained by that increased marketing spending.

And then by the time we get to Q4, we're back leveraging the SG&A as we finish up delivering that 200 basis points on the value Driver 5 Actions that we had committed earlier this year by the end of the year.

Our next question comes from Michael Binetti with Evercore.

Let me ask on tariffs. So I'm curious, it seems like your guidance in the third quarter lets us get to about 280 basis points of pressure in gross margin. In the fourth quarter, Zac, you said that the tariffs start -- the timing of tariffs starting to show up. And you gave us a sense of the unmitigated tariff pressure. I'm curious how we should think about that rolling into 2026. Is the tariff impact to gross is continuing to accelerate? And then you have some more time to think about mitigation efforts, maybe how you balance that, what leverage you can pull as you roll into 2026 or a reasonable time to get to neutral? I know you said you plan to offset them over time.

And then just a quick update on the outlets. I think you said the outlet traffic was down double digits earlier in the year. Usually, when we see the dollar weaken like this and help the tourism. Obviously, there's some political things going on right now that might disrupt normal flows. Maybe just help us think about how you're looking at the outlets as we think about the back half?

Yes. Thanks, Michael. So let me start on the -- let me start where you ended on the outlet traffic. So we saw traffic sequentially improve from Q1 to Q2, including the outlet traffic. So that's encouraging. When it comes to the tariffs before I hand it over to Zac for more of the technical answer. On the highest level, tariffs are impacting everyone in our sector but we have 70% of our revenues coming from our international business. So that's with a very large, diversified supply chain coming with that.

We also have the strength of being Calvin Klein and Tommy Hilfiger. So we have 2 of the most iconic beloved premium brands in the market. And through the PVH+ Plan, that we have for a number of years now executed a very disciplined on. We are driving relevance into our iconic beloved brands, product strength, consumer engagement strength, strength in the marketplace execution. So that is all to drive increasingly profitable growth, like growth with pricing power. So that's from a strategic perspective on how to navigate the tariffs really important to have that kind of brand strength and deliver that value -- increased value to the consumer.

When it comes to tactically here and now, just like all of our competitors. We are working through how to best mitigate the tariffs in a way that keeps our competitive positioning. And in doing that, we assess, and you will hear Zac share more details but we assess every part of the value chain. And it's still early but we are well positioned to work through this in a competitive way.

So Zac, do you mind taking it one?

Absolutely. Thanks, Michael, for the question. With a diverse and resilient supply chain, we've successfully navigated through many disruptive times before. And so we're confident in our ability to manage through this very dynamic environment also. We've previously communicated that we'd mitigate approximately 50% of the cost of the prior cost in 2025 with more over time. With the newly announced rates coming in for 4Q for us around 2x higher than we previously had talked about, we do see that mitigation cost percentage being a little bit lower for 2025.

But most importantly, we expect to continue to expand on our mitigation efforts through the strategic actions throughout 2026. Stefan mentioned, we feel really good about the premium positioning of our brands, and we'll continue to look at all levers across the entire value chain to mitigate the impact. This includes continuing to prioritize supply chain and internal efficiencies first. And any pricing actions we take will be targeted based on where we have pricing power. That's really important and always being sort of balance that price value for the consumer.

Our next question comes from Brooke Roach with Goldman Sachs.

Stefan, can you give us an operational update on your transformation within Calvin Klein? As you look ahead into 2026, what are the opportunities for improved execution in North America and globally?

Yes. Thanks, Brooke. So pleased to share this quarter as a follow-up to last quarter when we flagged the operational challenges we had in the first season of setting up the Calvin Klein global product capabilities in New York. So I'm pleased to share that what we set out -- how we set out to get through that is what we have delivered on during this quarter. So if you look at fall '25, we have made the sequential improvement from spring that we set out to do. If you look at spring '26, we have already secured the going margin improvements we targeted to get back and we are on time for the deliveries. So from there, we are fully back on track. So David and Calvin the team have done a really, really good job working through that.

And coming back to why we're setting up these capabilities and why it was worth it is because it will pay off for many years to come. We now have a strong global product engine for both Calvin and Tommy for each of the global brands, serving our regions. So we feel very good about how we work through it.

Our next question comes from Matthew Boss with JPMorgan.

So Stefan, maybe in the Americas, could you break down the drivers of the sequential improvement at direct-to-consumer relative to trends that you've embedded for the back half? And then in Europe, could you just elaborate on the composition of your fall '25 order book and initial indications for spring '26?

Yes. So thanks, Matt. So encouraging to see the improved D2C trends in North America, both they were driven both -- they were both significant and sequentially improved from Q1 and 3 main drivers behind that. So first, we were able to leverage the increased strength in product across both Tommy and Calvin. And then we were able to amplify that product strength with the improved marketing. And the way that we improved marketing and North America and each of the regions play a really important role is, yes, you need to have the call-through campaigns from each of the brands, which we now have.

But then what North America did and the other regions also did in the quarter was they expanded the mid-funnel in the marketing. So if you look at marketing from top of funnel, where you have Bad Bunny and awareness driving and then you have mid-funnel, which is the product storytelling, the increased consideration. You take the aspirational strength that you create with a product innovation and Bad Bunny and then you make it shoppable. And that part was really expanded and really drove engagement with the consumer.

So the third part was how we then drove new consumers at a growth rate we haven't seen before, we drove retained consumers up and we reactivate more consumers than we did prior. So it's a combination of the strength of the product, strength of the marketing, full funnel expansion and then an increased consumer and end customer focus. So really well done. And that is something that's repeatable and systematic that we will continue to build out.

Yes. And then Europe. Thanks, Zac. Europe, when it comes to the order books, really exciting to see. So if you look at form, we started to grow the order books in Europe again after our quality of sales initiatives. And we do that because of the strength in product across the board in both Calvin and Tommy. And in Calvin, its, of course, driven by the strength of underwear and denim. And in Tommy, it's more across the lifestyle. You see the polos, the cable knits, the outerwear. So strength in order books across the board in Tommy and for spring, we were able to continue to build on that strength.

And it's the reason why we are able to drive growth in the forward-looking order books for spring is same reason as we drove it for fall. That is a continuation of strengthening the products based on our key growth categories based on putting more innovation into the product and our partners seeing and recognizing that. So very well done by Fredrik and the team in Europe.

Our next question comes from Dana Telsey with Telsey Group.

As you think about your business, 70% international versus domestic, what are you seeing in the different promotional trends overseas versus here in the U.S.?

And then Stefan, you noted the new store in Tokyo, what we've heard about other enhancements being made to the store portfolio, what should we be looking forward to with Soho and perhaps other stores beyond outlets?

Thanks, Dana. And let's start with your question around the consumer across the world. So as everyone else in North America, we have uncertainty in the back half of tariff. We don't yet know how the consumer will respond. What we do know is every improvement we put into the desirability of the iconic strength of our brands will resonate with the consumer. And in Europe, we see the backdrop and the consumer remains stable. We have seen that for a number of quarters. And in APAC, we continue to see a choppy backdrop, but exciting to see in Q2 that us leaning into the relevance, the strength of the brand, product, marketing, very strong execution in the channels in APAC, we have stabilized our performance there and sequentially significantly improved it.

The second question was relating to stores. So very exciting today and tomorrow, we open our Harajuku flagship store in Tokyo. So it's one of the most important brand-building locations for APAC and for us globally. And for anyone in our sector globally. We have the biggest store, the most exciting brand expression on Calvin Klein. So David is there with the team and [Technical Difficulty]

Ladies and gentlemen, we are experiencing technical difficulties. Please, remain online.

Can you hear us?

And I can hear you loud and clear. Please present with your presentation.

Good question. Dana, are you still there?

I'm still here. Yes. So it's about the stores you were getting to.

Yes, where did they cut off, is there any way?

You cut off about Harajuku that the team is over there now.

All right. Even though I'm excited about Harajuku and our flagship stores, I want to make sure I don't take you through it twice. But yes, Harajuku opens tomorrow. It's our biggest and best flagship expression for Calvin so far. It's a really important location, not only for Japan but for APAC and for us globally to build the brand relevance. Soho, to your point, opens at the end of the year. And same there, really important shopping destination, also for our global consumers coming into New York to experience the brand, very exciting. And then in parallel to the flagships, what we really lean into is the renovations of our fleet.

So we are getting everything set up to over the next 3 years, renovate and upgrade the majority of our fleet globally. So more on that later.

We have time for one more question.

[Technical Difficulty]

Can you guys hear us. It sounds like it may have cut off again.

And Tom, your line is open.

I want to ask about the North American wholesale environment. I think a lot of brands I've talked about a lot of caution from the second half from wholesale partners? Have you seen any incremental caution from your wholesale partners in North America? And is there any impact on the in-sourcing of the G3 licenses based on the wholesale environment?

Thank you. So let's start with first half for second quarter in wholesale North America. We had a benefit of the intake and relaunch of the Calvin Klein women's sportswear and jeans businesses, as you mentioned. Then what you also see from the second quarter is that we grow with our most important full-price partners. And then thirdly, there is a normalization of wholesale shipment across first half, second half.

So Zac, do you want to say a few words?

Yes. Of course. So last year, we had a lighter weighting of shipments in the first half in wholesale than normal and a little bit heavier in the second half. As we moved into 2025, we've normalized that to a historical trend. So first half and second half are relatively normal. So what we see is in the first half of the year, a little bit of a stronger amount of growth and we'll see that normalize in the second half a little bit lower, especially in third quarter.

All right. So with that, I apologize for any technical difficulties. I hope you heard most of the call. We are on a multiyear journey to build Calvin and Tommy into their full potential. Quarter-by-quarter, step-by-step, you'll see us add strength, desirability and engaging our consumer and leaning into that brand love and expanding our PVH execution. So Q2 was an example of that. We continue heads-down executing on the plan and look forward to update you next quarter. Thank you.

Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

Good morning, everyone, and welcome to today's PVH First Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this call may be recorded, and that I will be standing by should you require any assistance.

It is now my pleasure to turn today's program over to Sheryl Freeman, Senior Vice President of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. First Quarter 2025 Earnings Conference Call. Leading the call today will be Stefan Larsson, Chief Executive Officer; and Zac Coughlin, Chief Financial Officer. This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material. It may not be recorded, rebroadcast or otherwise transmitted without PVH's written permission. Your participation constitutes your consent to having anything you say appear on any transcript or replay of this call.

The information to be discussed includes forward-looking statements that reflect PVH's view as of June 4, 2025, of future events and financial performance. These statements are subject to risks and uncertainties indicated in the company's SEC filings and the safe harbor statement included in the press release that is the subject of this call. These include PVH's right to change its strategies, objectives, expectations and intentions and the company's ability to realize anticipated benefits and savings from divestitures, restructuring and similar plans such as the head count cost reduction initiative announced in August 2022, the 2021 sale of assets of and exit from its Heritage Brands menswear and retail businesses, to November 2023, sale of the Heritage Brands women's intimate apparel business to focus on its Calvin Klein and Tommy Hilfiger businesses and its current multiyear initiative to simplify its operating model.

PVH does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimates regarding revenue or earnings. Generally, the financial information and projections to be discussed will be on a non-GAAP basis as defined under SEC rules. Reconciliations to GAAP amounts are included in PVH's first quarter 2025 earnings release which can be found on www.pvh.com and in the company's current report on Form 8-K furnished to the SEC in connection with the release.

At this time, I am pleased to turn the conference over to Stefan Larsson.

Thank you, Sheryl, and good morning, everyone, and thank you for joining our call today. I want to start by thanking our Calvin, Tommy and PVH teams around the world for their hard work this quarter as we delivered on our plan, driven by our disciplined execution of the PVH+ Plan, we grew revenue 2% above our guidance, and we delivered stronger-than-expected non-GAAP EPS, also above our guidance. and we remain on track to drive revenue growth for the full year.

In line with guidance, total direct-to-consumer revenue was down approximately 3%, with e-commerce up 3%. We grew wholesale revenue mid-single digits and benefited from earlier shipments as well as the intake and relaunch of the Calvin Klein women's sportswear and jeans businesses in North America. Since we last spoke, we have seen an increasingly tough macro environment. While we have to recognize this evolved backdrop, all our focus is on was within our control to strengthen and expand the impact of our own PVH+ actions. And in moments like this, when the external factors gets worse, is the time to sharpen our focus, get even closer to the consumers and expand our execution.

Based on this, I'll directly go into sharing the concrete examples of what actions we took that drove our performance in Q1 and then briefly cover our outlook. I'll then finish with covering the specific actions we will drive in the back half that are fully in our control and are geared to move the needle.

For Q1 drivers, I'll start with Calvin Klein. The world of underwear and jeans is a significant portion of Calvin's global revenues. And when we spoke last we had just launched our most innovative product franchise so far, the icon cotton stretch underwear for men with a viral cut-through campaign featuring Bad Bunny. It was built on a unique product innovation rooted in our biggest product category and was complemented by very strong product marketing activations that drove traffic to stores and boosted conversion. This full funnel approach drove a 25% increase in combined sales of Icon Cotton Stretch and Cotton Stretch styles globally. It's one very powerful example of where we are leaning into our core strength, aligning all the pieces of the PVH+ Plan from brand, product and marketing all the way to marketplace execution than we really cut through.

Another key product category for Calvin is denim. In Q1, we put a lot of innovation into our iconic fashion denim offering, expanding fits, washes and designs to be hyper relevant. And through these actions, we grew that part of the assortment 14% in the quarter. Today, we see a big difference in performance between where we have strategically leaned in to innovate and where we have yet to do so. And in the back half of this year, we will accelerate the impact of these kind of initiatives to cover a bigger part of the total assortment.

In addition to the strategic growth initiatives in the main lines, we kicked off the year with Calvin Klein's return to runway, which dominated the New York Fashion Week conversations and plays an important role in creating a strong halo for the brand. Top tier talent, including Dua Lipa, Alexander Skarsgård and Pedro Pascal where styling collection looks at cultural defining moments in the season, like most recently at the Cannes Film Festival.

Turning to Tommy. Similar to Calvin, what we see in Tommy from a product perspective, is that where we innovate and put fashion into our iconic styles, whether it's garment tide linen shirts or an evolution of our monogram T-shirts or when we add seasonal relevance to our iconic cable knit sweaters for men's and women's, we drive much stronger performance. We built our most recent summer lifestyle campaign, Hilfiger Resort on this learning where the product is iconic Tommy made current through an infusion of seasonal relevance, amplified by some of our best-performing talent, including Patrick Schwarzenegger and Madelyn Cline.

Earlier this spring, Tommy also launched 2 new collections, a women's collection with Sofia Richie Grainge and the Hilfiger's Sailing collection as part of our partnership with SailGP, both collections were showcased across all key platforms and channels. And going forward, you will continue to see these kind of seasonal collections and new takes on Tommy's iconic style always playing back to our biggest businesses and biggest categories and activated in our key wholesale doors and stores globally.

Finally, on the brand side, Tommy delivered breakthrough fashion entertainment at the Met Gala, actor Damson Idris drove up to the Met steps in the race car from the highly anticipated film F1, wearing a custom Tommy Hilfiger Race suit before dramatically revealing a red Tommy tuxedo to walk the red carpet. It became one of the most talked about entrances, both in global headlines and in social media, and it captured Tommy's iconic style and cultural relevance.

Now let me turn to our regional performance, starting with Europe. We kept strengthening our strong brand position in the region with overall revenue increasing mid-single digits, in line with our plan and driven by growth in both D2C and wholesale. Importantly, as planned, total D2C turned to growth in the quarter increasing low single digits, and we delivered our third consecutive quarter of store growth. Despite the continued muted consumer backdrop, we drove better conversion across the region with particular strength in the big consumer moments.

At wholesale, we delivered mid-single-digit growth, driven by the sequential improvements in order books for the spring '25 season compared to fall '24. We also benefited from earlier spring and summer product shipments compared to the same quarter last year. And as we shared previously, our full order book in Europe finalized up low single digits versus the prior year, reflecting the strong execution from our teams to improve the overall assortment and the successful quality of sales initiatives we took last year.

In the Americas, our team continued to lean into the next level execution of the PVH+ Plan. as we work to unlock the full growth potential of both brands and once again delivered a double-digit EBIT margin. This is a big improvement from when we first launched the PVH+ Plan. Overall revenue increased high single digits, above our plan, driven by earlier wholesale shipments and supported by the relaunch of the women's sportswear and jeans business at U.S. wholesale following the take-back of this license.

D2C store revenue in the quarter declined on lower traffic, although conversion continued to improve, and we grew e-commerce mid-teens. Where we delivered strong spring fashion newness, we drove strong growth, which for Tommy was led by newness in sweaters, linen fabrications and fashion tees. And in Calvin, the men's new icon cotton stretch underwear and fashion denim. Across both brands, we continue to drive strong performance in e-commerce with higher traffic and higher average order value.

Within wholesale, we launched Calvin Klein women's sportswear in Macy's in over 150 doors, supported by a special marketing campaign and we invested in building out the new shopping experience.

Moving on to Asia Pacific. Revenues declined low teens on a reported basis and low double digits in constant currency due to weaker customer confidence and the earlier timing shift of Lunar New Year into the last quarter. While we delivered e-commerce growth in constant currency, overall performance was more than offset by declines in stores and wholesale.

As we shared last quarter, starting in February, we began to face incrementally tougher headwinds in China, which have since continued. While we're optimistic about the opportunities to grow our brands in the regions, we are realistic about the continued headwinds from a challenged backdrop, particularly in China. In this backdrop, we continue to drive product elevation across outerwear, sweaters, polos and denim and our strong brand ambassadors, including Mingyu, Jisoo, Stray Kids, demonstrated our continued ability to amplify with global talent to excite consumers and remain strong in key consumer shopping months.

Turning to inventory and the build-out of our demand-driven supply chain. For the start of the year, we built up and evolved our never-out-of-stock program on core essentials. We did this as a deliberate effort after multiple seasons of being too low in these products and often missing sales. At the same time, Q1 started with lower-than-expected demand for basics and essentials. This has led to us leaving the first quarter with higher levels of inventory. And as part of our demand-driven supply chain, we have adjusted future buys, which will align inventory levels to current demand trends in the back half of the year. This is high-quality, fresh inventory of core essentials that we will keep adjusting over time based on demand.

On the licensing front, as we discussed last quarter, we have a large and diversified global licensing business, which is a key competitive advantage for us. Our licensing partners help bring our vision to life across multiple complementary categories where they are experts, from watches and fragrance to eyewear and they're critically important to how we drive sustainable, profitable growth through the PVH+ Plan.

In the first quarter for women's North America wholesale, as planned, we took back the Calvin Klein sportswear and jeans licenses, which are key to our lifestyle expression. And for spring '26, we will take back our Tommy sportswear license. Included in the licenses we are taking back our specialized wholesale category businesses like outerwear which are presented outside of our brand-specific lifestyle paths often on a dedicated section of the store. And this week for one of these specialized categories, we've entered into a new licensing agreement for men's and women's outerwear with an expected launch in Spring '26.

As I mentioned, any new licensing partner we complement our assortment with their specific expertise and be fully aligned with our brand directions. As a reminder, the overall contribution to our total global licensing business from the G-III license takeback is only 20% of our expected licensing revenues for 2025, and 80% of our licensing revenues are from long-term brand building partnerships that we are growing together.

Now let me switch gears and talk about our overall outlook. Across the industry, as I mentioned earlier, we are navigating a very uncertain consumer and macro environment that has become increasingly challenged over the past 3 months. The tougher retail trends we saw in February continued, with consumer sentiment further weakening to some of its lowest recorded levels since the 1950s. This has translated into traffic trends coming down in the U.S. and around the world, and this backdrop has led to increased promotional levels. We're also navigating the impact of tariffs. Based on our latest assessment, we estimate that the unmitigated impact of tariffs creates a headwind of approximately 65 million to our full year EBIT weighted dominantly in the second half of the year.

We're taking a variety of steps to mitigate this impact, which Zac will discuss in more detail. Our business in China also continues to face a dynamic situation. While we remain on MOFCOM's unreliable entity list, we continue to engage directly with MOFCOM as we work towards a positive resolution. We remain fully committed to serving our Chinese consumers as we have for the past 20 years, and we are investing in our growth in China for the long term. As we navigate these external factors, and as we shared last quarter, we're also working through the Calvin Klein global brand operational challenges that we experienced as we for the first season built up the global product creation capability for Calvin Klein in New York.

This work was a significant undertaking and absolutely critical to unlock the brand's full potential, with the first globally created product season now in the markets with Spring '25, we now have our arms around the full impact of these challenges, and they all come from the same root cause in that the team had to spend too much effort getting the new go-to-market process stood up, which constrained product development time lines and course sourcing delays. Combined, this led to a margin headwind, predominantly weighted to the first half with some carryover into the second half of this year. We have been laser-focused on addressing these transitory operational challenges.

And Last month, we announced new leadership with the appointment of David Savman as the Global Brand President for Calvin Klein. David is already fully in with the team, bringing his deep experience driving PVH+ performance across operations, regions and our brands. And I'm encouraged by the level of clarity and rigor at which he and the team are working to resolve these challenges and get our execution to where it needs to be.

As we shared last quarter, we are seeing sequential improvements already for the full '25 season, which will further strengthen for Spring '26, and we'll be able to start creating the full '26 product season from a very strong place. Through our PVH + execution, we are quarter-by-quarter building the capabilities we need to build these brands for the long term. This is a process. It takes time. We will continuously learn and improve to become stronger and stronger over time.

From a financial perspective, as we look ahead to 2025, although we are reaffirming our revenue guidance of flat to up slightly, we are not yet in a place to fully compensate for the effects of these strong macro forces. And that's why we have to adjust our full year non-GAAP guidance down for both EBIT margin and EPS.

Important to note is that we are targeting to exit the year in a stronger margin position, which Zac will share more details about. This will be supported by the business driving actions I just outlined to drive the back half of the year. Our delivery of 200 basis points of cost savings from our previously announced initiative, and by having resolved most of Calvin's operational challenges.

And with Spring 2026 product seasons in both brands on time and with strong gross margins, that positions us for a strong profit start of 2026. Let me just say that this guidance is not what we set out to deliver when we started the year. And as a leadership team, we are leaning into where we have the strength in the PVH+ execution, and we will expand this impact already for the back half of this year.

Globally for Calvin Klein, this means that we will continue to build our iconic cut-through campaigns, amplifying our core strength in the world of underwear and world of jeans. Building on the successful launch of our Icon Cotton Stretch, we are this fall launching the equivalent in women's underwear, which is our Icon Cotton Modal program. You'll see us activate again with a full funnel, cut-through approach, featuring one of the most current global superstars in music. Next to this, we will also continue to build out our men's iconic underwear campaigns, similar to the Jeremy Allen White and Bad Bunny format that became viral global sensations, and every time we'll add product newness and innovation, this time supported by superstars from the world of sport, music and including K-pop, where Calvin has so much strength.

Along with these underwear anchored campaigns, we will lean in and expand the impact of other big growth categories for the brand like fashion denim and outerwear. Finally, for Calvin, we will also direct more of our media investments to highly targeted traffic-driving media to further amplify these campaigns and further strengthen the wholesale and in-store impact. In Tommy, you'll see us launch a new cut-through fall lifestyle campaign where we will amplify the strength of the fall assortment with a 20% increase in media investment versus last year to drive high-quality traffic, and we will build out the top, middle and bottom parts of the consumer funnel for maximum impact.

In connection to this, you'll also see the newness in Tommy's fall product assortment with improvement across fabric, function and fit. This is the product strength that drove the European order books to growth in the fall. And across our icons and key product categories, we're designing into strong newness. We're also doubling down on our F1 program as the sport expands in relevance in the U.S. and globally. You might have already seen that we just announced a new partnership with Cadillac, another American icon where Tommy will be the first lifestyle sponsor of the Cadillac Formula 1 team reinforcing Tommy's 40-year legacy of fusing fashion, sport and entertainment.

Later this month, Tommy is featured in the highly anticipated F1 movie with Damson Idris and Brad Pitt, which will be the biggest movie launch this summer globally. We are already seeing the impact of the film strong media campaign which features Tommy Hilfiger on the mega screen in Piccadilly Circus, and we are starting to see incredible engagement on social media.

Across the regions, our brands are entering Fall '25 with a stronger product assortment across both key category offers and strong newness in innovation in hero product, with a commercial plan that tightly aligns our execution across product, marketing and the marketplace.

And we will, in both Calvin and Tommy have very strong fall and holiday cut-through campaigns with regionally relevant talent amplification. In markets around the world, you see us in Calvin further ignite the worlds of underwear and denim, and in Tommy, we'll connect iconic Tommy lifestyle to culture anchored in a strong men's focus and we'll do it in close collaboration with our partners around the world.

To further support our back half execution, as I've mentioned for Calvin and also for Tommy, we're increasing our investment across the marketing funnel to drive high-quality traffic.

In closing, for the first quarter, we delivered on our plan, driven by our disciplined PVH+ execution. And we have our sleeves rolled up, focusing 100% on what's within our control to improve the back half of the year by broadening and scaling our successful PVH+ Plan initiatives in both Calvin and Tommy across all 3 regions.

We are on a multiyear journey to unlock the full potential of Calvin, Tommy and PVH, where it's all about tapping into the global consumer lab for both Calvin Klein and Tommy Hilfiger. Two of the most iconic brands in the market and step-by-step building them into the most desirable lifestyle brands in the world. We are staying relentlessly focused, learning and improving continuously to build the product strength, consumer engagement and marketplace execution that over time, will tap into the full potential of these incredible brands and make us win repeatedly with the consumer and as a result, create the most shareholder value over time.

And with that, I'll turn the call over to Zac.

Thanks, Stefan, and good morning. My comments are based on non-GAAP results and are reconciled in our press release. As Stefan discussed, we were able to deliver our first quarter results within the backdrop of a highly dynamic and uncertain macro environment, driven by the strength of our 2 iconic global brands and disciplined execution of the PVH+ Plan.

For the first quarter, we delivered revenue above our guidance largely due to the timing of wholesale shipments in Americas with operating margin of 8.1% within our guidance range as we navigated an increasingly promotional environment. EPS came in slightly ahead of guidance driven by lower tax and interest expense. Additionally, we returned over $550 million to shareholders during the quarter with the repurchase of 5.4 million shares of our common stock through previously announced accelerated share repurchase agreements and open market purchases.

I will now discuss our first quarter results in more detail and then move on to our outlook. As a reminder, as I mentioned during our Q4 2024 earnings call, beginning this quarter, we have evolved our reportable segments to be, one, EMEA; two, Americas; three, Asia Pacific; and four, a new stand-alone licensing segment. We filed an 8-K yesterday with the recast quarterly and annual segment data for 2023 and 2024. Revenue for the first quarter was up 2% on both a reported and constant currency basis.

Starting from a regional perspective, our EMEA business returned to growth during the quarter with revenue up 4% in constant currency including mid-single-digit growth in the wholesale business and a low single-digit increase in the direct-to-consumer business. Wholesale growth for the quarter was impacted by a shift in timing of shipments with Q2. Revenue for our European business was up 5% on a reported basis.

In our Americas business, revenue was up 7%, driven by high-teens growth in the wholesale business, including the impact of Calvin Klein women's sportswear and jeans wholesale transition in-house and a shift in timing of shipments from the second half into the first half of the year.

This year wholesale shipments are planned to reflect a more balanced first half, second half weighting versus last year when shipments were more heavily weighted to the back half. In direct-to-consumer, mid-teens growth in our owned and operated digital commerce business was more than offset by a mid-single-digit decline in our retail stores due to the challenging consumer environment. Traffic trends ended the quarter lower than planned, leading to a more promotional environment.

Aligned with our outlook, revenue in our Asia Pacific business was down 11% on a constant currency basis, which included a 3% decrease due to the earlier timing of the Lunar New Year shopping period that I discussed last quarter. The decrease also reflects the challenging consumer environment in the region, particularly in China. Revenue for our Asia Pacific business was down 13% on a reported basis. Licensing revenue was down 2% versus last year, with the decrease more than explained by the previously mentioned transition of Calvin Klein women's sportswear and jeans in-house during the quarter.

In our global brands, Tommy Hilfiger revenues were up 3% on both a reported and a constant currency basis driven by growth in EMEA and Americas. Calvin Klein revenues were flat. From an overall PVH channel perspective, our direct-to-consumer revenue was down 3%, both reported and in constant currency. Sales in our retail stores were down 5% as low single-digit growth in EMEA was offset by the declines I mentioned in Americas and APAC. Sales in our owned and operated e-commerce business were up 3% with strong growth in the Americas.

Total wholesale revenue was up 7% on a constant currency basis and 6% on a reported basis, driven by increases in EMEA and Americas due in part to the shifts in timing that I mentioned earlier. In the first quarter, our gross margin was 58.6%, a decrease of 280 basis points compared to a record high in Q1 last year. As we've discussed previously, approximately 50 basis points of the decrease was the impact of our North America license transitions. The remaining 230 basis point decrease was a result of 3 main factors in the quarter.

First, a higher mix of wholesale revenue in the first quarter than last year and a change in the mix of shipments within the wholesale channel, which has a negative impact on gross margin but not on our overall profitability. Second, the impact of weakening consumer sentiment and lower retail traffic, which led to higher promotions. And third, incremental freight costs and customer discounts to address the impact of the Calvin Klein product shipment delays. SG&A as a percent of revenue was 50.5%, a 90 basis point improvement versus last year, reflecting our growth driver 5 cost savings actions.

We are making progress, and we expect the benefit of these actions to grow in impact as we progress through the year. EBIT for the quarter was $160 million, and operating margin was 8.1%. Earnings per share was $2.30. Interest expense was $17 million, and our tax rate for the quarter was approximately 17%. On a GAAP basis, we also took a noncash goodwill and other intangible asset impairment charge of $480 million, which was primarily due to an increase in discount rates. Inventory at quarter end was up 19% compared to Q1 last year.

The increase was primarily due to: one, as Stefan mentioned, a purposeful investment in best-selling core product categories; two, an increase to support our projected sales growth in the second quarter; and three, earlier receipts of summer season product to improve in-season stock availability. Importantly, the vast majority of our inventory is core and current season. As we progress through the year, we expect inventory will be impacted by tariffs, but otherwise begin to largely align with projected sales growth by the end of Q3.

And now moving on to our outlook. I'd like to start by reiterating what Stefan mentioned earlier. We are operating in a highly dynamic and fluid consumer and macroenomic environment globally. There is significant uncertainty around global trade policies and the impact on the broader macroeconomic environment and consumer spending behavior. As such, our outlook is based on our best assessment of current conditions and assumes no material worsening.

Overall, we are reaffirming our full year revenue outlook, but we are updating our earnings outlook to reflect our revised expectations for the remainder of the year with 3 main changes versus our prior guidance. The first is the impact of the recently announced tariffs on goods coming into the U.S. We expect the tariffs currently in place will have an overall net negative impact on our earnings in 2025 including an approximately $65 million unmitigated impact to EBIT or approximately $1.05 per share, some of which we will be able to mitigate through strategic actions in the second half of the year and some we will need to absorb. The net impact of the tariffs and these actions are embedded within our guidance.

We believe we are relatively well positioned to face tariff headwinds. We have a strong globally diversified revenue base with U.S. revenues accounting for approximately 30% of our total revenue. And we have a strong and established network of global sourcing partners across more than 30 countries and are leveraging these deep, long-standing relationships to identify ways we can further optimize our sourcing and production costs, sharing the impact with our partners wherever possible.

We will evaluate strategic discount reductions to mitigate the potential tariff impact. And while we are focused on delivering price value for the consumer, we are also ready to take calibrated targeted pricing actions where we have pricing power. As normal course of business, we continually assess our prices based on a number of factors. In addition to the newly enacted tariffs, the existing macro pressures have created an increasingly challenging consumer environment, particularly in the U.S. The tougher retail trends that emerge beginning in early February have continued. As such, we are already experiencing a more promotional environment across the market, and we have had to increase our promotional levels across both brands. We are now forecasting a more promotional environment to continue for the remainder of the year.

Similarly, our business in China continues to face a challenging consumer environment, which is driving more promotional activity there as well. And as Stefan mentioned, we remain on MOFCOM's unreliable entity list. And finally, as Stefan discussed, with the first globally created product season for Calvin Klein now in the markets, the full extent of the transitory operational challenges that we discussed last quarter are now apparent, further contributing to our margin headwinds this year. The outcome of these factors are leading us to the following financial outlook. We are reaffirming our overall full year revenue guidance of flat to a slight increase on both a reported and constant currency basis. Exchange has improved since we last spoke and is driving some favorability to our top line.

As such, we now expect our reported revenue is more likely to land at the higher end of that range. Our revenue outlook for EMEA and Americas remains unchanged with planned growth in both regions in 2025. In Asia Pacific, our outlook for the region overall also remains unchanged with revenue planned down mid-single digits in constant currency. Gross margin is now expected to decrease approximately 250 basis points versus last year. Our previous guidance was a decrease of approximately 100 basis points of which approximately half is due to the impact of the G3 transition in North America from license to wholesale and the rest largely explained by the transitory impacts from centralizing the Calvin Klein Global Product Kitchen.

The incremental 150 basis points decline is attributable to higher discounts as a result of the significantly more promotional environments, the impact of the incremental Calvin Klein operational issues and the net negative impact related to tariffs. This includes an unmitigated impact of approximately 80 basis points, partially offset by the impact of planned mitigation actions which will primarily take effect in the second half.

While we expect the promotional environment to continue all year, within that backdrop, we are planning improvement in the second half related to what is within our control. Specifically, we continue to expect the transitory Calvin Klein issues to have a greater impact to first half gross margins with the impact lessening in the second half. On SG&A, we expect expense to be lower in constant currency in 2025 compared to 2024.

As we previously saw macro headwinds gathering, our SG&A plans for 2025 already included a decrease of approximately 100 basis points as a percentage of revenue. As I discussed last quarter, we expect to drive significant cost savings connected to our growth driver 5 actions with savings showing up more powerfully as we progress through the year. These actions will simplify our operating model to drive more efficient ways of working, focused on our global technology stack, our global distribution network, our operating model in Europe and our support functions.

We expect these actions to deliver 200 to 300 basis points of operating margin expansion over time and expect to exit 2025 with approximately 200 basis points of the savings realized. As a result of the increased gross margin pressures, our full year operating margin is now projected to be approximately 8.5%, and EPS is projected to be in the range of $10.75 to $11. While operating margins are lower than last year, we expect to exit 2025 back at double-digit operating margins with both gross margin and SG&A actions contributing to improvements compared to the first half. Our expectations for interest expense and our tax rate are unchanged from our prior guidance.

Turning to the second quarter, we are projecting revenue to be up low single digits on a reported basis and flat to up slightly on a constant currency basis compared to 2024. In EMEA, we expect continued growth in DTC to be offset by a low single-digit decline in wholesale reflecting the timing shifts with Q1 I mentioned earlier. In Americas, we are planning revenue up high single digits and relatively in line with Q1, driven by an increase in wholesale revenue partially offset by lower DTC sales.

And in Asia Pacific, we expect revenue to decline by mid-single digits with the improvement versus Q1, primarily due to the timing of the Lunar New Year shopping period that negatively impacted Q1. We are expecting our second quarter gross margin to decline approximately 300 basis points with the Q1 trends largely continuing into Q2 and an approximately 60 basis point impact of tariffs. We don't expect our mitigation strategies to have any substantial impact into the second half of the year.

For SG&A, Growth Driver 5 savings will continue to deliver efficiencies. And as such, our SG&A expense as a percent of revenue is expected to decrease approximately 100 basis points compared to last year. Overall, we are expecting our second quarter operating margin to be approximately 6.5% to 7%, down approximately 200 to 250 basis points compared to last year. Earnings per share is expected to be in a range of $1.85 to $2. Our tax rate for the second quarter is estimated at approximately 20% and interest expense is projected to be approximately $25 million.

Before we open up for questions, I just want to conclude by saying we're navigating a highly dynamic and uncertain macroeconomic environment. We are facing increased pressures from the significantly more promotional environment, tariffs in the U.S., the challenging consumer environment in China and transitory operational challenges in Calvin Klein. While operating margins are lower than last year and our previous expectations. As Stefan mentioned, our focus is on taking proactive measures on what is in our control, including specific actions focused on supercharging our trajectory in the second half.

With this focus, we expect to exit 2025 back at double-digit operating margins, and we are setting up for a stronger spring 2026 with higher on-time deliveries increased product go in margins and stronger commercial plans amplified by increased marketing investments, all building momentum into 2026 to deliver sustainable and increasingly profitable growth. And with that, operator, we would like to open it up for questions.

[Operator Instructions] We'll go first this morning to Jay Sole of UBS.

Stefan, you mentioned that you've seen decreased traffic across many regions in the world and increased promotional levels. You also mentioned that your brands have strong product assortments and exciting commercial plans. But what gives you confidence that both brands, both Calvin and Tommy, still have good momentum with consumers that they haven't lost momentum that part of what maybe is explaining the change in the guide isn't something of that nature?

Yes. Thanks, Jay. What is so clear to us and especially when the consumer backdrop and the macro gets worse is everywhere where we lean in and tap into the consumer love for Calvin Klein and Tommy Hilfiger, and then we line up through the PVH+ focus, increase newness and innovation in product, cut-through marketing, stronger wholesale and in-store execution, we really win and we win big despite that macro.

So take the biggest product innovation in Q1 in Calvin Klein, one of the most promising proof points is the new product innovation in underwear. So if you look at what we did there is we leaned into the biggest Calvin Klein, men's underwear. We leaned into one of the biggest product franchises and then we put unprecedented newness and innovation into it. Innovation that's not existing in the market. We were first. And then we amplify that with one of the most streamed artist on Spotify, Bad Bunny.

And yes, it becomes viral. But what's really interesting is in this backdrop, it drove 25% growth within that big franchise. So in one move, we moved one of the top 3 product franchises for the biggest category and drove 25% growth. Then what might be missed by some, but not by the consumers, we're also increasingly start to introduce denim next to underwear because that's a really big iconic category for Calvin Klein as well. And the improved and innovated fashion denim in Q1 drove growth 14%. So what you see in the back half, what you see us doing, what our focus is 100% is expanding and scaling this across bigger and bigger parts of the business.

We are moving from this investor call to an all-hands call with our 20,000 associates. And my focus there is about not yet. We are not yet in a position to fully mitigate the macro headwinds, but look at where we lean in and execute. 25% growth, biggest franchise. 14% growth on the fashion denim. And then you will see in fall how these actions continue with more product innovation and product franchise introduction for men's. Then we do exactly the same for women's. So one of the biggest underwear franchises for women's for fall is completely reinvented backed up with one again -- once again, one of the biggest artists in the world. And then we continue biggest artist in the world, biggest sports, K-pop and then we continue to build on that.

For Tommy, we see the same thing in Tommy. So when we lean into the iconic strength of the Tommy lifestyle, the key growth categories, and then we infuse newness into those, we win big. So it's all about going back to the iconic DNA, making it current. And then for Tommy, it's the lifestyle setting. So what's really exciting is the Formula 1 partnership that some of you might saw the launch of that yesterday. So we're coming back big into Formula 1. And Formula 1 is one of the biggest, if not the biggest growing sport from a viewership in the world, also with -- especially with the young consumer.

And there, we are combining 2 American icons, Cadillac first U.S. team coming back on the grid with another American Icon Tommy Hilfiger, who was 20 years earlier than most other lifestyle brands in Formula 1. So we have the proof points. It's 100% correlated to where we lean in and execute. And coming back to the town hall right after this is talking about the sharpening actions and the scale that we grow this for the back half.

We go next now to Michael Binetti of Evercore.

Nice job with the relaunch of the Formula 1 business this week. Just -- I was wondering, Zac, can you just reorient us a little bit around the buckets and the cost-out efforts that we talked about last quarter? What were they? I think the size of them, if any timing has moved around? And just remind us, I think many of those stretch beyond 2025 into 2026 to help us calibrate the models here. And then just backing up, are there any concerns as you look at some of the unevenness in the operations around Calvin Klein here recently, that some of these cost saves are cutting into the muscle or contributing to operating volatility in the past few quarters?

Yes. So let's start with the Calvin Klein operational challenges that we experienced from bringing the Calvin Klein global product capabilities together, which is an absolutely critical needed move to unlock the full value of the brand going forward and win with this kind of product newness and innovation we just talked about. What's exciting to see is that the team has worked through it in a way that the biggest effect is soon behind us. We are improving for fall '25 already in the back half of this year.

We start now basically. We are improving it significantly for spring, another really big step up. And then very soon, we start the product season from scratch for fall '26. And then we start from strength. So very clear and the way we see that we are making this progress is that we see that for spring '26, we see that we are on time on both brands. We see that the going margin is improved versus last year significantly. So we see the KPIs, we see that yes, they had to take too much time in the first season to sort out the go-to-market process.

But now I'm very much by also amplified by David coming in with a deep operational and brand experience to connect both the creative strength that we already have to scale that, but also secure a systematic, repeatable operating model.

Michael, I think maybe on the cost piece, maybe I'll try to put that into the context of the bigger financial picture first. So in the first half, as we take a look at the financial outlook, as we said, it's really a gross margin story. And I say that because in the first half, we are growing revenue, which is a big commitment for us this year. And we're seeing SG&A percent of revenue coming down. So that's a good, strong foundation. So I described in the prepared remarks what's happening around gross margins. So we have that picture.

And second quarter is largely going to be consistent with that. So that sets up the baseline. I think for us, and this is where the cost actions come in and what's important is the bridge to the double-digit operating margins in 4Q. And that's actually pretty simple and very much in our control. The first and most obvious is the general seasonality of our business. So due to holiday sales last year for example, 4Q revenue, 14% higher than 2Q. So with that, we get really powerful leverage.

Beyond that, though, it comes to the value driver 5, our cost actions that we've been talking about for a couple of quarters now. So we've made very good progress, no slides on timing. And I think to remind everybody the pillars, A couple of them that are directly in our control and are already seeing significant progress on. So a decentralized technology mapping into a single global tech staff, taking advantage of both our scale, getting costs out and coming out with significantly better outcomes.

And also around the Global Logistics Network with a big focus on increasing capacity utilization in the U.S. So we're already seeing some progress on those in the first half and that is why you're seeing the SG&A deleverage even in the first half. As we move into the back end of the year, the totality of all of the actions we're still on track to deliver between 200 and 300 basis points of SG&A leverage reductions out of that and 200 basis points of that delivered by the fourth quarter of this year compared to the fourth quarter of last year.

So the combination of those 2 leaves us feeling very good about the work we're doing around cost and where that points us to from a trajectory for the second half and leaving the year with double-digit operating margin again.

We go next now to Dana Telsey of the Telsey Group.

I wanted to dial in on tariffs and how you're thinking about tariff impact as we go through the year on the mitigation strategies, I believe, in that $65 million of unmitigated, how are you thinking about it? And what are you seeing in terms of price increases for each brand in the U.S. and impact on margins?

Thank you, Dana. Let me start by creating some context around what the tariff situation means for PVH. So it's important to just note that 30% of our business is in the U.S., 70% of our business is international. So we have a much higher international share than most of our competitors. And as Zac mentioned, we have identified $65 million in unmitigated tariff effects for the rest of the year. And just like everyone else. We are working through our mitigation actions in this fluid environment.

So we have the strength of having Calvin and Tommy, which is 2 of the strongest and most of the larger brands. So that is strength when it comes to all the different parts of the value chain, the partnership with our -- all the way from the partnership with our sourcing to the partnership with our retail partners. So Zac, do you mind giving a little bit more detail on what that means?

Yes. As Stefan mentioned, our 2 biggest mitigation advantages are the globally diversified revenue base and our strong global supply base. But beyond that, we are working through several other specific initiatives. So first, we're leveraging those deep, long-standing supply chain relationships to identify ways we can further optimize sourcing and production costs, sharing that -- the impact of tariffs with partners where possible.

And then beyond that, as Stefan mentioned, we remain laser-focused on perceived value for our consumers. So we will evaluate strategic discount reductions to mitigate potential tariff impact. And lastly, consistent with our normal course of business, we're also ready to take calibrated and targeted pricing actions where we have particular pricing power.

We'll go next now to Brooke Roach of Goldman Sachs.

Stefan, you've talked about acceleration of some of the innovative and creative product into the back half and also the opportunity to take some strategic pricing reductions -- pricing increases, whether that's a reduction of discounting or otherwise. Can you help us square that with the outsized levels of promotions that you're expecting in the near term? What do you have to do to make the brand more resilient from a pricing perspective as macro impacts start to weigh on the consumer?

Yes. Thanks, Brooke. It comes back to doing more and scaling the impact of the PVH+ execution in how we build strength in the product in the key growth categories in putting innovation into the hero products. And it's -- if you look at Tommy, I took a Calvin example before, which is quite powerful with the biggest product introduction in a decade with plus 25%. So that's a great example, plus the 14% increase in denim. So it's doing strategically sharpening our focus to do more and more of that, that has a bigger and bigger impact on the total business.

But also for Tommy, we see it in key categories like sweaters where we lean into our iconic cable knits, and we expand that and we put new, better fabrication. We innovate in colors. We connect that then to the lifestyle on Tommy. And as Formula 1 is a great lifestyle, a great anchoring point for the lifestyle because then we take the Tommy Love for the brand, and we connect it to those innovations in key product categories, and then we connect it to the sport of Formula 1.

And then we follow up, and that's something that's worth saying as well for the back half, we are putting more marketing spend in a more focused way to drive traffic to do what you just asked Brooke, which is to mitigate more and more of those tougher headwinds because it's -- the way we operate the business is that it's 100% on what's fully in our control and expanding that impact.

We'll go next now to Matthew Boss of JPMorgan.

Great. So Stefan, maybe to break down the step down in top line trends that I know you cited to start the year. And then the leg lower that you cited here in May in the Americas or the need for additional promotional activity to hold the trend line. I guess how much of this do you attribute to the macro backdrop relative to execution? What's the pace of improvement that you see is reasonable? And then, Zac, could you just walk through the progression or maybe dig a leg deeper into the embedded gross margin for the second quarter versus the back half of the year? And just drivers of gross margin recapture if we think about next year?

Yes. Thank you, Matt. What we have seen over the past 3 months, as we mentioned, is a tougher consumer and macro backdrop, especially in North America. So we see the consumer sentiment coming down, translating in tougher traffic trends to the sector and then impacting us and impacting us in store traffic more than e-commerce. So what we also see is that the China backdrop from a consumer sentiment perspective is continuing to be tough and coming down. And even though that we are able to execute with strength in the big consumer moments.

And that's -- when we look at today, how much the North America consumer sentiment and the tariff effect plus the China, we are not yet in a place where we can fully offset that. But why I say not yet is because, one, the actions we're taking in the back half is stronger and it's expanding the PVH+ impact. It also connects to what Zac said that in the back half, we will have most of the 200 basis points of cost savings from the cost initiatives that we have been on now for quite some time, but it's really kicking in, in the back half. And we have good visibility to seeing that, that is coming into place.

And then we also see that we are resolving Calvin's operational challenges, significantly improved in the back half. And then when I look at 2026 product season, both brands are on time. Both brands have a positive gross margin going margin starting '26. So that's how we see that we are able to keep the revenue growth because we said we were going to drive back to growth this year. We're able to keep the revenue growth going for this year. We are taking a margin hit that we are in the beginning of this not able to fully compensate. And then coming out of the year, we are back up.

All right. And thank you, Matt, to the second part of your question. Maybe I'll answer it looking at our gross margin percent for the full year. So original plan for the full year gross margin is down around 100 basis points. Half of that was tied to the G-III business model transition and about half of that original decrease was tied to the transitory Calvin Klein issues we've talked about here.

Now as we look to the full year being approximately 250 basis points down, that extra 150 basis points has 2 main drivers. 50 basis points is due to the mitigated impact of tariffs. And the other 100 basis points is the -- is an increase in the promotionality that we were just talking about. So just to put that in context. That 100 basis points includes all 3 of those components Stefan mentioned here. So there is an increase tied to the U.S. declining macro consumer sentiment and lower traffic. There is a tougher consumer backdrop in Asia and our particular situation in China.

And then third is the sort of the bigger impact than we were planning initially around the CK operational challenges. So I think that as we take a look there in the second half, the progression we do expect to see sequential improvement in the CK operations issue. So that's carrying longer than the second half and will improve significantly, especially in 2026. But we do see -- expect in the second half. We are planning for that promotional activity to maintain through the rest of 2025, so no sequential opportunity there. Then exiting '25 into '26, we do expect to be putting the Calvin Klein challenges fully behind us during 2026. So that's another step forward that we'll see. And beyond that with tariffs over time, we do expect that we'll be able to work towards full mitigation of the unmitigated impact. So that will be improving over time as well. And then we'll adjust to whatever the broader macro environment is just like we've done this year.

We have time for one more question.

Yes, sir. We'll take that question now from John Kernan of TD Cowen.

Zac, what are you planning in terms of the promotional impact in gross margin for the back half of the year? It looks like the 60 basis point impact on gross margin from tariffs in Q2 implies a pretty steep impact from promotions and maybe a few other impacts. But I guess how do you -- how have you reserved room for a higher promotional environment in the back half of the year within the current gross margin guidance?

Yes. I think, thank you for the question. I would say consistent with what we just talked about a little bit. We've got the impact for the full year we've put in is around 100 basis points tied to the increased promotional environment. That impact is sort of we saw through the first quarter, we planned through into the second quarter, and we've assumed that, that level remains for the rest of this year.

We have, overall, over the last couple of years, been quite consistent with. And the uncertainty of potential outcomes, we maintained where we are called the broader macros there and that includes assumptions around promotional environment. And so I think we are planning for that to continue the trends that we've seen so far this year through the rest of the year.

All right. With that, we want to thank you for following along on the multiyear journey that we are on to tap into the full potential of Calvin Klein and Tommy Hilfiger. And we want you to know that we are responding to the moment we're leaning in to sharpen and expanding our very strong PVH+ impact because when we tap into that iconic brand love for Calvin and Tommy and then we do it super focused with connecting innovation in product, cut-through marketing campaign, investing behind it, driving efficiencies behind the scenes, but then letting the consumer feel that, we really cut through and that's what we are continuing to do. Thank you.

Thank you. Again, ladies and gentlemen, that will conclude today's PVH First Quarter 2025 earnings call. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.