AMZN Amazon.com Inc

By Suzanne Kapner 

PVH Corp., the owner of Calvin Klein and Tommy Hilfiger, is switching chief executives in the middle of the coronavirus pandemic. Stefan Larsson, PVH's president since June 2019, will succeed Manny Chirico in the top job on Feb. 1. Mr. Chirico will remain chairman.

Mr. Larsson, 46 years old, is known for streamlining supply chains, having spent nearly two decades at Hennes & Mauritz AB's fast-fashion retailer H&M and Gap Inc.'s Old Navy. Most recently, he was CEO of Ralph Lauren Corp., where he put in place a plan to overhaul the fashion brand, but then left in a dispute with its founder.

Mr. Chirico, 63, who has been CEO since 2006, helped transform PVH from a maker of men's clothing into a global fashion company with nearly $10 billion in annual sales. PVH, which also owns Van Heusen shirts and Warner's bras, operates its own retail stores world-wide and sells through department stores as well as Amazon.com Inc.

Like other retailers, PVH was hurt by the temporary closure of stores during the height of the pandemic. While most of its stores have reopened, revenue was down 38% in the six months to Aug. 2. Losses over that span exceeded $1.1 billion.

Mr. Larsson is charged with leading the company out of the pandemic and adapting to what he calls a "new normal" in retailing. The following are excerpts from a conversation with Messrs. Larsson and Chirico.

WSJ: It's an unusual time to make this type of transition. Why do it now?

Mr. Chirico: This has been in the works for the last year and a half. As we are starting to recover from the pandemic, Stefan has been leading the charge. It's a perfect time to move forward. It's gone about as smoothly as these transitions go.

WSJ: Stefan, what is your vision for moving beyond the current crisis?

Mr. Larsson: It starts with recognizing that [Covid-19, the illness caused by the new virus,] accelerated underlying consumer trends. Things that would have taken four to five years normally, now are taking one year. Consumers are moving to e-commerce, casual clothing and sustainability. They won't go back to shopping the way they did before the pandemic. We need to position the company for the new normal.

WSJ: What does that mean for PVH specifically?

Mr. Larsson: We're focusing on our core strengths. Calvin Klein and Tommy Hilfiger are over 85% of our revenue. We need to drive those brands by keeping them relevant with winning products. We are supercharging e-commerce. Last quarter, e-commerce sales grew 50% overall, including an 87% jump in sales on our own websites, compared with a year ago. And we're focused on global growth. Last year, over half our revenue came from outside the U.S. We are seeing a strong recovery in Europe and China.

We also have to become leaner and more data-driven. We need to increase the speed of our supply chain and cut lead times to better match what we sell with consumer demand.

Mr. Chirico: Investments that we had planned to make for e-commerce, we are doing those faster. We're opening warehouses and investing in systems. The winners will be the companies that have the financial wherewithal to make those investments during Covid.

WSJ: How are you approaching the coming holiday season?

Mr. Larsson: It will be a holiday season like no other. It will start earlier. We plan for there to be a big focus on e-commerce. We've got to navigate Covid restrictions in brick-and-mortar stores. We want to spread out the holiday season to enable more capacity in stores. That will be the biggest change.

WSJ: Your stores have reopened after temporarily shutting during the height of the pandemic. While foot traffic remains below year-ago levels, what are you seeing from the shoppers who visit your stores?

Mr. Larsson: Conversion rates and average order sizes are up. If shoppers make the effort to come to a store, they are buying.

WSJ: You get nearly 10% of your revenue from U.S. department stores. Many of them have been hard hit by the pandemic. Are department stores dead?

Mr. Chirico: We don't subscribe to the view that department stores are dead. Specialty retailers are under even more pressure, given the bankruptcies of mall-based chains. If your brands are strong and you don't oversupply department stores with too much inventory, you look just fine in those stores.

Mr. Larsson: We will go where the consumer is going. The biggest growth today is e-commerce and part of that is department-store websites. That is a good channel for us.

WSJ: You were one of the first brands to sell directly on Amazon. How did you arrive at that decision? And how has the relationship played out given that some other brands, like Nike Inc., have soured on Amazon.

Mr. Chirico: It was always an easy decision for me. We did a lot of analysis, but the key is, Amazon has the eyeballs. Consumers love shopping on Amazon. It didn't make any sense not to be there. Core products like Calvin Klein underwear and socks sold unbelievably well. The question was whether consumers would get more comfortable buying fashion online. That is happening.

WSJ: What is your biggest takeaway from the pandemic's impact on your business so far?

Mr. Chirico: The importance of flexibility. On the sourcing side, Stefan got us to push back decisions on quantities. We gave preliminary orders to the factories and followed up with more direction four weeks later. We also were able to cancel goods and redeploy into products that were selling.

Mr. Larsson: To work with speed. If anything good comes out of the Covid crisis, it's to show us what is possible, and how fast we can react. How much you can do in a much shorter period of time. It's something that will stay with us.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com

(END) Dow Jones Newswires

September 30, 2020 06:59 ET (10:59 GMT)

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