PVH Corp. (PVH - Free Report) recently agreed to reacquire the Tommy Hilfiger brand’s license in Central and South East Asia from Dickson Concepts (International) Limited. The deal is likely to close in second-quarter 2019 and spreads across Hong Kong, Macau, Taiwan, Singapore and Malaysia. It also includes some related leases and retail assets. However, other terms of the deal remained under covers.
Notably, the transaction is in sync with the company’s strategy of having direct control over its brands, which also covers licensed businesses. Through the latest agreement, PVH Corp will be able to leverage growth opportunities in the Central and South East Asian region. Further, the company expects its Asia Pacific platform to aid expansion of the Tommy Hilfiger brand in Greater China for driving growth. The enhancement of the brand will be backed by further investments for introducing other product lines and growing brand experience.
The latest deal reflects PVH Corp’s significant investments to aid long-term growth, hence leveraging its infrastructure, leadership and brand momentum. We note that PVH Corp has acquired Tommy Hilfiger from Chinese licensee Dickson Concepts in 2011. The Dickson Concepts was likely to remain the brand’s licensee in Hong Kong, Macau, Taiwan, Singapore and Malaysia till 2019.
PVH Corp has been witnessing strong momentum at Tommy Hilfiger brand, which has been driving the company’s top- and bottom-line performance. In third-quarter fiscal 2018, revenues at the Tommy Hilfiger segment jumped 11% to $1.1 billion and improved 13% in constant currency. The segment’s International revenues increased 16%, while it rose 19% in constant currency. This improvement was driven by a stellar performance in all regions and channels, and comparable store sales growth of 13%. Additionally, its North America business witnessed revenue growth of 3% to $424 million on the back of robust improvement in wholesale business.
Moreover, the company’s approach toward brand management helps each of its brands to develop further through efficient marketing strategies, financial control and operating leverage.
However, shares of this Zacks Rank #4 (Sell) have lost 24.8% in the past six months, wider than the industry’s 8.9% decline. Recent softness in its Calvin Klein brand has led to the stock’s dismal performance. Fashion-miss related issues in Calvin Klein’s Jeans business mainly impacted results. While the company is working to fix these issues, gains from these efforts are likely to be visible in fiscal 2019.
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