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A snapshot of the Heritage Brands business

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Heritage Brands operates under the wholesale distribution model

The product line under the Heritage Brands business consists of branded dress shirts, neckwear, sportswear, swim products, men’s underwear, and women’s intimate apparel.

Wholesale represents 80% of the Heritage Brands business. It involves the design and marketing of men’s dress shirts and neckwear to department, chain, and specialty stores. PVH’s Heritage Brands leads the market for neckwear and dress shirts. Heritage Brands has more than 50% of the market share in neckwear. It has a 43% share in branded dress shirts.

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Brands in the neckwear and dress shirts category include Van Heusen, ARROW, and IZOD. PVH Corp. (PVH) also licenses certain brands—DKNY, Kenneth Cole, Geoffrey Beene, MICHAEL Michael Kors, Chaps, and U.S. POLO ASSN.—from licensors Louis Vuitton (MC.PA), Kenneth Cole Productions, Geoffrey Beene LLC, Michael Kors (KORS), and Ralph Lauren (RL), respectively.

PVH sells swimwear, sportswear, and related products under the Speedo trademark. It has a perpetual license with Speedo International Ltd. It was acquired as part of the Warnaco deal—along with Warner’s and Olga. The company sells intimate apparel under the Warner’s and Olga brands.

Also, it operates retail outlet stores under the Van Heusen name in the US and Canada. PVH also has licensing arrangements with over 75 licensees across the world.

Completes the sale of G.H. Bass & Co.

In November 2013, PVH sold all of its assets including ~160 retail stores of the G.H. Bass & Co. division to a subsidiary of G-III Apparel (GIII) for approximately $50 million in cash. The move is part of its strategy to focus on its “core competencies” in the lifestyle apparel business. The sale price was $29 million lower in nominal terms than what it had paid to buy G.H. Bass from Unilever Plc (UL) in 1987.

Shuts down IZOD’s retail operations

Heritage Brands’ retail business was reduced more. The company announced its exit from the IZOD retail division. PVH expects to post $40 million in write-downs related to closing 120 stores. Around 20 of these stores will likely get converted to Calvin Klein and Tommy Hilfiger retail outlets. Management believes that this move of expanding the premium lifestyle business will result in improved operating margins and significantly higher sales per square foot.

Investors seeking to attain exposure to PVH can consider pooled investment vehicles like the SPDR S&P 500 ETF (SPY) and the Consumer Discretionary SPDR ETF (XLY). They have an allocation of 0.05% and 0.42% for PVH in their portfolios.

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