Tommy Hilfiger: One of PVH’s flagship brands
Tommy Hilfiger is PVH’s flagship brand along with Calvin Klein. In fiscal 2015, Tommy Hilfiger accounted for 42% of PVH’s top line and 44% of its operating income. The brand competes with Ralph Lauren (RL) and VF Corporation’s (VFC) brands.
PVH has been working toward expanding its Tommy Hilfiger business in North America as well as throughout the rest of the world. In the current section, we’ll discuss some of PVH’s initiatives toward building the Tommy Hilfiger brand and expanding its business.
Acquiring remaining stake in China
The Tommy Hilfiger China business has experienced strong momentum over the last several years. Brand awareness has doubled in the country, and the brand’s retail footprint has more than tripled over the last five years.
PVH operates in China through its joint venture (or JV) with TH Asia. PVH owns a 45% stake in the JV. The company now plans to acquire the remaining 55% interest in order to have better control over its Chinese operations. The acquisition is expected to add approximately $100 million to PVH’s top line and be slightly accretive to the company’s 2016 earnings per share.
Licensing agreement with GIII Apparel
In February 2016, PVH entered into a licensing agreement with GIII Apparel Group (GIII). Under the agreement, GIII will be responsible for designing, producing, and distributing Tommy Hilfiger’s women’s wear collection in the United States and Canada, beginning in the holiday 2016 season.
PVH believes that GIII can leverage its expertise in the women’s wear business to enhance Tommy’s women’s wear presence in the United States. The company is expecting this move to generate revenue of over $1 billion for the Tommy Hilfiger women’s business in the United States.
Marketing highlights for the brand
Advertisement and marketing play crucial roles in enhancing the brand equity of premium brands such as Tommy Hilfiger. Over the years, Tommy has positioned itself as a classic American cool style through its effective marketing campaigns.
The company signed Rafael Nadal as the brand ambassador for Tommy Hilfiger Underwear, Tommy Hilfiger Tailored, and the Tommy Hilfiger Bold fragrance in 2015. The campaign had over 500 million impressions during the second half of 2015 and helped Tommy’s full-price underwear sales to nearly double in Europe and the United States.
The company has also signed supermodel Gigi Hadid as the global brand ambassador for Tommy Hilfiger’s women’s collection starting in fall 2016. Gigi will be collaborating with Tommy Hilfiger on a capsule collection, which will be distributed globally with Tommy Hilfiger’s key retail partners and its website.
Investors wanting exposure to PVH can consider pooled investment vehicles such as the First Trust Large Cap Value AlphaDEX ETF (FTA), which invests 0.74% of its portfolio in PVH.
Read the next section to learn about PVH’s other flagship brand, Calvin Klein.