PVH Stock

Good morning, and welcome to this next session of the Goldman Sachs Global Consumer and Retail Conference. My name is Brooke Roach. I cover the apparel, softlines and brands sector here at Goldman, and I'm thrilled to introduce our next session with PVH Corp. Here joining me today is Stefan Larsson, CEO; Alexis Rollier, CFO; Melissa Stone, EVP of Global FP&A, and we're very thrilled to have you here. Welcome.

Thank you.

Thank you.

Thank you.

Stefan, we'll turn it to you.

Yes. Thank you. So we are in the business of building brands, and we are the stewards of 2 iconic -- 2 of the most iconic globally beloved brands, Calvin Klein and Tommy Hilfiger. And what better way to start than with 2 30-second views of how we started this fall with the fall campaigns because I'm going to come to it later because it's more than a campaign. It's the connection between the brand direction to the DNA that the consumer already loved, but made current focus on very clear product categories and very strong talent and then you can shop that from social all the way out. So I feel that's probably the best way to start.

Excellent. Let's play the reel.

[Presentation]

All right. Well, with that, thank you for joining us. Stefan, you spent the last several years building the foundations of the PVH+ Plan strategy through product, marketing, marketplace execution and simplification of the operating structure. As you sit here today, what do you view as the most important proof points that indicate to you that the brand is entering a period of sustainable growth and margin expansion ahead?

What I'm the most proud of because we have done a lot of heavy lifting over the past few years. What I'm really proud of is how clear we are now with each brand's direction and how it connects to what the consumer has always loved Calvin for, as an example, underwear, denim and the connection you see -- where you see that strongest in both Calvin and Tommy is the traffic increase, the consumer traffic increase to e-commerce.

So if you start like why is -- so Calvin Klein over the past few years has become -- we have built up to the most followed and engaged brand in fashion of all our competitor set in social media, all platforms. And Tommy is the third most engaged and biggest reach on social media. Why that matters and what makes us excited today is that social media engagement has built real strength with a young customer, so the Gen Z, the young millennials.

And then we see the traffic to e-commerce going up significantly. So in Q2 that we just reported, we were up double digit in traffic to e-commerce for Calvin and up high single digit for Tommy. And then you see that translate to mid-single-digit growth in e-commerce, and then you see it translating to where we don't have any macro disruptions, North America and APAC, we have mid-single-digit growth in -- we have growth in D2C overall.

And so the most exciting part is like how we line up the different building blocks to drive sustainable profitable growth and how you can actually see that now when you go on TikTok or Instagram or our e-commerce or our best partners' e-commerce.

That's really great. Alexis, we're thrilled that you can join us here today. For those who don't know you yet, what brought you to PVH? What areas of opportunity excite you the most? And are there any initial thoughts that you can share following your first few days at the organization?

Thank you, Brooke, and good morning to you all. It's a pleasure to be here so soon in my journey. So I'm definitely new to the company. It's day #14 for me in the company, and I'm the new CFO. My prior role was Global COO and CFO of Sephora. I've been with Sephora for many, many years. And what attracted me to the company is mainly 2 things. One is really the strength and the power of the 2 brands of Calvin and Tommy. I have already been working for very strong brands, and I feel the potential of those 2 brands is just amazing.

And second and importantly for me, of course, is the big opportunity that I see with PVH. The opportunity I see is actually connect the strategy, the PVH+ Plan, which is already in motion, already existing with a strict and strong financial discipline that is already existing, but I'm sure we can strengthen, and operational excellence. And those 2 areas -- financial discipline and financial leadership and operational excellence are 2 areas I've been leading for many years at Sephora with some success.

Just maybe to say a couple of words on Sephora's journey. So I'm not here to talk about Sephora, but we scale that business and that brand in a very significant manner. But importantly, we built up profitability to fuel the growth of the company and to make it more profitable. How did we do that? Multiple streams of work, gross margin management, promotional control, cost optimization through multiple streams. So I see many of those actually areas with similarity to where PVH is today. And I feel actually my experience can definitely be helpful to the company to further strengthen the brands and build up profitability. So I'm super excited to be joining the team and the leadership and to be connecting with you in the near future.

Excellent. Let's unpack the regional execution of the PVH+ Plan. And perhaps we can start with EMEA, which has historically been a very large area of strength for PVH, but has been a little bit more uneven recently. Can you talk a little bit more about what you're seeing in the EMEA consumer today and the actions that you're taking to improve both DTC and wholesale performance in that market?

Yes. So Europe is very strong for us. I spend a lot of time in Europe. It's a big important business for us. We have seen the pressure as the market has seen with the Middle East conflict. We flagged that in Q1. Since then, we have seen that D2C -- we have been able to improve D2C trends despite the ongoing conflict in Q2, improved versus Q1. E-commerce growth, we're able to drive e-commerce growth across both brands in Europe.

And having spent a lot of time, so I would say in the last 2 months, I've been in 5 markets, 7 airports. And airports are a great place to see the strength of Tommy and Calvin when you're in big European airports because you sit there and take a coffee or you stand in line, the amount of consumers, the consumer love for Calvin and Tommy, the amount of products, sneakers, denim, outerwear, sweaters, hoodies. So Europe is the source of strength for us. And what I'm particularly excited about is that where we have the biggest influence on reaching the consumer and really driving the business, we see the e-commerce growth and the D2C improvements.

And then we are working very closely with some of our all our biggest partners in Europe to get even closer to the consumer, even more data-driven. So -- and when I meet with our partners, the strength of Calvin and Tommy and the importance for them is real and the strength with the consumer and then connecting the strategy we have, which is the key growth categories all the way out. So that's -- we have more work to do there. But it's a real strength for us. And there will be disruptions in different places of the world. But underlying of that, I feel really good about it.

Let's unpack that a little bit more. Your outlook for the region for this quarter or for this year has moderated as a result of macro. As you think about the region beyond 2026, how are you thinking about the path to get back to sustainable growth and the growth targets that you've outlined under the PVH+ Plan?

Yes. So it's very much where Alexis and I connected as well is his experience from this journey as well. So where are we right now? So we have spent a lot of time on the heavy lifting as we talked about when we started the fireside chat on getting the brands very clearly directed on the DNA made current, built product capabilities. Last year, we centralized the global product capability in Calvin Klein, and we have all the benefits from that coming out right now. Each brand has 4 to 5 categories that stand super strong with the consumer. Each brand has driven a lot of strength, as we said, with the Gen Z and young millennial.

And then you connect -- so you connect the strengthening of consumer focus with the 4, 5 growth categories by brand, you drive really impactful full funnel marketing, as you can see that, again, it's the best line -- it's the best way we have lined up the different drivers. And then we invest into the shopping experience, social, e-commerce and our top doors and top stores. So when you see that, it will drive -- it's the foundation to drive revenue growth.

And when we do that -- where we do that already now in Q2, as an example, denim is up 10%. AUR in denim is up 10%. Underwear is up mid-single digits. AUR is up as well in underwear. In Tommy, we see sweaters, shirts, polos, up significantly as well and AUR up. And when we look at the D2C growth, we see AUR coming up, promotions coming down. So it's really where the growth will come from is putting these building blocks in place that we have done over the last few years and then adding that operational discipline that Alexis was talking about and just consistently execute on it.

I was speaking with our Global President for Calvin Klein last night. We caught up ahead of the week. And I said I was going to see all of you guys. And I said, what do you believe is the most important to share with investors? And he took some time and say, I believe this, we have the building blocks lined up that we need to -- what we have learned over the journey is we have to double down on those green shoots. We have to really make sure that the denim strength goes all the way out. So when you are in an average door or store in Germany, the U.S. or China, that we have doubled the denim exposure, that we have all the iconic denim, all the new fits, all the right inventory, all the right marketing. And when we do, it's the biggest challenge when I'm out in Europe, as we talked about, the biggest challenge in denim is just having enough denim and enough impact because the consumer loves it.

That's really great to hear. Let's switch to North America. In your DTC channel, you've been making investments in the shopping experience in stores and online. Can you unpack the key drivers here? And what does that mean for your digital and store growth business ahead?

Yes. So when you engage with our brands, you -- and when the consumer engage, they start in social. So you see the focus we have for the North American consumer on social, socially relevant product and brand storytelling. Then you go into our e-commerce, our partners' e-commerce. And what you see different now versus just 6 months ago is the connection to really strong category focus.

And then on top of that, you see the -- within each category, you see the innovation and newness into our big franchises. And that's what the North America consumer responds really well to. And we see the biggest and most positive leading indicators in that traffic growth from social to e-commerce and e-commerce and how the consumer responds to where we have put those pieces together the best, it works the best. What you will see in North America more is how we invest with our best partners like Macy's in new shop-in-shops. You will see how we renovate our outlet stores, factory stores. We have a full price store in New York in Calvin Klein with SoHo.

So you'll see how we bring the best of the brand to the marketplace. It's what you feel when you are in a Tommy campaign or Calvin campaign, we want to bottle that up and get that all the way into every door and every store. And where we do that, because we do that in increasingly bigger parts of the assortment, we already drive growth with higher pricing power.

That's great to hear. One question that we're asking every company at our conference today is on the health of the consumer. What are your expectations for the environment in the second half of '26 relative to your recent results? Do you expect things to be same, better or worse? And for 2027, do you expect the health of the consumer to be better, the same or worse than '26?

Yes. So we see the consumer -- we plan as if the consumer, the way they are today, they will continue for the rest of the year. So we don't plan for improvements. We don't plan it to get worse. We plan for the consumer we have seen in the first half. We are locked in to win more with that consumer. For '27, I'm optimistic in terms of the consumer continues to lead in fashion. So what I see even in the markets where we have macro disruptions, I see that when you have strong brands, you deliver really strong on your product promise, you deliver great value. We are in the premium space for the many people. We're in the aspirational space. And when you deliver a really strong brand experience in the door and the store, it really works and the consumer -- it really resonates with the consumer.

And you see that being -- I was having dinner last night with a big wholesale partner in Europe, and we just left the dinner with the conclusion of being a big beloved brand that you drive relevance in is going to be really good for the next 5 years, 10 years because you have so much consumer love and scale to tap into. And then you just have to follow the consumer. It's -- so speaking with this partner last night, we had dinner and talked through the business and how we can improve it. It's just our best wholesalers have a lot of consumer data. So getting closer to their data, connecting it with our data, and they see how we perform, what the consumer wants more of, how we are relative to the competition. And then we have the strength to really lean into cut-through moments where we combine all those parts, the product, the marketing, the experience.

So I'm optimistic medium to long term on the consumer, given that you as a brand or as a company in this space, you realize that the consumer is in charge and the consumer keeps moving.

Really great.

Brooke, I would just add, I totally agree with what Stefan said. But in terms of our guidance and our outlook for the year, we did embed some flexibility to strategically support a more promotional holiday environment in Q4 should that become necessary.

That's really great. Maybe we can shift to that just to make sure we completely clear that up. One question that we're asking every company at our conference today is on pricing and AURs. I guess the question that we would ask you is, do you expect your prices or AUR to be higher, lower or the same in the second half of '26 versus the first half?

I mean AUR, we are pleased with -- look, coming out of Q2 and -- Q1 and Q2, that's where we drive growth, we drive it with AUR expansion. So we expect the same AUR expansion in the back half.

Excellent. And on that full price selling and promotionality opportunity, we've heard a lot of comments from other retailers about a promotional marketplace. What are your views on the promotional backdrop today? And how are you balancing price increases with promotional intensity? What does this mean for your merchandise margin ex tariffs?

Yes, we have seen -- so if we take North America as an example, and we take the tariff effect out, we were able to drive higher gross margin compared to non-tariffs. So gross margin is up despite the tariff impact.

Yes. Gross margin for the company as a whole in Q2. So in Q2, we recognized tariff refunds. But even if you strip that benefit out, gross margin as a whole for the company was up overall. And then in the Americas, even with a higher year-over-year tariff cost, we were able to drive gross margins up. And we're really seeing the strength of AURs in our DTC business driving that strength.

AUR only comes up when you deliver as a brand. And that's why we -- every other week, we gather our 800 leaders, top leaders. And we drive example after example from them because I'm out 50%, 60% of my time traveling, seeing stores, partners. But taking their examples, they share examples with themselves, the 800 leaders, of how we drive growth and how we drive AUR expansion. It is always the same. When the denim is the right denim and it's denim because Calvin Klein is known for denim, it works. Same with underwear, same with outerwear, same with shirts, same with -- for cable knits with Tommy. So it's really about that discipline that David, our Head of Calvin Klein, was talking about last night of just doubling down where we already see that it works.

Very clear. You mentioned some conversations with some wholesale partners. We're getting a lot of questions about North America wholesale and the opportunity that PVH has there, excluding some of the timing and licensing transitions that have muddled the reported numbers this year. How are those conversations trending today? Are you seeing any shifts in the competitive dynamic? And how are forward order indications shaping up?

Yes. So 2, 3 parts to that question. So on the first question, in North America, I believe we have never been closer to our partners in North America, and that holds true for Europe and Asia as well. And so when you look at North America to start with, we are seeing a stronger back half than first half. So we see strengthening trends in wholesale in North America. We see a sequential strengthening in APAC as well from Q1 to Q2. We see in Europe that we know that when our wholesale partners have a tough season as spring '26, they will be more conservative with their future order buys for spring '27. So we knew that already, and that's what came through.

And what we're doing now is we leverage the partnership we have to say half of their selling is roughly coming from forward-looking orders and half is coming from in season. So what we're doing is that we are beefing up our capability to replenish more of our best sellers in season. And that will make -- that will mitigate their cautious approach coming in with the forward-looking orders.

So -- and that's where it matters because the best sellers, we know what the best sellers are now because we are together with them so much closer to the consumer. We know so much more down to SKU level, what is going to be in the marketing and what's the story we're going to tell and that they trust us that the talent we have is relevant.

So as an example, this past week, we talked a little bit before the fireside chat about Runway. And I don't know if you have seen on social, our Runway, the effects of the Runway. I just want to -- can I take 30 seconds on that?

Of course.

30 seconds on the Runway. So we had a Tommy Hilfiger Runway because it really excites me, and it connects to shareholder value over time. So you have seen it on your feed. So super strong. So we took 400 to 500 talents globally, and we dressed them in the current Tommy Hilfiger and current Calvin Klein line that you can buy online. You can buy it in Macy's, you can buy it in our stores. So we took 400, 500 talent times all their social engagement, all their excitement for seeing the best expression of Tommy, the best expression of Calvin. And then we had our best partners at the fashion show, seeing -- both seeing the strength when we combine the best of the product, marketing, talent, music.

We were -- for Tommy, we were in The Plaza Hotel. Tommy, as some of you know, Tommy lived in The Plaza Hotel for 10 years. So it's really -- we're building out the brand around Tommy's dream and Tommy's life, and it resonated so well. And I heard it from my wife and our kids between 16 and 22. Suddenly, they started texting me saying, what's going on with Tommy? And then on Friday, what's going on with Calvin? And you see our engagement during those moments are 25%, 30% on social, which is benchmark is 3%, 4%. And why does that matter to shareholder value creation? It matters because we drive a consumer desirability and then we build that in. And licensing, I'm happy to speak about licensing as well, but let's follow your question.

That was actually going to be my next question. So maybe we move to licensing. You're now through the largest transition of the women's portfolio in North America. Can you update us on the progress that's been made so far? Maybe the lessons learned as you move through this transition and how we should be thinking about the revenue and margin implications of licensing over the course of the next few years?

Yes. We're at a really exciting phase following a lot of heavy lifting. So at the end of '26, we are more or less done with the transition of -- the licensing we have transitioned is women's North America wholesale to get better in control of the product execution so we can win with the consumer over time. So that's why we took that back. Now we are in a place where we have -- we are going to finish that at the end of the year. And our underlying licensing business, $350 million of licensing revenues is growing. We are growing that already. And next year, in 2027, we're going to grow licensing overall. And why I'm so excited about that is there are 2 engines driving here for us.

First, we are in control since 3, 4 years, working better and better at driving brand relevance in our core categories that we can do better than anyone else. And then we partner with some of the best licensees across the world in categories where they have expertise that we don't have. And they want to partner with us, and they can grow their business because we grow our underlying demand. So if you see like we are driving the consumer flywheel as you see in e-commerce D2C growth with our best partners.

And then we add the strength of our licensees. And that's a reoccurring revenue stream that, again, when I spend a lot of time with them, we beefed up the leadership. We have Joel Samaha, who joined in the summer, who has deep licensing experience already working with the team to build growth in licensing for '27, '28, '29. And when you combine that, that's a pretty powerful combination of strong, strong core desirability and growth and then growth in the licensing part, but how they play together is really exciting.

And Brooke, I would just add to that. You mentioned the revenue and gross margin impact. So obviously, as we've been transitioning from a license model to a wholesale model, that does change the geography on the P&L. But when we look forward to 2027, we just have a couple of residual licenses, luggage and swim namely that they're transitioning to new long-term strategic partners. So it's licensing to licensing. And so you don't see another impact from a gross margin and P&L geography perspective.

Very clear. Melissa, let's stick with you. You just identified $45 million of annualized run rate cost savings with a portion expected this year and a portion expected in 2027. How much of this is already benefiting the 2026 P&L? And what are the primary savings categories? How should we be thinking about the potential flow-through into 2027?

Yes. So we did talk about $45 million of annualized run rate savings and a little less than half of that will benefit 2026, and that's already factored into our guidance. And then a little bit more than half, the remainder is going to benefit us in 2027, mostly in the first half of the year. And then, of course, we continue to look for opportunities to further realize SG&A savings. We're excited to have Alexis joining us and his expertise in this area as we move forward. But obviously, there's main areas that we've been focused on, and Stefan has talked about indirect procurement and also in our overall cost management across the company.

We took some time that frustrated some of you, and I apologize for that, to find Alexis. But the reason why it took time was that I wanted to find a CFO that was equally excited about driving the business and the brands as the efficiencies. And I don't know if you want to share anything, Alexis, about your thinking about efficiencies because since you -- since we decided to do this together before you started, we have been in constant dialogue. So we haven't waited for Alexis to come in. But you add an approach of -- because historically, in a legacy setting, it's either growth or cost efficiency. And we have to do both, and we have big opportunities to do both. So -- and that's what you did.

And like I said, I see a lot of similarities between what I did at Sephora and where we are right now at PVH by identifying and there are already a lot of areas where we can build efficiency, leverage our global scale as well in many areas of the business, and there are already some streams internally that are going after that, but also probably some new ones that are -- that we have started to look at have started to do a lot of deep dive in the cost structure across all geographies, brands, et cetera, to go deep and really identify the opportunities. And then to your point, reinvest partly into the business, being super deliberate on where strategically it makes sense to invest geographically, brand, channel to fuel growth and build up progressively, I would say, a virtuous circle of reinvestment, growth and profitability buildup.

Very clear. Melissa, let's turn back to you. The 8.8% margin guidance this year embeds a tariff refund benefit of about 1 point. And you've reinvested that this year in a lot of growth drivers. Can you help us unpack how we should be thinking about the earnings algorithm into 2027? What are the drivers that help you expand from that 7.8% framework? Or is 8.8% the right place from which to begin?

Yes. So we've -- I mean, we've talked about in terms of how we think about the business going forward. Obviously, from a revenue perspective, we've been driving a lot of brand heat. We will look to continue to drive low single-digit revenue growth over time. But when we look at the EBIT margin opportunities, obviously, from a gross margin perspective, we've had a lot of success recently in driving those higher AURs in D2C, and we'll continue to focus on that as well as opportunities within our sourcing and supply chain network as we leverage the power of PVH and our 2 global product kitchens, which we've already seen success with, and we'll continue to leverage that going forward. And then on cost, as we've talked about, we're just -- we've been working on costs, but we're really just starting at the beginning, and we have more work to do there.

Great. One question on margins that we're asking all companies at our conference today is on margin headwinds or tailwinds. Do you expect to see more margin headwinds or more margin tailwinds in 2027 versus 2026?

I mean the way I see it is we have to create the tailwinds. And that's partly why Alexis is here.

Very clear. As we think about margins, one of the big areas of investment that you've been investing behind is in marketing. You've mentioned this several times throughout the day, whether that's Wendy, whether that's The Plaza Hotel, some of the other things that we're seeing.

Wendy the dog -- Travis Kelce's dog has now millions of followers. And we have a dog license as well.

Maybe talk to us a little bit more about what you've learned from marketing investments this year. What are you seeing from an ROI perspective? And do you think you need to expand marketing as a percent of sales as you continue to build brand heat?

We feel good about marketing as a percent of sales at 6%. So we feel good about that. We're going to create the space to continue to be competitive while we expand the EBIT margin. So that's why we have to -- my comment on we will create the tailwind from a margin expansion perspective. The return on investment is coming when we connect. So sorry to be repetitive, but it's when we connect the different parts. And I really want you to -- if you're interested in Calvin, Tommy, the opportunity, you see how we better and better connect. We are clearer. So what's different from a year ago? We are much clearer on the consumer segments we are going after. We're going after the Gen Z, the young millennial, the status shopper and the style enthusiasts within those.

We are going after them because they like our brands the most. They shop us more often and they spend more. So we are getting better and better at targeting them, and we are getting better and better at getting flow-through into e-commerce traffic growth. And then we capitalize that better in e-commerce and in D2C, where we don't have any macro disruptions and now together with our best. That's -- all that are leading indicators for how we lead wholesale together with our partners. So it's the connection. And every time we have that connection, and Alexis, you have just been here for 2 weeks, but already started to see when we combine that, we can drive 10% growth, 5% growth with 5% to 10% higher AUR, which is quite substantial. But we need to do where is the job? The job is to expand that to do that more disciplined at a bigger part of the assortment.

Excellent. Do you think that you have the levers in place to drive back to a double-digit and potentially 15% margin as was stated with the PVH+ Plan?

We're not going to guide '27, but it's -- we have done a lot of the heavy lifting. And Pam is smiling here because I'm not -- you know I can't guide '27. But what I feel good about is that -- the brands are more relevant than any time before. The brand following is bigger than the business performance. And it's our job now to -- Alexis, I and the team and Melissa to build in the business into the already bigger brand strength. So we are at a point where we have the team in place to do that as well, which is Alexis is one example of that. David is another example. Joel is another example.

And then you go through the management team, and we have a really strong management team. Patricia Gabriel comes from FMCG, great operations, supply chain experience. Those things -- the heavy lifting concretely means we have to build our sourcing capability globally, and it took us 3, 4 years to do that. But now we have. So when we see macro pressures, coming back to your question on margin pressure, we see macro pressure on raw material, we compensate that with leveraging having built up a global sourcing capability. So we just keep working on that.

Very clear. We're about out of time, Stefan. Any closing thoughts or comments you'd like to share with the audience?

I am excited about where we are and what we are going to do in the next step, which is driving -- now building into that brand strength, driving the revenue growth and then increased with Alexis's support, increased discipline on our investment and our operations. So yes, very much looking forward to doing that. And check out on TikTok, Instagram, check out Tommy and Calvin because it's -- I hope you feel what I see, which is really exciting.

Well, thank you, Stefan. Thank you, Melissa. Thank you, Alexis.

Thank you.

Good morning, everyone, and welcome to today's PVH Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this call may be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Kate Howard, Senior Director of Investor Relations.

Thank you, operator. Good morning, everyone, and welcome to the PVH Corp. Second 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. Alexis Rollier, our incoming Chief Financial Officer, has joined PVH, and we look forward to having him lead our third quarter 2026 earnings conference call along with Stefan.

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 September 2, 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 second 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, Kate, and good morning, everyone, and thank you for joining our call today. I would like to start by acknowledging our Calvin Klein, Tommy Hilfiger and PVH teams around the world. Thanks to your hard work, we continue to make meaningful progress on our multiyear PVH+ Plan. During the second quarter, we built momentum while navigating a dynamic environment, achieving our revenue guidance and beating on profitability.

This morning, I'm also thrilled to formally welcome our new Chief Financial Officer, Alexis Rollier, to PVH. Alexis will officially join us in New York next week. He comes to us with deep financial and operational experience, most recently as the Global CFO and COO at Sephora, where he drove disciplined growth and significant profit expansion. Alexis's experience combining consumer-facing improvements with effective financial steering will help us deliver our PVH+ Plan and drive long-term shareholder value. I can't wait for you all to get to know him.

Now on to a discussion of the second quarter. This morning, I'm going to start with an overview of the results before turning to progress on our PVH+ Plan and we'll end with our thoughts on the remainder of the year and future opportunities.

Turning to the second quarter. We delivered revenues in line with our guidance across all three regions and our licensing business. Calvin Klein and Tommy Hilfiger revenues were in line with expectations with consistent year-over-year revenue performance, excluding the impacts of wholesale shipment timing. We continue to drive momentum in our D2C business, led by growth in both APAC and Americas, while the wholesale business was impacted by the tough macro environment in Europe.

E-commerce continued to be a source of strength, supported by strong year-over-year increases in online traffic across both brands, with Calvin up double-digits and Tommy up high single-digits. These results reflect the overall progress we are making in elevating our product, marketing and the consumer experience. We beat our guidance on all elements of profitability. Importantly, our gross margins, excluding tariff refunds, improved year-over-year and were above expectations.

We continue to lean into our strong cost discipline while remaining committed to a balanced approach to investment that prioritize brand building in support of the PVH+ Plan. We ended the quarter with very good inventory levels, down 3% versus last year, and we are well positioned for fall and holiday with improved stock freshness.

Turning to our performance by region. Across the regions, our performance was in line with our expectations. We drove D2C growth across the Americas and APAC and delivered better-than-expected gross margin expansion across both brands. In the Americas, our business remained resilient, driven by e-commerce growth, strong AUR expansion and disciplined execution.

In APAC, we saw continued strength in D2C, led by stores and better-than-expected gross margin performance. Stronger consumer engagement drove higher conversion and AUR growth with strengthened promotion management. In EMEA, we delivered on our revenue guidance for the quarter and drove e-commerce growth across both brands. We also improved D2C versus the prior quarter, while the wholesale channel remained under pressure, reflecting the challenging environment.

Turning to licensing, which is a significant high-value business for us, generating over $350 million in annual revenue and supporting more than $3 billion in license net sales globally. Licensing is a recurring, growing, strong profitable revenue stream, driven by long-term relationships with brand-building partners. We are focused on complementing our own strength in our core categories with the expertise and capabilities of our long-term strategic licensing partners.

During the second quarter, excluding the impact from the previously announced transition of our women's North America wholesale categories, we continue to grow our go-forward licensing portfolio. We expect that growth to continue through the balance of the year. Importantly, we also remain on plan with the transition of our women's wholesale business in North America and expect it to be substantially complete by the end of 2026. And from there, we expect to grow our overall licensing business.

Turning to the drivers of our Q2 performance. We are relentless in delivering on our PVH+ Plan, and we continue to build momentum while navigating a dynamic business environment. Now, let's take a moment to discuss the progress we have made across each pillar of the plan. When we connect all parts of the consumer journey, all the way to our doors and stores, we drive real commercial impact. And during the quarter, we continued to sharpen our consumer focus, deliver stronger products and engage our consumers with cut-through 360 marketing, all while improving the marketplace experience in both D2C and wholesale.

Let me share some specific examples that demonstrate the meaningful progress we continue to make this quarter. Starting with building strength with the consumer. We know that both brands outperform with Gen Z and younger millennials and within those performed strongly with the highest value consumer segments, the status shopper and the style enthusiast. We continue to focus our investments on reaching these power segments, and we are seeing early signs that it is helping us acquire and retain high-quality consumers who shop more often, are less price sensitive and are more loyal.

And we see this in our acquisition of online consumers, which is up significantly across both brands. We see it in the performance in the Americas and APAC, where we are driving D2C growth with higher pricing power. And we see it in our growing number of returning consumers at both Calvin and Tommy.

Next is product. During the quarter, once again, we grew multiple full hero categories in D2C, where we have the biggest right to win, specifically in Calvin Klein denim, global sales rose double-digits across both men's and women's, with women's jeans a particular standout as consumers responded really well to our new take on Calvin icons, leading to very strong gross margins and AURs up double-digits.

And in Calvin Klein underwear, we drove low single-digit global growth for the total category with mid-single AUR improvement. And at Tommy, D2C growth was driven by sweaters, which were up double-digits and shirts and polos, which were both up mid-single digits, with linen a particular standout across categories, rising over 30% across all regions. Third, we continue to drive strong consumer engagement, increasingly connecting all the parts of the consumer journey end-to-end.

As previously discussed, we strategically increased our marketing spend in the first half of the year. And this investment, together with a sharper focus on our target consumer segments delivered low single-digit e-commerce growth across both Calvin and Tommy with improvements in share of online search.

In Calvin Klein, the standout moment this quarter was Jung Kook for Calvin Klein. It's Jung Kook's first product collaboration with us and our most successful global product collaboration in the history of the brand. Jung Kook is a global phenomena with a unique ability to connect with fans across regions and demographics. By linking the campaign's product, marketing and immersive retail activations globally, our teams created a true cultural moment that drove $5 billion in social media reach, triple-digit growth in e-commerce traffic compared to the spring brand campaign and over 90% global sell-through. This collaboration is such a powerful example of how we can successfully deliver 360 global brand activations.

In Tommy, through our global partnership with Liverpool Football Club, we invited consumers into an iconic summer of soccer and style, Together with Cadillac Formula 1, U.S. SailGP and our other partnerships, we continue to connect our iconic brand and products to growing influential sport and entertainment platforms, leveraging Tommy's unique heritage across fashion, art, music, entertainment and sport.

Finally, we also continue to upgrade our marketplace experience across both brands, further investing in the shopping experience across digital, shop-in-shop and store concepts. Globally, we have now completed over 120 refurbishments and relocations and over 130 new store openings year-to-date.

Looking at recent performance across regions and brands, I like where we are positioned. There is still more work to be done, but we are making good progress. And I'm optimistic that we will build on this momentum as we continue to thoughtfully execute the PVH+ Plan. This morning, I would also like to share an update on our cost management actions. We have extended beyond our traditional onetime programmatic cost actions to focus on more systematic, repeatable ways to become more efficient.

We are embedding a culture of cost discipline in two main ways. First, we have globalized and centralized our indirect procurement capabilities to optimize spend by consolidating our indirect supplier base, standardizing our ways of working and operating as one global team to leverage the full PVH scale across key areas, including global freight cost, packaging, parcel sourcing, marketing production.

Second, we are now driving enterprise-wide cost management by spend category with senior leaders responsible for optimizing how we use our resources more effectively and more efficiently against our PVH+ priorities. Through these efforts, we are reducing costs across nearly a dozen categories and have already confirmed annualized run rate savings of approximately $45 million, with a portion of these savings in 2026 and a full realization in 2027.

This is important work, and we are committed to finding next level sustainable cost savings. It's one of the many areas along with his global brand-building expertise where Alexis's experience is highly relevant, and identifying further cost opportunities will be a key priority in the upcoming months. While cost savings are a top priority, it doesn't come at the expense of our brand-building efforts to further strengthen our products, consumer engagement and marketplace presence.

Just last week, Calvin Klein launched a new denim campaign featuring Grammy-nominated pop sensation Tate McRae. It's a great example of how we are connecting the iconic Calvin brand to a new generation of consumers all over the world. The consumer reaction has been incredible, creating another major cultural and viral moment for Calvin and driving 28 million views across Instagram and TikTok in just the first week with strong resonance among Gen Z audiences.

We quickly followed this week with a new consumer moment featuring Tony Award-nominated actor Sadie Sink, the star of two of the biggest entertainment phenomena of the recent years, Stranger Things and Spider-Man. Both campaigns are built around our new Feel the Fit denim platform, where we connect Calvin's authority in denim and fit with the individual style of some of today's most relevant talent. We are supporting the campaign with a full 360 activation, bringing together the power of the brand, the relevance of the talent and the strength in product all the way through to our doors and stores.

And coming this fall, we have the strongest lineup of Calvin talent yet, leveraging the momentum Calvin has created with global stars like Dakota Johnson, Bad Bunny and Jung Kook. We're also continuing to build out the expression of the Calvin brand in even more immersive and aspirational ways. We have recently upgraded the underwear shopping experience in approximately 100 of our stores, and we'll do the same with the new in-store denim concept beginning this fall.

For Tommy, we continue to lean into the brand's classic American cool DNA. This fall, we have our first campaign with football superstar Travis Kelce. Travis is our newest global brand ambassador and creative collaborator, and his style, energy, enthusiasm are a great representation of the brand. The campaign is set at the Plaza Hotel in New York City, where Travis is joined by an incredible group of mega talent across fashion, music and sport, including Gigi Hadid, Jisoo, Carmelo Anthony. They all bring Tommy's take on Prep to life in a way that's fresh and relevant. The early consumer response has been really positive, and we are excited to see the campaign impact continue to build in the coming weeks.

Also in Tommy, the campaign puts key growth categories front and center, including cable knit sweaters, shirts and transitional outerwear as we continue to focus on expanding the strength of our products to bigger parts of the assortment. The Travis campaign complements the recently launched Always Denim campaign featuring Romeo Beckham. It supports Tommy's accelerated focus on the denim category and the campaign drove a roughly 30% increase in North America and Europe D2C jeans sales in the first month following its July launch, again, reinforcing how our category-focused approach is translating into measurable commercial results.

In the marketplace, we are continuing to step up Tommy's consumer experience, both online and in stores, with pilot openings of the new Tommy Hilfiger shop-in-shop concept in major cities around the world. Finally, next week, both Calvin and Tommy will be presenting at New York Fashion Week. It's another powerful expression of how each brand is bringing its iconic DNA to life in ways that are highly relevant to today's global consumer and culture.

Turning to our forward-looking guidance. The fall product season is off to a positive start across both brands and all regions. Looking ahead, we are pleased to reaffirm the full year guidance that we shared last quarter. From a regional perspective, we continue to expect growth in both the Americas and APAC for the full year with continued strength in e-commerce across all our three regions.

And in EMEA, we expect continued momentum in e-commerce, offset by wholesale. Given the ongoing conflict in the Middle East and the tough spring season in the region, European wholesalers are understandably cautious, and this is reflected in our spring '27 order book, which is down mid-single digits. To mitigate this, we are working more closely than ever with our key accounts, curating stronger assortments and providing them more in-season replenishment of our best-selling products.

We're also taking the insights we get from our own D2C business in the region, where our European consumers continue to demonstrate their strong engagement and love for both of our brands and using that to better serve our wholesale partners. And we know that as we execute these actions together, we will realize the significant long-term opportunities in the region.

During the summer, I had the opportunity to visit five markets in Europe and over 30 locations. It's always great to see the consumer love for our products firsthand. And I was so impressed with the passion of our store teams and partners and how our focus on the key growth categories and best product franchises is translating more and more into the consumer experience. During these visits, I also see that we have still real growth opportunities in further expanding our category and franchise strength all the way out to every door and every store.

In summary, we continue to make real progress as we execute our PVH+ Plan. leveraging the strength of our iconic Calvin Klein and Tommy Hilfiger brands to drive long-term increasingly profitable growth. We delivered on our guidance for the quarter with strong gross margin performance, continued strength in e-commerce and D2C growth and AUR expansion in both Americas and APAC. In EMEA, we are navigating a challenging consumer environment by staying even closer to our consumers and partners and leaning into the strong love they have for Calvin and Tommy.

Across both brands, we continue to see that where we focus on the key categories where we have the right to play and win, we drive real commercial impact with growth in multiple D2C categories. We remain committed to expanding the strength of our products to more of the assortment season-by-season. At the same time, we're stepping up our cost discipline, prioritizing our resources behind the PVH+ strategic pillars that will drive growth and long-term value creation while continuously finding more efficient ways to operate.

And we are starting Q3 well. Both Calvin and Tommy are cutting through with stronger product, great campaigns and some of the most relevant talent in culture today, and we are looking forward to peak fall season. Before I hand the call over to Melissa, I would like to thank her for her truly exceptional partnership and great work as interim CFO. I look forward to working closely with both her and Alexis as we continue to execute our plan and unlock the full potential of Calvin Klein and Tommy Hilfiger. And with that, I'll turn the call over to Melissa.

Thank you, Stefan. Good morning. In the second quarter, we met or exceeded guidance across all key financial metrics. Revenue decreased 3% in both reported and constant currency at the high end of our reported revenue guidance and slightly ahead of our constant currency guidance, with all three regions and licensing in line with our expectations. Operating margin was 11.1% and EPS was $3.70, ahead of our guidance, with both gross margin and SG&A better than our plan. Tariff refunds were received during the quarter as expected and contributed approximately 510 basis points to our operating margin and approximately $1.80 to our EPS.

We are pleased with our second quarter execution. While top and bottom line results, excluding the tariff refunds, were below last year as we continue to navigate the dynamic global macro environment, revenue was in line with guidance and profitability was better than expected. This supports our confidence in the full year plan we discussed last quarter, balanced with caution given the continued uncertainty around global consumer demand.

We are reaffirming our full year outlook for reported revenue of approximately flat and a slight decline on a constant currency basis, operating margin of approximately 8.8% and EPS in the range of $11.80 to $12.10.

I will now discuss our second quarter results in more detail and then move on to our outlook. From a regional perspective, Americas revenue was down 1% with DTC up slightly compared to the prior year period. We continue to drive strong growth in our e-commerce business, which was up high single-digits. Wholesale revenue was down low single digits and reflected the timing shifts of certain shipments into the second half, as we discussed last quarter, primarily impacting the Calvin Klein business, partially offset by an increase in wholesale revenue driven by the license transitions for Tommy Hilfiger North America.

In APAC, revenue was up 3% reported and up 1% in constant currency. DTC revenue grew low single-digits in constant currency, led by growth in stores. E-commerce was down slightly but remains on track for full year growth. Wholesale revenue declined mid-single digits in constant currency as our partners remain cautious. Within the region, we drove strong mid-single digit e-commerce growth in constant currency in China.

In Australia, while macro headwinds continue to weigh on consumer spending, we saw an improvement compared to the first quarter result. EMEA was down 6% in both reported and constant currency, reflecting continued macro pressure, including lower consumer demand due to the direct and indirect effects of the conflict in the Middle East. DTC revenue declined low single digits in constant currency, improving compared to the mid-single digit constant currency decline in the first quarter, with continued strength in e-commerce, which was up mid-single digits and grew in both brands.

Wholesale revenue declined high single digits in constant currency, reflecting the cautious market backdrop. In our licensing business, revenue was down 13% as expected due to the North America license transitions. Excluding the impact of these transitions, our ongoing licensing business grew low single-digits.

Turning to our global brands. Tommy Hilfiger revenues were flat in both reported and constant currency and included an approximately 3 percentage point increase attributable to the wholesale sell-in of previously licensed Tommy Hilfiger women's product categories in the Americas. Excluding the transition impact, Tommy Hilfiger revenues were down approximately 3% versus last year.

Calvin Klein revenues were down 7% in both reported and constant currency and included an approximately 4 percentage point decrease attributable to the wholesale shipment timing in Americas, as just discussed. Excluding the timing impact, Calvin Klein revenues were down approximately 3% versus last year.

From an overall channel perspective, direct-to-consumer revenue was flat in reported and constant currency. E-commerce grew 4% reported and 3% in constant currency, driven by growth in EMEA and Americas with growth in both Calvin Klein and Tommy Hilfiger. Revenue in our retail stores was down 1% on both a reported and constant currency basis, with growth in APAC more than offset by decreases in EMEA and Americas. Wholesale revenue was down 6% in both reported and constant currency, primarily driven by EMEA. Americas and APAC also declined to a lesser extent, as I just discussed.

In the second quarter, our gross margin was 63%, an increase of 530 basis points compared to last year. During the quarter, we received the tariff refunds we discussed last quarter, which contributed $107 million and approximately 510 basis points benefit to gross margin. Excluding the benefit of tariff refunds, gross margin increased approximately 20 basis points compared to last year and reflected lower product costs, including favorable foreign exchange and favorable channel mix, partially offset by a more promotional environment in EMEA, increased tariff costs, net of mitigation and the impact of the North America license transitions.

Notably, gross margin expanded in both APAC and in the Americas, excluding tariff refunds, driven by higher AURs in DTC, supported by strong promotional discipline and a benefit from favorable channel mix. Inventory was down 3% and lower in all regions. We continue to tightly manage our inventory, and we have healthy levels of core products and improved stock freshness.

Looking ahead, we expect Q3 inventory will be up year-over-year to support the Americas wholesale shipments, which are weighted more heavily to the second half compared to last year. SG&A increased 240 basis points to 51.9% of revenue, but was better than planned, reflecting continued cost discipline across the business and an approximately 20 basis point timing benefit from a shift in marketing spend into Q3. The increase versus last year reflected our continued investment in the business, including an 80 basis point increase in marketing as well as a higher channel mix impact and deleverage on lower revenue. Excluding the increased marketing investment, SG&A dollars were approximately flat to last year in constant currency.

In sum, EBIT for the second quarter was $233 million and operating margin was 11.1%, including the $107 million tariff refunds benefit compared to EBIT of $178 million and operating margin of 8.2% in the prior year. Excluding the tariff refunds, EBIT for the second quarter was $126 million and operating margin was 6%. EPS was $3.70, including the approximately $1.80 benefit from the tariff refunds compared to $2.52 last year.

Interest expense was $12 million, and our tax rate was approximately 22%. On a GAAP basis, we also recognized a noncash goodwill impairment charge of $439 million, reflecting changes in valuation assumptions associated with geopolitical and macroeconomic factors.

Now moving on to our outlook. We continue to expect full year reported revenue to be approximately flat to the prior year and down slightly in constant currency with relatively similar expectations for both Calvin Klein and Tommy Hilfiger versus last year.

Regionally, our revenue outlook also remains consistent with what we shared last quarter with growth in both Americas and APAC, offset by pressure in our EMEA business. Importantly, we continue to expect e-commerce growth for the full year in all regions. For the year, we continue to expect gross margin and SG&A as a percent of revenue each to increase approximately 100 basis points versus last year, and we are reaffirming our operating margin outlook of approximately 8.8% and our EPS outlook of $11.80 to $12.10, which as we talked about last quarter, includes the benefit of the tariff refunds we received in Q2.

While new tariff rates have been recently announced, the situation remains fluid. We continue to closely monitor developments, work hand-in-hand with our partners and actively manage our mitigation efforts. On SG&A, we continue to invest in our brands and our business where we see momentum. We continue to expect that marketing spend will increase at least 50 basis points to approximately 6% of sales for the full year. And as Stefan shared, we are managing our costs with increased rigor, and this work will drive the discipline and governance needed to support additional savings in 2027 and beyond.

Turning to below-the-line items. Net interest expense is now expected to be approximately $70 million compared to $75 million previously. Our expectation for our tax rate is unchanged at 22% to 23%. With respect to capital allocation, we remain on track with our plans for capital spending of approximately $250 million or approximately 3% of sales as we invest globally in e-commerce, stores and shop-in-shop renovations, and we continue to expect to repurchase at least $300 million of our shares.

Now moving to our outlook for the third quarter. We are projecting third quarter revenue to be down low single digits in both reported and constant currency compared to the prior year, with Q2 DTC trends generally expected to continue across all regions. In Americas, we are planning revenue up mid-single digits with DTC up slightly and wholesale revenue benefiting from the planned first half to second half timing shift discussed previously with a more significant timing benefit expected in Q4.

In Asia Pacific, we expect revenue to be relatively flat in constant currency as growth in DTC is offset by continued caution in wholesale. In EMEA, we expect revenue to continue to be down mid-single digits in constant currency with declines in both channels. In our licensing business, revenue is expected to be down mid-single digits, driven by the previously mentioned North America license transitions with growth expected to continue in the go-forward business.

We expect our third quarter gross margin to increase approximately 100 basis points compared to last year, reflecting lower product costs, including favorable foreign exchange, higher AURs and favorable channel mix. We expect gross margin expansion in all three regions. SG&A expense as a percent of revenue is expected to increase over 200 basis points compared to last year, reflecting strategic investments in our brands and our business, including approximately 100 basis points of higher marketing investment as well as a higher channel mix impact and deleverage on lower revenue.

For the second half, marketing as a percent of sales is expected to be up slightly versus last year, with spending weighted to Q3 due to the timing shift from Q2 and the acceleration of certain investments to maximize their impact around key consumer moments. As a result, marketing as a percent of sales is expected to be up in Q3 and down in Q4 versus last year.

Third quarter operating margin is expected to be approximately 7.5%, improving compared to Q2 operating margin, excluding the tariff refunds benefit. EPS is expected to be in a range of $2.50 to $2.65 with a tax rate of approximately 22% and interest expense of approximately $18 million.

In closing, we are pleased with our second quarter execution and the improvement in several parts of the business while recognizing that the external environment remains uncertain. Our targeted investments behind our brands, disciplined inventory and cost management and continued execution of the PVH+ Plan support our confidence in our full year outlook and our ability to create long-term shareholder value. With that, operator, we would like to open it up for questions.

[Operator Instructions] And our first question today comes from Bob Drbul with BTIG.

I was wondering if you could spend some time on the marketing side, there's -- it's been really good visibility -- some of the activations. And I'm just curious if you can talk to the marketing ROI that you're seeing with some of these pretty high-profile campaigns. And I guess I was also curious if you had to pay Travis Kelce for his dog in the Tommy Hilfiger video.

Thanks, Bob. I'll come back to Travis dog, Wendy. So we'll come back to Wendy because Wendy now has multi-million following on social, as I'm sure you have seen. So just grateful that he decided to bring his own dog to the shoot. And it tells you a little bit about Travis's connection and partnership with Tommy. It's pretty incredible.

But let me back up and talk about the strengthening marketing ROI because it's really something that excites us because we see that our investments and the way -- it's especially our investments and the way we apply those investments that drive the strengthening ROI. So the key leading indicator is we see strong, as I mentioned in my prepared remarks, we see strong traffic growth.

Consumer acquisition is really strong, targeted to our power segment, the Status shopper and the style enthusiasts. So we see the e-commerce traffic, Calvin up double-digit, Tommy up high single-digits. That's a very strong leading indicator that then drives the D2C growth, e-commerce growth across the company, including in Europe, given that we had the disruption from the Middle East war, we were still able to drive strong traffic increase and e-commerce growth and then full D2C growth in North America and APAC, where we had less disruption.

So those are really encouraging proof points. Then I often feel like it's best to break it down into concrete examples. And if we look at fall and the start of fall, we are -- the brands are lined up stronger with more integrated campaigns since -- I would say, since we started the PVH+ journey. And as you know, we have had a lot of heavy lifting to do to get the foundation in place.

But what you -- when you see Calvin start with Tate McRae and Sadie Sink, let's just take Sadie Sink, the most recent talent. And it's not just about the talent is incredible, but it's the way it's the campaign is built up in the key and core categories. So it's a denim campaign that connects many different talent to feel the fit. And then it's denim and underwear. And if you look at denim and underwear, that's the biggest -- that's a big part of Calvin Klein.

So if you look at the Sadie campaign so far, just with Sadie, 14% social engagement rate, which is really high. 60% consumer mentions versus spring -- 60% up. Over 20 million views on Instagram first week. But here's what's really interesting. 96% of those views were from non-followers, status shopper demographics, 18 to 34. So we are starting to become really effective in driving our consumer acquisition to our target consumer.

They already love the brand because both Calvin and Tommy are 2 of the most -- 2 out of 5, 7 most beloved brands globally. And then we are getting more and more effective to connect the different parts of the consumer journey.

Travis, I have to come back to Travis. 10% social engagement since we launched really high. Search interest globally up. Over 20 media outlets in the U.S. only have been writing about Travis and Tommy. Travis mentioned it on his podcast, which is a top 10 podcast globally. We have 1 billion impressions on social first 24 hours. Instagram views up versus same time last fall 500%. And you can see how this is driving -- so in Q2, you saw how this started to drive return in sweaters up double-digit in revenue, shirts and polos up mid-single digit, transitional outerwear up. So that's what's driving the strengthening of the ROI.

But I'm really proud of the team's work on lining up such strong fall start. And you should check it out on both Calvin and Tommy, if you haven't checked it out. It's very good. Do we have more work to do? Of course. We can improve in every single area. But it's a lot of foundational work that has led to the strength of fall.

And Bob, I'll just add in terms of our outlook, we previously shared that we're increasing our full year marketing investment by at least 50 basis points as a percentage of sales compared to last year, bringing it to 6%. And that in the second half, we would lap the stepped-up level of investment that we began in 2025 in the second half. And so within that, we are rebalancing our investment between Q3 and Q4 to drive that consistent drumbeat in fall and into holiday that Stefan just talked about.

Our next question comes from Jay Sole with UBS.

My question is about the trends in Europe. Stefan, you mentioned the order book for spring. Can you just talk about what you see as the underlying demand for the brand? Because it sounds like you're going to take some actions to be able to sort of fulfill at once for wholesale partners to make it easier for them. But just talk about what you think the Europe business can grow in total from a total sellout standpoint, including all channels as we get through this year and into next year and kind of why you feel that way?

Thanks, Jay. Really important question. So if we look at Q2 for Europe, we were early, one -- if not the most early to flag the Middle East war effect, and we took a hit in Q1 for that. But what is good to see is what we said we were going to do and the trends we saw, we delivered in Q2. So, Europe continued to be consistent with what we expected coming into Q2, coming out of Q2. But within that, we see e-commerce growth increasing, and it's very much driven to what Bob asked about the marketing effectiveness in the areas where we have the most control of the end-to-end consumer experience, we drove strong growth in traffic and growth in D2C e-commerce. And then all D2C trends overall in Q2 improved in Europe versus Q1.

So to your point, we are focusing on two things here. We are working closer with our key accounts than any time before. So we know that wholesale, when they have a tough season like we had in spring in Europe, they will be cautious going into the next spring. We knew that and we know that. So what we are doing is we're working super closely with them on a very granular level to make sure that we lean in even more into the key growth strategy, even more into our key franchises with newness and innovation.

Because having spent a lot of my time this summer in Europe with the team is where we lean into the key growth categories, where we lean into the best franchises, where we have newness and innovation, whether it's transitional outerwear, shirts, denim, underwear, we are able to drive growth.

So that -- the way we apply that is a much more granular, even more detailed planning on a key account level for next spring, but also complementing the forward-looking orders with the in-season replenishment, which is just going to be increasingly important. So we are working closely with identifying our key categories, key franchises, right price points, right timing with accounts and then being -- having capability to replenish much more in season.

So if you look at the forward-looking order books, it's north of 50% of the wholesale sales and the rest is in season. So that's how we work with wholesale. On D2C, we just continue to lean into the consumer love that's so strong in Europe for both Calvin and Tommy. Again, when I share it with the team coming back. I was at 5, 6, 7 different airports in Europe this summer. It's incredible when you are at peak holiday period. You walk around in an airport, you take a coffee and you see so many consumers wearing Calvin Klein and Tommy Hilfiger.

So it's really about taking share in a in a market that's being disrupted by the Middle East. But the good news is e-commerce up, D2C improved and closer to our wholesale accounts.

And our next question comes from Dana Telsey with Telsey Advisory Group.

Stefan, as you think about the licensing transition, how is it progressing? What are you seeing there? And how you're thinking about the brands and the categories go forward? And last quarter, you mentioned about the hero products and new products. What are you seeing now and your thoughts for the future?

Thanks, Dana. As I mentioned as well in my prepared remarks, the licensing business is super important to us. And there's really two big parts there. The transition of our women's licensing in North America is on plan and going to be done by end of this year. So underlying the next part -- so we are on plan and it's going to be done by the end of this year.

The next big part in licensing from an investor perspective, that's super important to share is we are leaning in and growing with our brand-building licensing partners. We have over a $300 million revenue coming from licensing. It's reoccurring, it's growing. So we are growing underneath the transition of women's North America, we are growing our go-forward licensing portfolio. And having Joel Samaha come in with his deep licensing and partner experience has been really exciting to see what he has already been able to do with our -- the strength we have already on the team -- on our licensing team is to set us up for overall licensing growth for 2027.

So it's really -- our strategy is very clear. We are in control of the core brand expression, and we do those categories better and better and better, as you can see in our e-commerce D2C growth, et cetera. And then we complement that with expertise from our best partners globally. And I spend a lot of time with our partners. And it's the combination that excites them that we are building the consumer flywheel in the core proposition of the brand.

We are investing in relevance for the brands, relevance at the core categories, and then they complement that with relevance where they have more expertise than us. So it's been a long transition, but we are looking at the other end now where we see overall growth starting in 2027. And then we just continue to grow from there.

Got it. And then the product hero versus fashion, how are you thinking about that for the back half of the year for the brands?

Yes. Also super interesting question. So Heroes has a lot of fashion in it as well. So if you look at if you look at denim, where we -- when we look at our deep consumer research, we saw early in the PVH+ journey that we stand so strong in underwear and so strong in denim, but the business in denim is much smaller versus what the consumer sees us having the right to play. So when we lean into denim now, double-digit growth, double-digit AUR growth.

So here comes the pricing power. And within that, we have a lot of ways that we have made the iconic Calvin denim more current than ever before. So it's really the combination of when something is iconic and something is fashionable and current, that's when it really works. Same with Tommy, leaning into sweaters and cable knits and building out those franchises and then having Travis in those cable knits and loving the brand. And so it's really the combination of leaning into what's iconic, and we know from consumer research that the consumer already loves with the brands.

We don't have to convince anyone that Calvin and Tommy that they like Calvin and Tommy. It's about driving that brand love through the full funnel. And that's what we are doing better and better. So it's a mix between -- it has to be iconic and it has to be fresh, current and fashionable. So you should, again, really check out how we show up in Calvin in denim, how we show up in underwear, how we show up in sweaters, transitional outerwear in Tommy. It's really a big step forward this fall.

Our next question comes from Blake Anderson with Jefferies.

So, I wanted to ask first, it would be great to hear Alexis's key priorities into the new CFO role and going forward. And then if you could comment on the U.S. region and the consumer there. There's still higher gas prices. I would be curious how the macro impact is unfolding there on your business and especially any comments you're seeing on pricing elasticity given the AURs you're seeing there.

Yes. Thanks, Blake. So I couldn't be more thrilled to have Alexis join. I know you have been waiting patiently from the investor community for our search to be completed. But what I shared through the process is true, which is we needed to find the person with the right experience. So here is Alexis with. Why his experience is so important to us is, he has been part of the team -- global leadership team for Sephora for a long time.

During his tenure, they have significantly expanded the business. And the way they have done it is increasingly profitable. So I wanted to find a partner on the finance side that is equally interested in the consumer-facing improvements of Calvin and Tommy as the efficiency part. So that's part of his priorities coming in.

He's going to be here in New York with us on Monday, starting Monday next week or Tuesday after Labor Day. And one of the key priorities here is driving and leading together with me and the leadership team, the increased cost focus because it's both. We're going to drive very focused investment in driving the consumer flywheel and you're going to see 2027 significant improvements on the cost side as well. And we have not waited for Alexis to lean into that. But his experience of doing this with deep European experience, deep U.S. experience, APAC experience. And Sephora is they have gotten to be known for -- they just deliver.

So it's really exciting to have him join. Your next question when it comes to the U.S. consumer. So we see the U.S. consumer being very resilient and holding up. And we see the consumer in the U.S. responding really well to where we lean into these key categories and key franchises. We see the pricing power coming up. So it's really about delivering great value to the consumer.

And that comes out of two pieces: relevance in brand and product and the right price. And everywhere where we take that iconic strength of the brands and translate that into relevance in product and create great price value, it works really well. So we are encouraged so far. Dynamic environment, but we are encouraged by the consumer.

Our next question comes from Michael Binetti with Evercore.

Stefan, you talked about the EMEA spring orders for next year down mid-singles. As you guys work closely with the wholesale channel, maybe talk a little bit about what you can do to try to drive the direct-to-consumer channel towards positivity in that environment since that's where you have a lot more control.

And then I think we've heard a lot of retailers talk about investing tariff refunds in lower prices in the U.S. Is that contemplated in the guidance considering the fourth quarter gross margin compressing year-over-year that Melissa talked about? And then when you look at some of the medium-term comments that you have given us today, some of the run rate cost efficiencies, the spring order books, the licensing wrapping up this year, it's pretty noisy. Is there a starting point we can think about for how the operating margins in the business should trend in 2027?

Okay, Michael. So thank you. I picked up three parts of your question. So let me start, and Melissa and I will take turns. But let me start on the D2C part. So that's where we see -- again, to your point, that's where we see the biggest proof points despite the disruptive background in Europe. E-commerce is up. D2C is better in Europe in Q2 versus Q1.

And we -- it's very clear and Americas and APAC D2C up as planned, and we continue to have them up for the rest of the year. And we really see -- we are really clear on what's driving that D2C growth. It is that increased brand relevance, increased targeting the Gen Z, young millennial, increased focus on the key categories and putting newness and innovation and putting investments behind the newness and innovation in the big franchises and really letting that show up super strong in the doors and stores.

So that's very similar of how we work with our best wholesale partner. I spent a lot of time with some of our best and biggest partners this summer in Europe. And what's really exciting is they are really good retailers, and they have really good consumer insights. And so they know -- they see where the consumer is going, and they see it across the market.

So it's really hand-in-hand working closer with them on making sure we have enough newness and innovation in matching the consumer demand, whether it's denim, underwear, sweaters, transitional outerwear. And where we have that, we see that we drive growth with them. And then as I shared, in season is going to be even more important with wholesale.

So that's why the closeness of our key account partnership is just going to be even more important. And the way we already now prepare for spring '27 to compensate for that cautiousness in the forward-looking order books is to make sure that we are ready to replenish our best sellers. And our best sellers, we are so clear on what they are right now.

So when I'm coming back to Europe this summer, when I'm out in the five markets and the over 30 stores, I see so much growth opportunity just by being better in inventory, bigger and better presentation of our key categories, best franchises. And that's how we work across taking the D2C strength and also tapping into the strength of our partners because it's -- when we combine their strength with our strength, that's when we can really mitigate the external disruption. The third -- let's see here, the third question.

I think there's a question on gross margin, so I can just touch on that. So as we think about gross margin -- yes. So we have not changed our overall gross margin guidance for the year. In Q2, we drove gross margin better than planned, up 20 basis points, excluding the tariff refunds. And we expect Q3 gross margin to be up about 100 basis points with expansion in all regions as we continue to drive that D2C strength through higher AURs as we've already done in Q2 and Q3 -- sorry, Q2 in Americas and APAC.

So we've seen a good start to fall, as Stefan talked about, with our product and Q3 is when most of our fall product ships, which supports that expansion. So we feel good about Q3 gross margin. And then when we think about Q4 and given our guidance for the full year, that does, as you mentioned, imply we expect gross margin will be lower. And so there's three things I'll mention as we think about that.

First, there's a channel mix effect. In Q4 when we think about that weighted timing of the North America wholesale shipments that we've mentioned. Second, we're giving ourselves some flexibility to strategically support a promotional holiday landscape if that becomes necessary. And then the third thing is that there continues to be uncertainty around tariff rates. And so we have embedded support for volatility in that as well. And so I think we think that's a prudent approach given where we're at in the year and the dynamic operating environment.

I would say -- so building on what Melissa just said, Michael, it's we take a prudent approach. We feel good about reaffirming our guidance. And then I'm not going to stress anyone out internally with giving guidance for next year. But, what I can say is that we are really leaning into cost as a real driver of EBIT margin expansion. So you should expect that is -- we are significantly leaning into that, and you should see an effect in 2027. More to be guided when it's time for guidance of '27.

At this time, we've reached our allotted time for questions. I'll now turn the call back to Stefan for any additional or closing remarks.

All right. Thank you, everyone, for investing your time with us this morning. What I would really like to reiterate is engage with Calvin and Tommy on TikTok, engage in a way where you search Tommy and Travis, Calvin and Sadie or Calvin and Tate, like really see because one thing is what we say as brands, but it's really what the consumer says.

So I spend -- as soon as we launch a campaign, I spend a lot of hours at night looking at what others are saying, what's the consumer? That's the kind of consumer landscape we live in now. So you will firsthand see on TikTok, you will see the engagement on Instagram, click through to shop. And the connection between the campaigns and the brand relevance and the key franchises and key categories, I hope you see what I see, which is -- and the consumer sees, that it's much stronger. So it's a step in the right direction. And I'm sure you will see opportunities and send them my way because we are heads down just continuing to improve. But check out Calvin and Tommy for the fall campaigns and looking forward to reconnecting next 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 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.