It’s a job Larsson has been preparing for since he joined the group, which owns Calvin Klein and Tommy Hilfiger, in a newly created role nearly a year and a half ago. He succeeds Manny Chirico, PVH’s longtime chief, who is credited with transforming the Calvin Klein and Tommy Hilfiger businesses into global behemoths. Chirico, who has been chief executive since 2006, will remain board chairman of the company, currently valued on the market at over $4 billion. PVH's share price was up 2 percent on Wednesday.
When he arrived at PVH, Larsson “started working next to Manny, just getting to know the company and its underlying value drivers…taking leadership for the brands and the [different] regions more and more,” Larsson told BoF. “When Covid hit, it became crisis management."
Pandemic aside, the transition comes at a critical time for both PVH and the category it plays in: mid-priced apparel predominantly sold at department stores like Macy’s, which have been losing both market and mindshare to cheaper fast fashion.
PVH’s efforts to move some of its business upmarket — in particular, its attempt at Guccify-ing Calvin Klein by hiring superstar designer Raf Simons in 2016 — failed. However, it has managed to back away from shrinking department stores. Today, only 10 percent of its business takes place in that channel, with sales split 50-50 between retail and wholesale.
But what’s really motivating Larsson is the strength of the company’s core. Calvin Klein and Tommy Hilfiger, which has powered the tough times with attention-grabbing marketing and a focus on international sales growth, are globally recognised brands that remain interesting to many consumers.
In his new role, Larsson will need to test whether brands still matter to shoppers, and figure out how and where to sell those brands through new channels.
“I am a big believer of the power of iconic brands,” he said. “There are only so many brands out there…when you have an iconic brand that collided with culture…globally you have tremendous advantages.”
However, the key to continued success is “evolving, renewing and making it current,” he added. “That’s the winning formula…Consumers won’t go back to how it was, they will only go forward.”
Larsson’s CV made him a sought-after talent in an industry that finds it increasingly hard to recruit CEOs. After working at H&M during its heyday, he was widely credited with turning around Gap, Inc.-owned Old Navy by transforming operations to better align with the fast-fashion model.
While his stint as Ralph Lauren’s chief executive ended two years after clashing with the founder over creative differences, his Way Forward plan became the blueprint for a reorganisation still taking place at the American company. At one point, he was in talks to take over troubled preppy retailer J.Crew but did not move forward.
So far at PVH, he has played a role in streamlining operations — creating a modern supply chain less reliant on long-lead inventory and more driven by “data and demand” — and bringing an even greater focus to the Calvin Klein and Tommy Hilfiger businesses, which accounted for 85 percent of revenue and 95 percent of EBIT (earnings before interest and tax) in 2019.
Now, Larsson is tasked not only with preserving and developing those two properties but also dealing with the retail sector’s fallout from Covid-19, with the global fashion industry — including apparel and footwear — expected to contract by 27 to 30 percent in 2020, according to BoF and McKinsey's State of Fashion 2020 Coronavirus update.
PVH has fared better than some so far. Earlier this month, it surprised analysts with better-than-expected earnings as online were up 50 percent — 85 percent on its own e-commerce sites — and consumers continued purchasing casual, comfortable clothing.
“If anything good comes out of Covid, it’s that it showed us how quickly we can pivot,” Larsson said.
Second-quarter sales hit $1.6 billion, exceeding expectations of $1.3 billion. Nonetheless, like all retailers, the company remains under pressure; it's forecasting sales will decline less than previously expected, but still drop 25 percent in the second half of its financial year.
While analysts have speculated in the past that PVH could create more value by acquiring another big brand, Larsson said that the priority is Calvin Klein and Tommy Hilfiger. “We see great potential in our existing business,” he said. “The focus here and now is to drive value creation with these two iconic brands.”
In the long term, expect Larsson to place an emphasis on brand building as well as making production and distribution more efficient and fast with the intention to, as Larsson put it, “win with the consumer and drive profitable market share growth for years to come.”