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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.21pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.08pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.33pp
Lean -
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
shortages+3
weakened+3
adverse+2
disruptions+2
conflict+2
Positive rising
effective+2
successfully+2
successful+1
improve+1
Risk Factors (Item 1A)
11,440 words
Item 1A. Risk Factors
The following risk factors should be read in conjunction with the other information set forth herein when evaluating our business and the forward-looking statements made herein. The occurrence of one or more of the circumstances or events described below could have a material adverse effect on our business, financial condition or results of operations. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may occur or become material and also may adversely affect our business, financial condition or results of operations.
Business and Operational Risks
A meaningful portion of our revenue and gross profit is derived from a small number of large wholesale customers and the loss of any of these customers or significant financial difficulties in their businesses could substantially reduce our revenue.
A small number of our wholesale customers account for a meaningful portion of our revenue. Sales to our five largest customers were 16.6%, 15.1% and 13.3% of our revenue in 2025, 2024 and 2023, respectively. No single customer accounted for more than 5% of our revenue in any such year.
We do not have long-term agreements with any of our large wholesale customers and purchases generally occur on an order-by-order basis. A decision by any major customer, whether motivated by marketing strategy, competitive conditions, financial , perceptions of us or our brands, or otherwise, to decrease significantly the amount of merchandise purchased from us or our licensing or other partners, or to change their manner of doing business with us or our licensing or other partners for any reason, including due to store , reduced consumer traffic, changes in consumer shopping habits, or product delivery , could reduce substantially our revenue and materially affect our . During periods of consumer spending and low consumer sentiment, whether due to inflation, , buying power, price increases due to , tariffs or other trade policies, or otherwise, our wholesale customers may be more cautious with orders or may investments necessary to maintain a high quality in-store experience for consumers, which may result in lower sales of our products.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+18
restructuring+11
decline+7
negative+7
conflict+7
Positive rising
favorable+3
positive+3
effective+2
gain+1
efficiencies+1
MD&A (Item 7)
15,882 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
The following discussion and analysis is intended to help you understand us, our operations and our financial performance. It should be read in conjunction with our consolidated financial statements and the accompanying notes, which are included elsewhere in this report.
We are one of the largest global apparel companies in the world, with a history going back over 140 years. We have been listed on the New York Stock Exchange for over 100 years.
We generated revenue of $9.0 billion, $8.7 billion, and $9.2 billion in 2025, 2024 and 2023 respectively, with over 70% of our revenue in 2025, 2024 and 2023 generated outside of the United States. Our global iconic lifestyle brands, TOMMY HILFIGER and Calvin Klein , together generated over 95% of our revenue during each of 2025 and 2024, and over 90% of our revenue during 2023.
In addition to TOMMY HILFIGER and Calvin Klein , which are owned, we previously owned a portfolio of other brands, which primarily consisted of Warner’s , Olga and True&Co. , which we owned until November 27, 2023. We also license Van Heusen , Nike and other brands for certain product categories.
PVH+ Plan
The PVH+ Plan is our multi-year, strategic plan to build Calvin Klein and TOMMY HILFIGER into the most desirable lifestyle brands in the world and make PVH the leading brand building group in our sector. A description of the plan can be seen in Item 1 of this report under the heading “Our Business Strategy.”
The retail industry has seen a great deal of consolidation and other ownership changes, as well as store closing programs, restructurings, reorganizations, management changes and activist shareholder campaigns. We expect these disruptions to be ongoing, particularly as omnichannel strategies and digital commerce continue to grow, and consumer shopping and buying habits change. In the future, retailers also may reposition their stores’ target markets or marketing strategies. Any of these types of actions could result in a further decrease in the number of stores to which we can sell, to which we want to sell or which want to carry our products, and there can be no assurance that these sales can be fully offset by sales through digital channels. Additionally, stores may purchase a smaller amount of our products and reduce the retail floor space designated for our brands. These changes could decrease our opportunities in the market, increase our reliance on a smaller number of customers or decrease our negotiating strength with our customers. These factors could have a material adverse effect on our financial condition and results of operations.
We may not be able to continue to develop and grow our Tommy Hilfiger and Calvin Klein businesses.
Our PVH+ Plan strategy involves growing our Tommy Hilfiger and Calvin Klein businesses. Our achievement of revenue and profitability growth from these businesses will depend largely upon our ability to:
• continue to maintain and enhance the distinctive brand identities of the TOMMY HILFIGER and Calvin Klein brands;
• continue to maintain good working relationships with our brand licensees and enter into new, or renew or extend existing, license agreements and successfully transition licensed businesses in house, including our in-process plan to directly operate a significant portion of the businesses for the product categories that are or had been licensed to G-III,
our largest licensee of both brands, upon the expirations of the underlying license agreements, with the remainder being re-licensed to other third parties; and
• continue to strengthen and expand the Tommy Hilfiger and Calvin Klein businesses.
We cannot assure you that we can execute successfully any of these actions, nor can we assure you that the launch of any additional product lines or businesses by us or our licensees or that the continued offering of these lines will achieve the degree of consistent success necessary to generate profits or positive cash flow. Our ability to carry out our growth strategy successfully may be affected by, among other things, our ability to enhance our relationships with existing customers to obtain additional selling space or add additional product lines, our ability to develop new relationships with retailers, the ability of our new licensees to maintain and improve upon prior sales levels of licensed product categories, competitive conditions, changes in consumer shopping and spending patterns (including due to economic conditions or price increases caused by shortages, increases in duties or tariffs, or other factors), and changes in consumer tastes and style trends. If we fail to continue to develop and grow our businesses, our financial condition and results of operations may be materially adversely affected.
Our success depends on the value of our “TOMMY HILFIGER” and “Calvin Klein” brands and, if the value of either of those brands were to diminish, our business could be adversely affected.
Our success depends on our brands and their value. The TOMMY HILFIGER name is integral to the existing Tommy Hilfiger business, as well as to our strategies for continuing to grow and expand the business. Mr. Hilfiger, who continues his role of Principal Designer, is closely identified with the TOMMY HILFIGER brands and any negative perception with respect to Mr. Hilfiger could adversely affect the brands. In addition, under Mr. Hilfiger’s employment agreement, if his employment is terminated for any reason, his agreement not to compete with the Tommy Hilfiger business will expire two years after such termination. Although Mr. Hilfiger could not use any TOMMY HILFIGER trademark in connection with a competitive business, his association with a competitive business could adversely affect the Tommy Hilfiger business. We also have exposure with respect to the Calvin Klein brands, which are integral to the existing Calvin Klein business and could be adversely affected if Mr. Klein’s public image or reputation were to be tarnished.
In addition, brand value and reputation, and consumer patronage could diminish significantly due to numerous other factors, including consumer attitudes regarding social and political issues, consumer perceptions of our position on these issues, the positions taken by celebrities, athletes and others who promote our products (and our response to the same), a belief that we or our business partners have acted in an irresponsible or unacceptable manner (including in respect of human rights events in our supply chain), or environmental impact or sustainability claims made in regard to products under our brands. Negativeclaims or publicity regarding the TOMMY HILFIGER or Calvin Klein brands, stores or products, including stores operated by business partners and licensed products, or regarding celebrities, athletes and others who promote our products, as well as our treatment of employees and customers, particularly when made on social media, which has the potential to rapidly accelerate the timing and reach of negative publicity, also could adversely affect the brands’ reputations and our sales even if the subject of such publicity is unverified or inaccurate and we seek to correct it.
China’s Ministry of Commerce (“MOFCOM”) conducted an investigation into our business which resulted in PVH Corp. being placed on the List of Unreliable Entities (“UEL”) and could result in fines or restrictions on our ability to do business in China, which could have a material adverse effect on our revenue and results of operations.
In September 2024, MOFCOM announced that it had initiated an investigation into our business under the Provisions of the List of Unreliable Entities (“UEL Provisions”). In October 2024, we submitted a written response to MOFCOM and, in December 2024, we submitted a supplemental response. In January 2025, MOFCOM issued a preliminary finding that PVH Corp. had violated normal market trading principles and in February 2025, it announced its determination and placed PVH Corp. on the UEL. We do not know if or when MOFCOM will implement any measures as a result of the listing or what they will be if any are imposed. According to the UEL Provisions, potential measures could include monetary fines, restrictions or prohibitions on engaging in import and export activities related to China or making investments in China, entry denial of our relevant personnel into China, restrictions or revocation of work permits, stay or residence status of our relevant personnel in China, or other measures. No measures have been imposed on us at this time. The practical impact of any such restrictions or prohibitions could include our inability to produce goods in China for sale elsewhere, our inability to sell goods on a wholesale or retail basis in China, or our inability to make investments in China.
We cannot currently predict the duration or impact of any measures that may ultimately be imposed. The imposition and enforcement of measures against us could have a material adverse effect on our revenue and results of operations.
Furthermore, if, as a result of any such measures, it is necessary for us to cease certain or all operations in China, it may result in charges related to excess inventory and difficulty collecting trade receivables, among other things. We may also incur material non-cash impairment charges if we are unable to recover the carrying value of our indefinite-lived intangible assets and long-lived assets. Additionally, if the production of our products in China ceases, our business could be impacted more broadly and we may need or decide to shift production to other jurisdictions. Please see the risk factors entitled “ We primarily use foreign suppliers for our products and raw materials, which poses risks to our business operations. and We depend on third parties to manufacture our products and any disruption in our relationships with these parties or in their businesses may materially adversely affect our business. ” for additional information.
Increased regulation and stakeholder scrutiny regarding our corporate responsibility matters, could result in additional costs or risks and adversely impact our reputation.
There is a focus from certain consumers, investors, our associates and other stakeholders on corporate responsibility matters, which has led to increased pressure to expand our disclosures, ensure labor and other sustainability standards within our value chain, make and establish corporate responsibility goals, and take actions to meet them, which could expose us to regulatory, legal, market, operational and execution costs or risks. The emergence of legislation and regulation regarding marketing of goods, business practices, and public reporting and disclosures related to issues under the corporate responsibility umbrella in various jurisdictions, including but not limited to, the European Union, the United Kingdom, Canada, Australia and various U.S.-state-level regulations, could also lead to risks associated with non-compliance. We seek to comply with all applicable laws, rules and regulations and have established focus areas and targets under our corporate responsibility strategy in respect to many measures, including in regard to greenhouse gas emissions, water usage and usage of more environmentally preferred materials and packaging, and human rights. There can be no assurance that we can achieve compliance without significant impact on our business or results of operations or that our stakeholders will agree with our strategy or that we will be successful in achieving our goals. This could result in our inability to achieve our targets or comply with reporting regulations. In addition, we could be criticized by stakeholders, regulators, or other interested parties for the scope or nature of our corporate responsibility initiatives or goals or for any revisions to these goals, including negative responses by governmental actors (such as anti-sustainability legislation or retaliatory legislative treatment) or consumers (such as boycotts or negative publicity campaigns). Any of these occurrences could adversely affect our reputation and the reputation of our brands, sales and demand for our products, retention of our associates, willingness of our suppliers to do business with us, and investor interest in our securities.
Our cost-saving initiatives may not generate the intended benefits or attain the projected cost savings we anticipate.
We have embarked and may continue to embark on initiatives to drive more efficient and cost-effective ways of working across the organization, such as our Growth Driver 5 Actions and 2022 cost savings initiative described in Note 17, “Exit Activity Costs,” in the Notes to Consolidated Financial Statements included in Item 8 of this report. Our ability to realize anticipated benefits and cost savings from these initiatives are subject to many estimates and assumptions, which may change during implementation and execution. In addition, there can be no assurance regarding the timing of or extent to which we will realize the anticipated cost savings. We may also face disruptions to our business or operations as we execute on the initiatives.
Our inability to execute our digital commerce strategy could materially adversely affect the reputation of our brands and our revenue and our operating results may be harmed.
Growing digital revenue, both with respect to our direct-to-consumer businesses and our wholesale business ( i.e. , sales to pure play and digital commerce businesses of traditional retailers), continues to be a focus for us, representing approximately 20% of our total revenue during 2025. Our success depends, in part, on third parties and factors over which we have limited control, including changing consumer preferences and buying trends relating to digital commerce usage and promotional or other advertising initiatives employed by our wholesale customers or other third parties on their digital commerce sites. Any failure on our part, or on the part of our digital partners, to provide digital commerce platforms that attract consumers, build our brands, provide a satisfactory consumer purchasing experience and result in repeat consumer purchases could result in diminished brand image, relevance and loyalty, and lost revenue. Additionally, as online channels continue to grow in importance, the failure to attract new and existing consumers to our digital commerce channels and those operated by our wholesale partners and franchisees will adversely affect our financial condition and results of operations.
Our operation of digital commerce sites poses risks and uncertainties including:
• changes in required technology interfaces;
• website downtime and other technical failures;
• costs and technical issues from website software upgrades;
• potential failure to successfully implement any new or upgraded system or platform without disruption to our operations;
• data and system security;
• computer viruses and other malicious acts; and
• changes in applicable laws and regulations.
Keeping current with technology, competitive trends, security and the like may increase our costs and may not succeed in increasing sales or attracting consumers. Our failure to respond successfully to these risks and uncertainties might adversely affect the reputation of our brands and our revenue and results of operations.
The success of our digital strategy depends, in part, on consumer satisfaction, including timely receipt of orders. Fulfillment of these orders requires different logistics operations than for our retail store and wholesale customer operations. We need adequate capacity, systems and operations to sustain and support the continued growth in our digital commerce businesses. If we encounter difficulties with our operation of our directly operated distribution facilities or in our relationships with the third parties who operate our other distribution facilities, or if any such facilities were to shut down or be limited in capacity for any reason, including as a result of fire or other casualty, natural disaster, systems disruption (including as a result of ransomware and other cybersecurity attacks), labor shortage or other interruption, including as a result of epidemics and other health-related concerns (such as had occurred during the COVID-19 pandemic), or if there is a significant increase in demand for shipping capacity (as was the case due to the pandemic), we may experience (and, due to these factors in the past, have experienced) disruption or delay in distributing our products to our consumers, which could result in consumer dissatisfaction and lost sales. Additionally, in the event of any of the foregoing, we may incur higher costs than anticipated to ensure smooth and timely operation. Any of the foregoing could have an adverse effect on the reputation of our brands and our revenue and results of operations.
Global economic conditions, including volatility in the financial and credit markets, may adversely affect our business.
Economic conditions in the past have adversely affected, and in the future may adversely affect, our business, our customers and licensees and their businesses, and our financing and contractual arrangements, as a result of, among other factors, pandemics, inflationary pressures and other macroeconomic pressures, such as tariffs imposed and threatened in 2025 and 2026 on goods imported into the United States, elevated interest rates, the risk of recession, the war in Ukraine and the conflict in the Middle East and its broader macroeconomic implications, and disruptions that have been occurring in the Red Sea. Such conditions, amongst other things, have resulted, and in the future may result, in financial difficultiesleading to restructurings, bankruptcies, liquidations and other unfavorable events for our customers and licensees, may cause customers to reduce or discontinue orders of our products and licensed products sold by our licensees, and may result in customers being unable to pay us for products they have purchased from us and licensees being unable to pay us royalties owed to us. Financial difficulties of business partners also may affect their ability to access credit markets or lead to higher credit risk relating to receivables from them.
Volatility in the financial and credit markets due, in part, to inflationary pressures or other macroeconomic or geopolitical factors, could also make it more difficult or expensive for us to obtain financing or refinance existing debt when the need arises, or on terms that would be acceptable to us. We have senior unsecured term loans (€408 million outstanding as of the end of 2025) and senior unsecured notes (€600.0 million principal amount) coming due in 2027 that will need to be paid or refinanced.
We primarily use foreign suppliers for our products and raw materials, which poses risks to our business operations.
Our apparel, footwear and accessories are produced by and purchased or procured from independent manufacturers in approximately 30 countries, with most being located in Asia. Although no single supplier or country is or is expected to become
critical to our production needs, any of the following could materially and adversely affect our ability to produce or deliver our products and, as a result, have a material adverse effect on our business, financial condition and results of operations:
• political or labor instability or military conflict involving any of the countries where we, our contractors, or our suppliers operate, which could cause a delay in the production or transportation of our products to us and an increase in production and transportation costs;
• heightened terrorism security concerns, which could subject imported or exported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundments of goods for extended periods or could result in decreased scrutiny by customs officials for counterfeit goods, leading to lost sales, increased costs for our anti-counterfeiting measures and damage to the reputation of our brands;
• limitations on our ability to source raw materials or goods produced in a country that is a major provider due to political, human rights, labor, environmental, animal cruelty or other concerns;
• a significant decrease in factory and shipping capacity or a significant increase in demand for such capacity;
• a significant increase in wage, freight, shipping and other logistics costs, including as a result of disruption at ports of entry, which could result in increased freight and other logistics costs;
• natural disasters, such as floods, earthquakes, wildfires and droughts, the frequency of some of which may be increasing due to climate change, could result in closed factories and scarcity of raw materials (particularly cotton);
• disease epidemics and other health related concerns, such as the COVID-19 pandemic, which could result in (and in the case of the pandemic, did result in certain of the following) a significant decrease in factory and shipping capacity, closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;
• the migration and development of manufacturers, which could affect where our products are or are planned to be produced;
• the adoption of regulations, quotas and other restrictions relating to imports and our ability to adjust timely to changes in trade regulations, which, among other things, could limit our ability to produce products in cost-effective countries that have the labor and expertise needed;
• the implementation of new or increased duties, tariffs, taxes and other charges on imports;
• the regulation or prohibition of the transaction of business with specific individuals or entities and their affiliates or goods manufactured in certain regions, such as the listing of a person or entity as a SDN (Specially Designated Nationals and Blocked Persons) by the United States Department of the Treasury’s Office of Foreign Assets Control and the issuance of WROs by the CBP; and
• legal or regulatory issues, such as those resulting from our listing on the UEL, could result in manufacturers or others in our supply chain being prohibited from, or choosing against, conducting business with us or our business partners or from others working with our licensees, franchisees or other business partners.
There continues to be uncertainty in the current global trade environment due to recent changes in, and proposals and declared intentions to change trade policy, including trade restrictions, the negotiation, renegotiation or termination of trade agreements, and the imposition of new tariffs or increases in existing tariffs on imports into the affected countries. Recent legal and policy developments have further increased uncertainty. In February 2026, the U.S. Supreme Court ruled that many of the tariffs imposed by the U.S. federal government were unconstitutional. In response to that decision, the U.S. President issued an executive order imposing tariffs pursuant to Section 122 of the Trade Act of 1974 for 150 days, effective on February 24, 2026. There is significant uncertainty regarding further trade policy actions, including whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and in the amount and timing of tariff refunds.
Tariffs and other changes in trade policy have triggered in the past, are currently triggering and could continue to trigger retaliatory actions by affected countries, including through the use of counter tariffs and other measures, which could
result in a higher cost or restrictions on the importation of the products we sell. We continuously look for alternative sourcing options, but we may not be able to shift timely, if at all, production from a country when new or increased duties, tariffs, taxes or other charges are imposed. In addition, higher costs in sourcing from other countries, including because others in the industry are looking to move production for the same reason, may make the move price-prohibitive. We may not be able to pass the entire cost increase resulting from tariffs, duties, taxes or other expenses onto consumers or could choose not to. Any increase in prices to consumers could have an adverse impact on our direct sales to consumers, as well as sales by our wholesale customers and our licensees. Any adverse impact on such sales or increase in our cost of goods sold could have a material adverse effect on our business and results of operations.
Various actions by the United States Government, including SDN designations, have prohibited or limited the business that companies like us and, in many cases, our business partners, can conduct with numerous individuals, companies and entities, or where we or they can produce or sell products under our brands, whether directly or indirectly. These and other U.S. government actions, such as the enforcement of the Uyghur Forced Labor Prevention Act and the issuance of WROs, have affected and could continue to affect the sourcing and availability of raw materials used by our suppliers in the manufacturing of certain of our products and our importation of goods into the United States and elsewhere. These and related matters also have been subject to significant scrutiny in China, the United States and elsewhere, resulting in criticismagainst multinational companies, including us, as discussed in the risk factor entitled “ China’s Ministry of Commerce (“MOFCOM”) conducted an investigation into our business which resulted in PVH Corp. being placed on the List of Unreliable Entities (“UEL”) and could result in fines or restrictions on our ability to do business in China, which could have a material adverse effect on our revenue and results of operations .” As a consequence, these matters (and matters like them) have the potential to affect our revenue, our results of operations and the reputation of our brands and us. In addition, while we make efforts to confirm that SDNs, people and materials covered by WROs, and other sanctioned entities, people and materials are not present in our supply chain, we could be subject to penalties, fines or sanctions (including on a strict liability basis) if any of the vendors from which we purchase goods is found to have dealings, directly or indirectly, with SDNs or other sanctioned persons or in banned materials.
An additional risk that is related to the foreign production of goods is in regard to the transportation of goods from such foreign locations. Strikes, work slowdowns and stoppages and other actions at ports of shipment and entry could slow or stop the inflow of goods. Additionally, shipments are threatened by piracy, military actions and terrorism on shipping routes (like the disruptions that have been occurring in the Red Sea), and similar actions. The impact of these conditions could be the same as described in the risk factor entitled “ We depend on third parties to manufacture our products and any disruption in our relationships with these parties or in their businesses may materially adversely affect our business. ”
Our business is heavily dependent on the ability and desire of consumers to travel and shop.
Reduced consumer traffic and purchasing, whether in our own retail stores or the stores operated by our business partners, could have a material adverse effect on our financial condition, results of operations and cash flows. Reductions could result from economic conditions, fuel shortages, increased fuel prices, travel restrictions, travel concerns and other circumstances, including adverse weather conditions, such as droughts and extreme heat, natural disasters, terrorist attacks or the perceived threat of terrorist attacks. Disease epidemics and other health-related concerns, such as the COVID-19 pandemic, also could result in (and, in the case of the pandemic, did result in) closed stores, reduced consumer traffic and purchasing, as consumers become ill or limit or cease shopping in order to avoid exposure, or governments impose mandatory business closures, travel restrictions, vaccine mandates or the like to prevent the spread of disease. Conflicts and wars, or the perceived threat of war, also could result in (and, in the case of the war in Ukraine and the conflict in the Middle East has resulted in and the Israel-Hamas war did result in) closed stores (those operated by us and/or by our business partners), and reduced consumer traffic and purchasing. Inflation, recessionaryfears, and price increases due to shortages, tariffs or other trade policies, could result in weakened consumer spending and lower consumer sentiment, which may result in lower sales of our products. Additionally, political or civil unrest and demonstrations also could affect consumer traffic and purchasing.
Our U.S. retail store operations are a material contributor to our revenue. The majority of our United States stores are located away from major residential centers or near vacation destinations, making travel and tourism a critical factor in their success. These retail businesses historically also have had a significant portion of their revenue attributable to sales to international tourists and, as such, have been negatively affected by the decrease in international tourists traveling to the United States. In addition to the factors discussed above, international tourism to the United States could be reduced, as could the extent to which international tourists shop at our stores, during times of a strengthening United States dollar, particularly against the euro, the Japanese yen, the Korean won, the British pound, the Australian dollar, the Canadian dollar, the Mexican peso, the Brazilian real and the Chinese yuan. Reductions in international tourist traffic and spending have had, and in the future may have, a material adverse effect on our financial condition and results of operations.
Other factors that could affect the success of our stores include:
• the location of the store or mall, including the location of a particular store within the mall;
• the other tenants of the mall;
• increased competition in areas where the stores or malls are located;
• the amount of advertising and promotional dollars spent on attracting consumers to the store or mall;
• the changing patterns of consumer shopping behavior;
• increased competition from online retailers; and
• the diversion of sales from our retail stores to our digital commerce sites.
If our suppliers, licensees, or other business partners, or the suppliers used by our licensees, fail to use legal and ethical business practices, our business could suffer.
We require our suppliers, licensees and other business partners, and the suppliers used by our licensees, to operate in compliance with international labor standards and applicable laws, rules and regulations regarding working conditions, employment practices and environmental compliance. Additionally, we impose upon our business partners operating guidelines that require additional obligations in order to promote ethical business practices. We require that third parties audit the operations of these independent parties to determine compliance. However, we do not oversee the entirety of the operations and supply chains utilized by our business partners and our licensees, including with respect to their labor, manufacturing and other business practices in their supply chains. Our industry has experienced and we have been impacted by increased regulation and enforcement, in particular in regards to concerns around forced labor in supply chains.
If any of these suppliers or business partners violates labor, environmental, building and fire safety, or other laws or implements labor, manufacturing or other business practices that are generally regarded as unethical, the shipment of finished products to us or our customers could be interrupted, orders could be canceled and relationships could be terminated. Further, we could be prohibited from importing or exporting goods by governmental authorities. In addition, we could be the focus of adverse publicity and our reputation and the reputation of our brands could be damaged. Any of these events could have a material adverse effect on our revenue and, consequently, our results of operations.
We depend on third parties to manufacture our products and any disruption in our relationships with these parties or in their businesses may materially adversely affect our business.
We depend on third parties to manufacture all products that we sell. A manufacturer’s failure to ship products to us in a timely manner, as well as logistics disruptions, or for manufacturers to meet required quality standards could cause us to miss the delivery date requirements of our customers for those products, as well as prime selling periods in our direct-to-consumer channels. As a result, customers could cancel their orders, refuse to accept deliveries or demand reduced prices. Additionally, we may need to be more promotional in our direct-to-consumer channels, and we may also miss sales that would otherwise occur when our stores are properly merchandised. Any of these actions could have a material adverse effect on our revenue and, consequently, our results of operations.
Legal or reputational issues, such as those resulting from our listing on the UEL, could result in manufacturers or others in our supply chain being prohibited from, or choosing against, conducting business with us or our business partners. Any of these actions could have a material adverse effect on our revenue and, consequently, our results of operations.
Our business is susceptible to risks associated with climate change and environmental degradation, and to an increased focus by stakeholders on climate change action and sustainability standards, which may adversely affect our business and results of operations.
Our business is susceptible to risks associated by some parties with climate change and environmental degradation, including potential disruptions to our supply chain and impacts on the availability and costs of raw materials. Extreme heat as well as increased frequency and severity of adverse weather events (such as storms and floods) due to climate change could cause increased incidence of disruption to the production and distribution of our products, an adverse impact on consumer demand and spending, and/or more frequent store closures and/or lost sales as customers prioritize basic needs. Our supply
chain is also exposed to risks associated with water, including drought and water scarcity, which could impact raw materials sourcing, manufacturing processes, and workers and communities. In addition, evolving climate-related legislation and disclosure requirements, and the potential for more, coupled with carbon taxes and fluctuating costs of sourcing renewable energy, may also increase our compliance costs and operational complexity, including implementation of new information technology systems and the development of controls and processes to ensure completeness and accuracy of the reported data. Certain of our wholesale customers have also begun to establish sourcing requirements related to sustainability. As a result, we have received requests for sustainability related information about our products and, in some cases, customers have required that certain of our products include sustainable materials or packaging, which may result in higher raw material and production costs. Our inability to comply with these and other sustainability requirements in the future could adversely affect sales of and demand for our products. Further, certain online sellers of our products have begun to identify to consumers and help consumers limit purchases to product the sellers identify as being more sustainable. Our failure to offer products that meet these sustainability standards could result in decreased demand for our products and lost sales.
We are dependent on a limited number of distribution facilities. If one becomes inoperable, our business, financial condition and operating results could be negatively impacted.
We operate a limited number of distribution facilities and also engage independently operated distribution facilities around the world to warehouse and ship products to our customers and our retail stores, as well as perform related logistics services. Our ability to meet the needs of our customers and of our retail stores depends on the proper operation of our primary facilities. If any of our primary facilities were to shut down or otherwise become inoperable or inaccessible, including as a result of epidemic or other health-related concerns (such as the COVID-19 pandemic), or a cybersecurity incident, we could have a substantial loss of inventory or disruptions of deliveries to our customers and our stores, incur significantly higher costs or experience longer lead times associated with the distribution of our products. This could materially and adversely affect our business, financial condition and operating results.
Our profitability may decline as a result of increasing pressure on margins.
The apparel industry, particularly in the United States, is subject to significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, pressure from retailers to reduce the costs of products, retailer demands for allowances, incentives and other forms of economic support, and changes in consumer demand. These factors may cause us to reduce our sales prices to retailers and consumers, which could cause our profitability to decline if we are unable to offset price reductions with sufficient reductions in product costs or operating expenses.
Volatility in the availability and prices for commodities and raw materials we use in our products (such as cotton) and inflationary and other macroeconomic pressures, including, for example, the increased costs of labor and raw materials we experienced in 2022 and the first half of 2023 and the new and additional tariffs on goods imported into the United States that took effect beginning in the second quarter of 2025, have resulted in increased pricing pressures and, in turn, pressure on our margins. We have implemented in the past, and in the future may seek to implement price increases to mitigate higher costs but such actions have not always fully mitigated and, in the future, we may not be able to fully mitigate, the impact of any higher costs. Further, any such price increases could have an adverse impact on consumer demand for our products. In addition, consumer spending has been, and may continue to be, negatively impacted by reduced earnings power resulting from inflationary and other macroeconomic pressures, which has resulted, and may continue to result in, lower sales of our products, increased inventories, order cancellations, higher discounts, pricing pressure, higher inventory levels industry-wide, and lower gross margins.
We may not be successful in directly operating previously licensed businesses.
We have announced that we will allow certain of our licenses for our Calvin Klein and TOMMY HILFIGER brands to expire in order to increase our management and oversight of the licensed businesses. We may in the future acquire licensed businesses or allow other licensed rights to expire for the same or similar reasons. We have been directly operating a significant portion of the businesses for the Calvin Klein and TOMMY HILFIGER product categories previously licensed to G-III in the United States and Canada, and we intend to continue to directly operate a significant portion of these businesses as the license agreements expire, through 2026, with the remainder being re-licensed to other third parties.
The integration of previously licensed businesses may be complex, costly and time-consuming. We may have difficulty, or may not succeed, in growing or even maintaining the businesses compared to prior performance, integrating the businesses into our operations, hiring qualified employees needed to operate the businesses, or otherwise managing the
previously licensed businesses. Furthermore, we may incur higher than expected costs to bring previously licensed businesses in house and/or to operate these businesses. As such, operating previously licensed businesses may not achieve the intended benefits to our overall growth strategy, our brands and results of operations, and our overall profitability may decline to the extent we are unable to operate these businesses at the same level of earnings that we realized when they were licensed businesses.
A portion of our revenue is dependent on royalties and licensing.
The operating profit of our Licensing segment is significant because the operating expenses directly associated with administering and monitoring an individual licensing or similar agreement are minimal. Therefore, the loss of a significant licensee, whether due to the termination or expiration of the relationship, the cessation of the licensee’s operations or otherwise (including as a result of financial difficulties of the licensee), without an equivalent replacement, or a significant decline in our licensees’ sales could materially impact our profitability. Although the licensing model can be highly profitable, we are planning to, and in the future may pursue further opportunities to, increase direct management of our Calvin Klein and TOMMY HILFIGER brands through takebacks of licensed businesses. Please see the Risk Factor entitled “ We may not be successful in directly operating previously licensed businesses .”
While we generally have significant approval rights over our licensees’ products and advertising, we rely on them for, among other things, operational and financial controls over their businesses. Our licensees’ failure to successfully market licensed products or our inability to find replacements for existing licensees once their respective licensing agreements end or are terminated could materially and adversely affect our revenue both directly from reduced licensing revenue received and indirectly from reduced sales of our other products. Risks are also associated with our licensees’ ability to obtain capital, execute their business plans, timely deliver quality products, manage their labor relations, maintain relationships with their suppliers, manage their credit risk effectively and maintain relationships with their customers.
Our licensing business makes us susceptible to the actions of third parties over whom we have limited control.
We rely on our licensees to preserve the value of our brands. Although we attempt to protect our brands through, among other things, approval rights over design, production quality, packaging, merchandising, distribution, advertising and promotion of our products, we cannot assure you that we can control our licensees’ use of our brands. The misuse of our brands by a licensee could have a material adverse effect on our business, financial condition and results of operations.
We face intense competition in the apparel industry.
Competition is intense in the apparel industry. We compete with numerous global, domestic and foreign designers, brand owners, manufacturers and retailers of apparel, accessories and footwear, some of which have greater resources than we do. We also face increased competition from digitally native brands; digital retailing is characterized by low barriers to entry. In addition, in certain instances, we compete directly with our wholesale customers, as they also sell their own private label products. We compete within the apparel industry primarily on the basis of:
• anticipating and responding to changing consumer tastes, demands and shopping preferences in a timely manner and developing distinctive, attractive, quality products;
• maintaining favorable brand recognition, reputation and relevance, including through digital brand engagement and online and social media presence;
• appropriately pricing products and creating an acceptable value proposition for customers, including increasing prices to mitigate inflationary pressures (as we did in certain regions and for certain product categories during 2022) while minimizing the risks of dampening consumer demand;
• providing strong and effective marketing support;
• successfully implementing digitally-led marketing strategies to foster deeper consumer engagement and increased demand;
• ensuring product availability and optimizing supply chain efficiencies with third party suppliers and retailers;
• obtaining sufficient retail floor space and effective presentation of our products at retail locations, on digital commerce sites operated by our department store customers and pure play digital commerce retailers, and on our digital commerce sites;
• establishing notable and effective relationships with actors, athletes, musicians, celebrities, social media influencers and others on a global, regional and local basis to promote our brands and products; and
• effectively utilizing data and technology, including the successful utilization of artificial intelligence, to achieve and exploit the foregoing.
The failure to compete effectively or to keep pace with rapidly changing consumer preferences and technology and product trends could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to manage our inventory effectively and accurately forecast demand for our products, our results of operations could be materially adversely affected.
We have made and continue to make investments in our supply chain management systems and processes that enable us to respond more rapidly to changes in sales trends and consumer demands and enhance our ability to manage inventory. However, there can be no assurance that we will be able to anticipate and respond successfully to changing consumer tastes and style trends or economic conditions and, as a result, we may not be able to manage inventory levels to meet future requirements. If we fail to accurately forecast demand, or our supply chain and logistics partners are unable to adjust to changes in demand, we may at times experience excess inventory levels or a shortage of product. Inventory levels in excess of consumer demand have resulted in, and may in the future result in, inventory write-downs and the sale of excess inventory at heavily discounted prices, as well as impact our ability to implement and execute profitable, competitive and effective pricing and promotional strategies, all of which could have a material adverse effect on our profitability and the reputation of our brands. If we underestimate consumer demand, we may not have sufficient inventories of product, which could result in lost revenues, as well as damage to our reputation, the reputation of our brands, and our relationships with customers and consumers.
We previously had a material weakness in our internal controls and if we have additional material weaknesses in the future, there could be an adverse impact on our ability to accurately report our financial results, we could fail to meet our reporting obligations, be subject to litigation and investigation, and lose investor confidence, resulting in an adverse impact to our stock price.
Effective internal controls are critical to maintaining the accuracy of our financial reporting and disclosures. We reported in our Annual Report on Form 10-K as of February 2, 2025, a material weakness in internal control related to ineffective information technology general controls in the area of user access management over our enterprise resource planning system and the related systems in our Europe, the Middle East and Africa region. While the material weakness has been remediated, there can be no assurances that other deficiencies will not come to management’s attention in the future that could lead to additional material weaknesses. If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, it could adversely affect our ability to accurately report our financial results, resulting in material misstatements in our financial statements or causing us to fail to meet our reporting obligations, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.
The loss of members of our executive management and other key employees could have a material adverse effect on our business.
We depend on the services and management experience of our executive officers and other key executives, who have substantial experience and capabilities in our industry and their areas of expertise. Competition for qualified personnel in the apparel industry and with certain skill sets is intense and competitors may use aggressive tactics to recruit these individuals. The loss of services of one or more of them or the inability to timely and effectively identify a suitable successor could have a material adverse effect on us.
Financial Risks
Our ability to obtain financing or refinance existing debt on terms that are acceptable to us could be adversely affected by general macroeconomic conditions or our financial performance and credit ratings.
Disruption or volatility in the financial and credit markets, including as a result of macroeconomic pressures or geopolitical events, could limit the availability of funds or the ability or willingness of financial institutions to extend capital to us in the future. In addition, our ability to access financial and credit markets in the future as a source of funding, and the borrowing costs associated with such financing, is dependent upon our financial performance, outlook and credit rating.
An inability to obtain additional financing or refinance existing debt on terms that are acceptable to us, if at all, could impact our ability to fund working capital, capital expenditures, acquisitions, dividend payments, share repurchases and general corporate requirements and/or significantly increase our cost of capital, which may have a material adverse effect on our results of operations, cash flows and financial condition. Furthermore, if our investment rating is downgraded in the future, in addition to it resulting in a higher cost of capital, it could also result in reduced access to the financial and credit markets and more restrictive covenants for future debt issuances.
Our business is exposed to foreign currency exchange rate fluctuations and control regulations.
Our Tommy Hilfiger and Calvin Klein businesses each have substantial international components that expose us to significant foreign exchange risk. Changes in exchange rates between the United States dollar and other currencies impact our financial results in two ways: a translational impact and a transactional impact. Please see our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this report for further discussion.
Our results of operations will be unfavorably impacted by foreign currency translation during times of a strengthening United States dollar, particularly against the euro, the Japanese yen, the Korean won, the British pound, the Australian dollar, the Canadian dollar, the Mexican peso, the Brazilian real and the Chinese yuan, and favorably impacted during times of a weakening United States dollar against those currencies. There also is a transactional impact of foreign exchange because we have foreign subsidiaries that purchase inventory in a currency other than their functional currency. We currently use and plan to continue to use foreign currency forward contracts to mitigate the cash flow or market risks associated with these inventory transactions, but we are unable to eliminate these risks entirely.
We conduct business in countries that have laws and regulations that restrict the ability of our foreign subsidiaries to pay dividends and remit cash to affiliated companies and, as a result, limit our ability to repatriate or use outside of the country the cash generated by the impacted subsidiaries, which may have an adverse impact on the funding of our business and operations.
Our level of debt could impair our financial condition and ability to operate.
We had outstanding as of February 1, 2026 an aggregate principal amount of $2.316 billion of indebtedness, of which senior unsecured term loans (€408 million outstanding as of the end of 2025) and senior unsecured notes (€600 million principal amount) are coming due in 2027. Our level of debt could have important consequences to investors, including:
• requiring a substantial portion of our cash flows be used for the payment of principal and interest, thereby reducing the funds available to us for our operations or other capital needs, including planning for, or reacting to, changes in our business;
• increasing our vulnerability to general adverse economic and industry conditions because, during periods in which we experience lower earnings and cash flows, we will be required to devote a greater proportion of our cash flow to paying principal and interest;
• limiting our ability to obtain additional financing in the future to fund working capital, capital expenditures, acquisitions, contributions to our pension plans and general corporate requirements;
• placing us at a competitive disadvantage to other relatively less leveraged competitors that have more cash flow available to utilize in, or grow or expand, their business, fund operations or provide returns to stockholders; and
• leaving us vulnerable to increases in interest rates with respect to our adjustable rate borrowings, including under our senior unsecured credit facilities, and any refinancings of our fixed rate debt at higher interest rates than the current rates applicable to them.
Our ability to maintain compliance with the financial covenant under our senior unsecured credit facilities may be adversely affected by future economic conditions.
We are required under our senior unsecured credit facilities to maintain a net leverage ratio below a maximum level. A prolongeddisruption to our business may impact our ability to comply with this covenant. Non-compliance with this covenant would constitute an event of default under the terms of the facilities, which may result in an acceleration thereof, which in turn could trigger defaults under our other debt facilities.
Our inability to comply with the covenant may require us to seek relief in the form of a waiver. Waivers often require payment of a fee and may lead to increased costs, increased interest rates, additional restrictive covenants, the granting of security interests and other lender protections, any of which could be significant. Furthermore, our ability to provide additional protections under the senior unsecured credit facilities will be limited by the restrictions under our other debt facilities. There can be no assurance that we would be able to obtain waivers in a timely manner, on terms acceptable to us, or at all. If we are not able to obtain a needed waiver, there can be no assurance that we would be able to raise sufficient capital, or divest assets, to refinance or repay such facilities.
Adverse decisions of tax authorities or changes in tax treaties, laws, rules or interpretations could have a material adverse effect on our results of operations and cash flow.
We have direct operations in many countries and the applicable tax rates vary by jurisdiction. The tax laws and regulations in the countries where we operate are subject to change. Moreover, there may be changes from time to time in interpretation and enforcement of existing tax law. As a result, we may pay additional taxes if rates increase or if laws, regulations or treaties in the jurisdictions where we operate are modified. The Organization for Economic Cooperation and Development (“OECD”) has proposed updates to long-standing international tax principles, addressing issues such as profit shifting among affiliated entities in different tax jurisdictions and a global minimum effective tax rate of 15%, generally referred to as “Pillar Two.” In response, some member countries have already implemented or are planning to implement legislation to align their tax rules with the OECD’s recommendations in 2025 and beyond. The Pillar Two legislation did not have a material impact on our 2025 effective tax rate. However, the final outcome and application of these rules in the U.S. and other jurisdictions could potentially have a material adverse financial impact on us.
In addition, various national and local taxing authorities periodically audit our returns. The resolution of an audit may result in us paying more than the amount that we may have reserved for a particular tax matter, which could have a material adverse effect on our cash flows, business, financial condition and results of operations for any affected reporting period.
We and our subsidiaries are engaged in various intercompany transactions. While we believe these transactions are conducted at arm’s length and are supported by the appropriate transfer pricing documentation, local tax authorities may scrutinize the transfer prices and conditions in place, which could potentially result in additional tax liabilities.
If we are unable to fully utilize our deferred tax assets, our profitability could be reduced.
Our deferred tax assets are valuable to us. These assets include tax loss and foreign tax credit carryforwards in various jurisdictions. Realization of deferred tax assets is based on a number of factors, including whether there will be adequate levels of taxable income in future periods to offset the tax loss and foreign tax credit carryforwards in jurisdictions where such assets have arisen. Valuation allowances are recorded in order to reduce the deferred tax assets to the amount expected to be realized in the future. In assessing the adequacy of our valuation allowances, we consider various factors including reversal of deferred tax liabilities, forecasted future taxable income and potential tax planning strategies. These factors could reduce the value of the deferred tax assets, which could have a material effect on our profitability.
Volatility in securities markets, interest rates and other economic factors could increase substantially our defined benefit pension costs and liabilities.
We have significant obligations under our defined benefit pension plans. The funded status of our pension plans is dependent on many factors, including returns on invested plan assets and the discount rate used to measure pension obligations. Unfavorable returns on plan assets, a lower discount rate or unfavorable changes in the applicable laws or regulations could materially change the timing and amount of pension funding requirements, which could reduce cash available for our business.
Our operating performance also may be significantly impacted by the amount of expense recorded for our pension plans. Pension expense recorded throughout the year is calculated using actuarial valuations that incorporate assumptions and estimates about financial market, economic and demographic conditions. Differences between estimated and actual results give rise to gains and losses that are recorded immediately in pension expense, generally in the fourth quarter of the year. These gains and losses can be significant and can create volatility in our operating results. As a result of the recent volatility in the financial markets, there continues to be significant uncertainty with respect to the actuarial gain or loss we may record on our retirement plans in 2026. We may incur a significant actuarial gain or loss in 2026 if there is a significant increase or decrease in discount rates, respectively, or if there is a difference between the actual and expected return on plan assets.
Our balance sheet includes a significant amount of intangible assets and goodwill, as well as long-lived assets in our retail stores. A decline in the estimated fair value of an intangible asset or of a reporting unit or in the current and projected cash flows in our retail stores could result in impairment charges recorded in our operating results, which could be material.
Goodwill and other indefinite-lived intangible assets are tested for impairment annually and between annual tests if an event occurs or circumstances change that would indicate that it is more likely than not that the carrying amount may be impaired. Long-lived assets, such as operating lease right-of-use assets and property, plant and equipment in our retail stores and intangible assets with finite lives, are tested for impairment if an event occurs or circumstances change that would indicate the carrying amount may not be recoverable. Please see the section entitled “Critical Accounting Policies and Estimates” within Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this report for further discussion of our impairment testing. If any of our goodwill, other indefinite-lived intangible assets or long-lived assets were determined to be impaired, the asset would be written down and an impairment charge would be recognized as a noncash expense in our operating results.
Adverse changes in future market conditions, a shift in consumer buying trends or weaker operating results compared to our expectations may impact our projected cash flows and estimates of weighted average cost of capital, which could result in a material impairment charge if we are unable to recover the carrying value of our goodwill, other indefinite-lived intangible assets and long-lived assets.
Macroeconomic and geopolitical factors that occurred during the first quarter of 2025 resulted in significant market volatility and a decrease in our stock price, which was determined to be a triggering event that required us to perform quantitative interim impairment tests for our goodwill and other indefinite-lived intangible assets as of the end of the first quarter of 2025. As a result of these interim impairment tests, we recorded $480 million of noncash impairment charges. The impairments were non-operational and driven primarily by a significant increase in discount rates, as a result of then-current economic conditions. As of February 1, 2026, we had $2.022 billion of goodwill and $3.096 billion of other intangible assets on our balance sheet, which together represented 44% of our total assets.
Legal and Regulatory Risks
We may be unable to protect our trademarks and other intellectual property rights.
Our trademarks and other intellectual property rights are important to our success and our competitive position. We are susceptible to others imitating our products and infringing on our intellectual property rights, as the TOMMY HILFIGER and Calvin Klein brands enjoy significant worldwide consumer recognition and the generally premium pricing of products under the brands creates incentive for counterfeiters and infringers. Imitation or counterfeiting of our products or infringement of our intellectual property rights could diminish the value of our brands or otherwise adversely affect our revenue. We cannot assure you that the actions we take to establish and protect our trademarks and other intellectual property rights will be adequate to prevent imitation by others. We cannot assure you that other third parties will not seek to invalidate our trademarks or block sales of our products as a violation of their own trademarks and intellectual property rights. In addition, we cannot assure you
that others will not assert rights in, or ownership of, trademarks and other intellectual property rights of ours or in marks that are similar to ours or that we will be able to successfullyresolve these types of conflicts to our satisfaction. In some cases, there may be trademark owners who have prior rights to our marks because the laws of certain foreign countries may not protect intellectual property rights to the same extent as do the laws of the United States. In other cases, there may be holders who have prior rights to similar trademarks. We have in the past been and currently are involved in proceedings relating to marks similar to some of ours or a company’s claim of prior rights to some of our trademarks.
Provisions in our certificate of incorporation and our by-laws and Delaware General Corporation Law could make it more difficult to acquire us and may reduce the market price of our common stock.
Our certificate of incorporation and by-laws contain provisions requiring stockholders who seek to introduce proposals at a stockholders meeting or nominate a person to become a director to provide us with advance notice and certain information, as well as meet certain ownership criteria; permitting our Board of Directors to fill vacancies on the Board; and authorizing the Board of Directors to issue shares of preferred stock without approval of our stockholders. These provisions could have the effect of deterring changes of control.
In addition, Section 203 of the Delaware General Corporation Law imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our common stock. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the Board of Directors.
Information Technology and Data Privacy Risks
We rely significantly on information technology. Our business and reputation could be adversely impacted if our computer systems, or the systems of our business partners and service providers, are disrupted or cease to operate effectively or if we or they are subject to a data security or privacy breach.
Our ability to manage and operate our business effectively depends significantly on information technology systems, including systems operated by third parties and us, systems that communicate with third parties, and website and mobile applications through which we communicate with our consumers and our employees. We process, transmit, store and maintain information about consumers, associates and other individuals, as well as business partners, in the ordinary course of business. This includes personally identifiable information protected under applicable laws, the processing of customers’ credit and debit card numbers, and reliance on systems maintained by third parties with whom we contract to provide payment processing. The failure of any system, website or application to operate effectively or any significant disruption thereto that may occur, including as a result of malicious actors, catastrophic events, natural disasters, or otherwise, could require significant remediation costs and adversely impact our operations.
We recently announced a partnership with OpenAI to integrate an enterprise ChatGPT platform throughout various aspects of our operations for which there can be no assurance that we will be fully successful in our utilization of artificial intelligence. The growing integration of artificial intelligence into business systems and processes both by us and our business partners poses data exposure, privacy, legal, operational and other risks that could adversely affect us and our business. Additionally, malicious actors are using artificial intelligence to carry out more sophisticated social engineering attacks, increasing the potential for harm.
We utilize a risk-based, multi-layered information security approach based on the “NIST” (National Institute of Standards and Technology) Cybersecurity Framework version 2.0 to identify and address cybersecurity risks. We take measures to protect data and ensure that those who use our systems are aware of the importance of protecting our systems and data. These steps include implementing security standards, endpoint and network system security tools, associate training programs and security response and recovery procedures. To measure the effectiveness of our cybersecurity controls, we frequently perform phishing exercises, tabletop exercises and penetration tests. We also provide training throughout each year to all associates with access to our systems through online courses, including 8 covering information security and data privacy and 12 phishing-related exercises/tests. We maintain an escalating discipline schedule for individual phishing test failures, including additional training. We also administer specific training courses to the members of the Board of Directors, one of which is typically mandatory annually. In addition, to measure and assess compliance, our information security approach is subject to an annual assessment of its maturity, within the NIST Cybersecurity Framework, by an independent third party consultant.
We require third party providers who have access to our systems or receive personally identifiable information or other confidential data to take effective measures to protect data, but have no control over their efforts and are limited in our ability to
assess their systems and processes. As a result, these third party providers also are a source of cybersecurity and other related risks for us. When third party service organizations process data that affects our financial statements, System and Organization Controls (SOC) 1 reports are obtained and evaluated annually. While we invest, and believe our service providers invest, considerable resources in protecting systems and information, including through the training of the people who have access to our systems and information, we all are still subject to security events, including but not limited to cybercrimes and cybersecurity attacks, such as those perpetrated by sophisticated and well-resourced bad actors attempting to disrupt operations or access or steal data. Security events may not be detected for an extended period of time, which could compound the scope and extent of the damage and problems. These security events could disrupt our business, severelydamage our reputation and our relationship with vendors, customers and consumers, and expose us to risks of regulatory enforcement activity, litigation and liability. While we maintain insurance coverage, including cybersecurity insurance, it may be unavailable or insufficient to cover all losses or claims, and it does not remedy the reputational and future business impacts. Although we require third party providers with access to our systems and confidential information to have insurance coverage for any losses we may experience due to their work, the amount we can recover may not fully compensate us for any loss we experience.
We regularly implement new systems and hardware and are currently undertaking a major multi-year SAP S/4 implementation to upgrade our platforms and systems worldwide. The implementation of new software and hardware involves risks and uncertainties that could cause disruptions, delays or deficiencies in the design, implementation or application of these systems including:
• adversely impacting our operations;
• increased costs;
• disruptions in our ability to effectively source, sell or ship our products;
• delays in collecting payments from our customers; and
Our business, results of operations and financial condition could be materially adversely affected as a result of these implementation initiatives. In addition, intended improvements may not be realized. Our business partners and service providers face the same risks, which could also adversely impact our business and operations.
We are subject to data privacy and security laws and regulations globally, the number and complexity of which are increasing. We may be the subject of enforcement or other legal actions despite our compliance efforts.
We collect, use, store, and otherwise process or rely upon access to data, including personally identifiable information, of consumers, employees, and other individuals in the daily conduct of our business. There have been significant enactments and developments in the area of data privacy and cybersecurity laws and regulations, such as the General Data Protection Regulation in the European Union, the California Consumer Privacy Act/California Privacy Rights Act, Personal Information Protection Law in China, and Personal Information Protection Act in South Korea . These laws and regulations have caused and could continue to cause us to change the way we operate, including in a less efficient manner, in order to comply with these laws. We have a global data privacy program and, as discussed above, have guidelines and a training program to ensure our associates understand the laws and how to collect, use and protect our confidential data (including personally identifiable information). However, our compliance efforts are not an assurance that we will not be the subject of regulatory or other legal actions. We could expend significant management and associate time and incur significant cost investigating and defending ourselves against the claims in any such matter, which matters also could result in us being the subject of significant fines, judgments or settlements. In addition, any such claim could give rise to significant reputational damages, whether or not we ultimately are successful in defending ourselves.
RESULTS OF OPERATIONS
Macroeconomic Environment
The conflict in the Middle East, which began in March 2026, has resulted in increased fuel and oil costs, the strengthening of the United States dollar against other currencies, in particular the euro, and volatility in world financial markets. These and other factors may lead to broader macroeconomic implications that could have a significant impact on our business including a decline in consumer spending and inventory availability. The length, scope and intensity of the conflict is unknown. As a result, there is significant uncertainty regarding the extent to which the conflict and its broader macroeconomic implications will impact our business, financial condition and results of operations in 2026.
Inflation and other macroeconomic pressures, such as tariffs (discussed further below), elevated interest rates and the risk of recession, continue to create a complex and challenging retail environment globally, particularly in North America. Macroeconomic factors have had and may continue to have a negative impact on consumer demand for apparel and related products globally.
Beginning in the first quarter of 2025, the United States government announced additional tariffs on goods imported into the United States, with incremental tariffs on products imported from most countries and economic unions, and the potential for further increases and revisions or terminations to existing trade agreements. In response, some countries and economic unions announced retaliatory tariffs on United States exports and other trade restrictions. In February 2026, the U.S. Supreme Court ruled that many of the tariffs imposed by the U.S. federal government were unconstitutional. In response to that decision, the U.S. President issued an executive order imposing tariffs pursuant to Section 122 of the Trade Act of 1974 for 150 days, effective on February 24, 2026. The outlook on further trade policy actions is unclear, including whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended. These actions have led to significant volatility and uncertainty in global markets. We continue to analyze the impact of incremental tariffs on our business and are taking steps to mitigate our tariff exposure to the extent possible. Mitigation strategies have included, and may continue to more significantly include further sourcing optimization, negotiations with our vendors, internal efficiencies to drive cost savings, optimizing our discount strategies and pricing actions.
The increased tariffs for goods entering the United States had a net negative impact on our full year 2025 gross profit, including a gross impact of approximately $69 million and a partially offsetting impact from mitigation actions which began in the third quarter and more significantly took effect in the fourth quarter. Our outlook assumes a 15% tariff rate on goods
coming into the U.S. effective February 24, 2026 and assumes that U.S. inventory receipts prior to that include the tariff rates that were in place for each applicable country prior to the Supreme Court ruling. We currently expect an estimated net negative impact on our full year 2026 gross profit, including a gross impact of approximately $195 million and a partially offsetting impact from planned mitigation actions. However, the duration, magnitude and scope of any additional tariffs are difficult to predict, along with the extent (if any) to which we will be able to offset the impact through our mitigation efforts. In addition, there is significant uncertainty as to the amount and timing of tariff refunds, and as such, our outlook does not assume refunds for tariffs previously paid.
Outlook Uncertainty
There is significant uncertainty with respect to the conflict in the Middle East, global trade policies (including tariffs) and the related impacts of each on the broader macroeconomic environment, as well as the impact of inflation and other macroeconomic factors, and foreign currency volatility. Our 2026 outlook excludes any potential impacts from a prolonged, expanded or more intense conflict in the Middle East and assumes no material worsening of current conditions. Our revenue and earnings in 2026 may be subject to material change as a result of these and other macroeconomic factors.
Operations Overview
We generate net sales from (i) the wholesale distribution to traditional retailers (both for stores and digital operations), pure play digital commerce retailers, franchisees, licensees and distributors of branded sportswear (casual apparel), jeanswear, performance apparel, intimate apparel, underwear, swimwear, dress shirts, handbags, accessories, footwear and other related products under owned and licensed trademarks, and (ii) the sale of certain of these products through (a) approximately 1,350 Company-operated free-standing store locations worldwide under our TOMMY HILFIGER and Calvin Klein trademarks, (b) approximately 1,450 Company-operated shop-in-shop/concession locations worldwide under our TOMMY HILFIGER and Calvin Klein trademarks, and (c) digital commerce sites worldwide under our TOMMY HILFIGER and Calvin Klein trademarks. Additionally, we generate revenue from fees for licensing the use of our TOMMY HILFIGER and Calvin Klein trademarks.
Effective February 3, 2025, the first day of 2025, we changed our reportable segments to be region-focused to align with changes in our business and organizational structure. We operate our business through the following reportable segments: (i) EMEA, (ii) Americas, (iii) APAC, and (iv) Licensing. Our historical segment results have been recast to reflect the new organizational structure. Our reportable segments include the brand businesses we operate under our TOMMY HILFIGER and Calvin Klein trademarks, which we own, and Van Heusen , Nike and other trademarks, which we license for certain product categories. References to brand names are to registered and common law trademarks owned by us or licensed to us by third parties and identified by italicizing the brand name. Please see Note 20, “Segment Data,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion of our reportable segments.
The following actions, transactions and events have impacted our results of operations and the comparability among the years, including our full year 2026 expectations, as discussed below:
• We recorded pre-tax noncash goodwill and other intangible asset impairment charges of $480 million in the first quarter of 2025 in conjunction with interim goodwill and other intangible assets impairment tests. The impairments were primarily due to a significant increase in discount rates. Please see Note 7, “Goodwill and Other Intangible Assets,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
• We embarked on a multi-year initiative beginning in the second quarter of 2024 to simplify our operating model through the Growth Driver 5 Actions. The initiative has resulted in annualized cost savings of over $200 million, while making targeted investments to drive our strategic initiatives. While the actions to support this initiative were largely completed by the end of 2025, there are certain actions to be completed and additional actions that we plan to take under this initiative, on a limited basis, in 2026. We recorded pre-tax costs of $93 million during 2025 in connection with this initiative consisting principally of severance. We recorded pre-tax costs of $24 million during 2024 in connection with this initiative, including $33 million of costs consisting principally of severance, which were partially offset by a $10 million gain on the sale of a warehouse and distribution center. We expect to incur additional costs in 2026, however the additional costs cannot be quantified at this time. Please see Note 17, “Exit Activity Costs,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
• We amended in September 2024 Mr. Tommy Hilfiger’s employment agreement, pursuant to which we made a cash buyout of a portion of the future payment obligation (the “Mr. Hilfiger amendment”). We recorded pre-tax costs of
$51 million during the third quarter of 2024 in connection with the Mr. Hilfiger amendment.
• We completed the sale of our Warner’s , Olga and True&Co. women’s intimates businesses, including net assets with a carrying value of $140 million, to Basic Resources on November 27, 2023 for net proceeds of $156 million. We recorded an aggregate net pre-tax gain of $13 million in the fourth quarter of 2023 in connection with the closing of the transaction, consisting of (i) a gain of $15 million, which represented the excess of the amount of consideration received over the carrying value of the net assets, less costs to sell, partially offset by (ii) $2 million of pre-tax severance and other termination benefits associated with the transaction. We recorded an incremental gain of $10 million in the first quarter of 2024 due to the accelerated realization of the earnout provided for in the agreement with Basic Resources. Please see Note 4, “Divestitures,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
• We announced in August 2022 plans to reduce people costs in our global offices by approximately 10% by the end of 2023 to drive efficiencies and enable continued strategic investments to fuel growth, including in digital, supply chain and consumer engagement (the “2022 cost savings initiative”), which has resulted in annual cost savings of over $100 million, net of continued strategic people investments. We recorded pre-tax costs of $61 million during 2023, consisting principally of severance related to additional actions taken in July and September 2023. All costs related to these actions were incurred by the end of 2023. Please see Note 17, “Exit Activity Costs,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
We extended in 2022 most of our licensing agreements with G-III for Calvin Klein and TOMMY HILFIGER in the United States and Canada, largely pertaining to the women’s apparel product categories sold at wholesale in North America. These agreements now have staggered expirations through 2026, the first of which occurred at the end of calendar 2023. We have been directly operating a significant portion of the businesses for the previously licensed product categories, and we intend to continue to directly operate a significant portion of these businesses as the license agreements expire, with the remainder being re-licensed to other third parties. The expiration of these licenses and the transition of previously licensed women’s product categories in house did not have a material impact on our revenue and gross margin in 2024 and resulted in a 1% net increase to our revenue and an approximately 50 basis point decline in our gross margin in 2025. In 2026, the transition of previously licensed product categories in house is expected to result in a less than 1% net increase to our revenue and an approximately 50 basis point decline in our gross margin.
Our Tommy Hilfiger and Calvin Klein businesses each have substantial international components that expose us to significant foreign exchange risk. Our results of operations in local foreign currencies are translated into United States dollars using an average exchange rate over the representative period. Accordingly, our results of operations are unfavorably impacted during times of a strengthening United States dollar against the foreign currencies in which we generate significant revenue and earnings and favorably impacted during times of a weakening United States dollar against those currencies. Over 70% of our 2025 revenue was subject to foreign currency translation.
During 2024 the United States dollar weakenedagainst the euro, which is the foreign currency in which we transact the most business, and then further weakened during 2025. As a result, our 2025 revenue and net income increased by approximately $250 million and $25 million, respectively, as compared to 2024 due to the impact of foreign currency translation. We currently expect our 2026 revenue and net income to increase by approximately $100 million and $15 million, respectively, as compared to 2025 due to the impact of foreign currency translation.
There also is a transactional impact of foreign exchange because we have foreign subsidiaries that purchase inventory in a currency other than their functional currency. We use foreign currency forward contracts to hedge against a portion of the exposure related to this transactional impact. We enter into these contracts up to 15 months in advance for a portion of the projected inventory purchases and may enter into incremental contracts leading up to the time the inventory purchases occur. The impact of foreign currency fluctuations on the cost of inventory purchases covered by these contracts is then realized in our results of operations as the underlying inventory hedged by the contracts is sold. The transactional impact of foreign currency on our 2025 gross margin as compared to 2024 was immaterial. The transactional impact of foreign currency on our 2026 gross margin as compared to 2025 is expected to be favorable by approximately 50 basis points.
We also have exposure to changes in foreign currency exchange rates related to our €1.125 billion aggregate principal amount of senior notes that are held in the United States. The strengthening of the United States dollar against the euro would require us to use a lower amount of our cash flows from operations to pay interest and make long-term debt repayments, whereas the weakening of the United States dollar against the euro would require us to use a greater amount of our cash flows from operations to pay interest and make long-term debt repayments. We designated the par value of these senior notes issued
by PVH Corp., a U.S.-based entity, as net investment hedges of our investments in certain of our foreign subsidiaries that use the euro as their functional currency. In addition, we entered into multiple fixed-to-fixed cross-currency swap contracts in 2023, with a maturity date of July 2025, which, in aggregate, economically converted our $500 million principal amount of 4 5/8% senior notes due July 2025 from a United States dollar-denominated obligation to a euro-denominated obligation of €457 million. In July 2025, we completed a transaction to effectively blend and extend those cross-currency swaps with new fixed-to-fixed cross-currency swap contracts maturing in July 2027 and July 2028. We also designated these cross-currency swap contracts as net investment hedges of our investments in certain of our foreign subsidiaries that use the euro as their functional currency. As a result, the remeasurement of these foreign currency borrowings and cross-currency swaps at the end of each period is recorded in equity. Please see Note 10, “Derivative Financial Instruments,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
Investigation by China’s Ministry of Commerce
In September 2024, MOFCOM announced that it had initiated an investigation into our business under the UEL Provisions . In October 2024, we submitted a written response to MOFCOM and, in December 2024, we submitted a supplemental response. In January 2025, MOFCOM issued a preliminary finding that PVH Corp. had violated normal market trading principles and in February 2025, it announced its determination and placed PVH Corp. on the UEL. We do not know if or when MOFCOM will implement any measures as a result of the listing or what they will be if any are imposed. Approximately 6 % and 20% of our revenue and income before interest and taxes (excluding goodwill and other intangible asset impairment charges recorded in 2025), respectively, were generated in China in each of 2024 and 2025. Furthermore, if, as a result of any such measures, it is necessary for us to cease certain or all operations in China, it may result in charges related to excess inventory and difficulty collecting trade receivables, among other things. We may also incur material non-cash impairment charges if we are unable to recover the carrying value of our indefinite-lived intangible assets and long-lived assets. Please see our risk factor “ China’s Ministry of Commerce (“MOFCOM”) conducted an investigation into our business which resulted in PVH Corp. being placed on the List of Unreliable Entities (“UEL”) and could result in fines or restrictions on our ability to do business in China, which could have a material adverse effect on our revenue and results of operations ” in Part I, Item 1A. Risk Factors of this report for additional information.
The following table summarizes our consolidated statements of operations in 2025, 2024 and 2023:
(Dollars in millions)
Revenue
Gross profit
% of total revenue
SG&A expenses
% of total revenue
Goodwill and other intangible asset impairments
Non-service related pension and postretirement income (cost)
Other gain
Equity in net income of unconsolidated affiliates
Income before interest and taxes
Interest expense
Interest income
Income before taxes
Income tax expense
Net income
Total Revenue
Fiscal 2025 Compared to Fiscal 2024
Total revenue in 2025 was $8.950 billion compared to $8.653 billion in 2024. The overall increase in revenue was $297 million, or 3%, in 2025 compared to 2024, including a positive impact of $251 million or 3 % related to foreign currency translation.
Revenue by Segment :
• EMEA – Revenue increased $210 million, or 5%, compared to 2024, including a positive impact of $249 million, or 6%, related to foreign currency translation. Excluding the impact of foreign currency translation, the decrease in revenue was driven by declines in both the direct-to-consumer and wholesale businesses.
• Americas – Revenue increased $154 million, or 6%, compared to 2024, driven by growth in the wholesale business partially offset by a decrease in the direct-to-consumer business. The increase in wholesale revenue included the transition to in-house of previously licensed women’s product categories. The impact of foreign currency translation on our Americas segment was not significant.
• APAC – Revenue decreased $60 million, or 4%, compared to 2024, including an approximately 2% decline resulting from the timing of Lunar New Year, which occurred in the first and fourth quarters of 2024 but did not occur at all in 2025. The decrease in revenue reflected declines in both the direct-to-consumer and wholesale businesses. The impact of foreign currency translation on our APAC segment was not significant.
• Licensing – Revenue decreased $7 million, or 2%, compared to 2024.
Revenue by Brand :
• Tommy Hilfiger – Revenue increased 4% compared to 2024, including a 3% positive foreign currency impact.
• Calvin Klein – Revenue increased 3% compared to 2024, including a 2% positive foreign currency impact.
Revenue by Channel:
• Direct-to-consumer – Revenue increased 1% compared to 2024, including a 3% positive foreign currency impact.
◦ Owned and operated retail stores – Revenue was flat compared to 2024, including a 3% positive foreign currency impact. Excluding the impact of foreign currency translation, revenue declined in Americas and APAC, with EMEA revenue flat compared to the prior year period.
◦ Owned and operated digital commerce – Revenue increased 4% compared to 2024, including a 3% positive foreign currency impact. Excluding the impact of foreign currency translation, growth in Americas and APAC was partially offset by a decline in EMEA.
• Wholesale – Revenue increased 7% compared to 2024, including a 3% positive foreign currency impact. Excluding the impact of foreign currency translation, revenue growth in Americas was partially offset by the decreases in APAC and EMEA.
Fiscal 2024 Compared to Fiscal 2023
Total revenue in 2024 was $8.653 billion compared to $9.218 billion in 2023. The decrease in revenue of $565 million, or 6%, in 2024 compared to 2023 included (i) a 2% decline due to the Heritage Brands intimates transaction, (ii) a 1% decline from the 53rd week in 2023 and (iii) a 1% negative impact of foreign currency translation.
Revenue by Segment :
• EMEA – Revenue decreased $253 million, or 6%, in 2024 compared to 2023, including a negative impact of $23 million, or 1%, related to foreign currency translation. Excluding the impact of foreign currency translation, the decrease in revenue was driven by declines in both the direct-to-consumer and wholesale businesses, primarily due to a planned strategic reduction of sales in EMEA to drive overall higher quality of sales in the region.
• Americas – Revenue decreased $270 million, or 9%, in 2024 compared to 2023, driven by declines in both the direct-to-consumer and wholesale businesses. The decrease in wholesale revenue was driven by a 15% reduction resulting from the Heritage Brands intimates transaction. The impact of foreign currency translation on our Americas segment was not significant.
• APAC – Revenue decreased $27 million, or 2%, in 2024 compared to 2023, including a negative impact of $35 million, or 2%, related to foreign currency translation. Excluding the impact of foreign currency translation, an increase in revenue in the direct-to-consumer business was offset by a decrease in wholesale revenue.
• Licensing – Revenue decreased $15 million, or 3% in 2024, compared to 2023.
Revenue by Brand :
• Tommy Hilfiger – Revenue decreased 5% in 2024 compared to 2023, including a 1% negative foreign currency impact. The decrease in revenue was driven by a revenue decline in Europe, including our planned strategic reduction to drive overall higher quality of sales in the region, which weighed more heavily on Tommy Hilfiger revenue given the size of the business in Europe.
• Calvin Klein – Revenue decreased 1% in 2024 compared to 2023, including a 1% negative foreign currency impact.
Revenue by Channel:
• Direct-to-consumer – Revenue decreased 2% in 2024 compared to 2023, including a 1% decline from the 53rd week in 2023 and a 1% negative foreign currency impact.
◦ Owned and operated retail stores – Revenue decreased 1% in 2024 compared to 2023, including a 1% negative foreign currency impact. Excluding the impact of foreign currency translation, growth in EMEA and APAC was offset by a decline in Americas.
◦ Owned and operated digital commerce – Revenue decreased 7% in 2024 compared to 2023, including a 1% negative foreign currency impact, primarily due to the planned strategic reduction of sales in EMEA to drive overall higher quality of sales in the region, partially offset by growth in Americas.
• Wholesale – Revenue decreased 10% in 2024 compared to 2023, primarily due to (i) a 5% reduction resulting from the Heritage Brands intimates transaction and (ii) the planned strategic reduction of sales in EMEA to drive overall higher quality of sales in the region . The impact in 2024 of foreign currency translation on our wholesale distribution revenue was not significant.
Fiscal 2026 Compared to Fiscal 2025
We currently expect revenue for the full year 2026 to increase slightly compared to 2025. Excluding the impact of foreign currency translation, we currently expect revenue for the full year 2026 to be flat to increase slightly.
Gross Profit
Gross profit is calculated as total revenue less cost of goods sold, and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of product, such as inbound freight costs, purchasing and receiving costs, inspection costs and tariff and other import costs. Also included as cost of goods sold are the amounts recognized on foreign currency forward contracts as the underlying inventory hedged by such forward contracts is sold. Warehousing and distribution expenses are included in selling, general and administrative (“SG&A”) expenses. Revenue from licensing the use of our trademarks is included in gross profit because there is no cost of goods sold associated with such revenue. As a result, our gross profit may not be comparable to that of other entities.
Our gross margin was as follows:
Gross profit
% of total revenue
Fiscal 2025 Compared to Fiscal 2024
Gross profit in 2025 was $5.149 billion, or 57.5% of total revenue, compared to $5.143 billion, or 59.4% of total revenue, in 2024. Approximately 80 basis points of the decline was due to the gross negative impact of the tariffs enacted in the first quarter of 2025 that were in place for goods coming into the United States and approximately 50 basis points of the decline was due to the transition of previously licensed product categories into our directly operated wholesale business, as revenue
through our wholesale distribution channel carries lower gross margins. The remaining 60 basis point decrease was primarily driven by (i) an increase in promotional selling as compared to the prior year period and (ii) higher freight costs and incremental discounts provided to customers to address the impact of Calvin Klein product delivery delays, partially offset by (i) lower product costs as compared to the prior year period which benefited us more significantly in the fourth quarter of the year, including a slightly favorable transactional impact of foreign exchange on our international businesses, particularly our European business, and (ii) mitigation actions to address the impact of tariffs.
Fiscal 2024 Compared to Fiscal 2023
Gross profit in 2024 was $5.143 billion, or 59.4% of total revenue, compared to $5.363 billion, or 58.2% of total revenue, in 2023. The 120 basis point gross margin increase was primarily driven by (i) lower product costs as compared to 2023, which benefited us more significantly in the first half of the year, (ii) the impact of a change in the revenue mix between our direct-to-consumer distribution channel and our wholesale distribution channel, as our direct-to-consumer distribution channel was a larger proportion of total revenue in 2024 than in 2023 and carries higher gross margins, and (iii) the impact of the reduction in revenue as a result of the Heritage Brands intimates transaction, as the revenue from the Heritage Brands intimates business carried lower gross margins. These increases were partially offset by increased promotional selling in the fourth quarter of 2024 due to continued softness in the consumer environment particularly in North America.
Fiscal 2026 Compared to Fiscal 2025
We currently expect that gross margin in 2026 will be up slightly compared to 2025, despite (i) the approximately 215 basis point gross negative impact in 2026 of the tariffs on goods coming into the United States which reflects an assumed 15% tariff rate effective February 24, 2026 and the tariff rates previously in place for each applicable country prior to the Supreme Court ruling, compared to the approximately 80 basis point gross negative impact in 2025 and (ii) the approximately 50 basis point decline expected in connection with the above-mentioned transition of previously licensed product categories into our directly operated wholesale business. These decreases are expected to be more than offset by (i) the impact of planned mitigation actions to address the impacts of tariffs, (ii) the approximately 50 basis point increase due to the favorable transactional impact of foreign exchange on our international businesses, particularly our European business, (iii) lower product costs, and (iv) the absence of higher freight costs and incremental discounts provided to customers to address the impact of Calvin Klein product delivery delays.
SG&A Expenses
Our SG&A expenses were as follows:
(In millions)
SG&A expenses
% of total revenue
Fiscal 2025 Compared to Fiscal 2024
SG&A expenses in 2025 were $4.492 billion, or 50.2% of total revenue, compared to $4.411 billion, or 51.0% of total revenue in 2024. The 80 basis point decrease in SG&A as a percentage of revenue was primarily driven by (i) the non-recurrence of costs incurred in the prior year period in connection with the Mr. Hilfiger amendment, and (ii) cost savings resulting from the Growth Driver 5 Actions. These decreases were partially offset by a net increase in restructuring costs incurred in connection with the Growth Driver 5 Actions.
Fiscal 2024 Compared to Fiscal 2023
SG&A expenses in 2024 were $4.411 billion, or 51.0% of total revenue, compared to $4.543 billion, or 49.3% of total revenue in 2023. The $132 million decrease in SG&A expenses was primarily driven by cost efficiencies across the business as we continued to take a disciplined approach to managing expenses. The 170 basis point increase in SG&A as a percentage of revenue was primarily driven by (i) the impact of a change in the revenue mix between our direct-to-consumer distribution channel and our wholesale distribution channel as compared to 2023, as our direct-to-consumer distribution channel was a larger proportion of our total revenue in 2024 than in 2023 and carries higher SG&A expenses as a percentage of total revenue, (ii) the impact from the deleveraging of expenses resulting from the decline in revenue in 2024, (iii) costs incurred in connection with the Mr. Hilfiger amendment, and (iv) restructuring costs incurred in connection with the Growth Driver 5
Actions. These increases were partially offset by the favorable impact of (i) the 2022 costs savings initiative and (ii) cost efficiencies across the business as we continued to take a disciplined approach to managing expenses.
Fiscal 2026 Compared to Fiscal 2025
We currently expect that SG&A expenses as a percentage of revenue in 2026 will decrease compared to 2025 primarily due to an approximately 100 basis points decrease resulting from the non-recurrence of restructuring costs incurred in 2025 in connection with the Growth Driver 5 actions. This decrease is expected to be offset by the net impact of an increase in strategic investments to fuel growth, including increased marketing, partially offset by the cost savings resulting from the Growth Driver 5 actions. Our expectation for 2026 does not include any further restructuring costs in connection with the Growth Driver 5 actions as they cannot be quantified at this time.
Goodwill and Other Intangible Asset Impairments
We recorded noncash impairment charges of $480 million during the first quarter of 2025 in conjunction with interim goodwill and other intangible assets impairment tests, including $426 million related to goodwill and $54 million related to our Australia reacquired perpetual license rights, which were primarily due to a significant increase in discount rates.
Please see Note 7, “Goodwill and Other Intangible Assets,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion of these impairments.
Non-Service Related Pension and Postretirement Income (Cost)
Non-service related pension and postretirement income (cost) was $9 million, $(27) million, and $47 million in 2025, 2024 and 2023, respectively. Non-service related pension and postretirement income in 2025 included an actuarial gain on our retirement plans of $13 million. Non-service related pension and postretirement cost in 2024 included an actuarial loss on our retirement plans of $28 million. Non-service related pension and postretirement cost in 2023 included an actuarial gain on our retirement plans of $46 million, inclusive of a $20 million pre-tax curtailmentgain recorded in connection with a change to freeze our defined benefit pension plans.
Please see Note 12, “Retirement and Benefit Plans,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion of our pension and postretirement plans, including the 2023 change to freeze our defined benefit pension plans.
Non-service related pension and postretirement income (cost) recorded throughout the year is calculated using actuarial valuations that incorporate assumptions and estimates about financial market, economic and demographic conditions. Differences between estimated and actual results give rise to gains and losses that are recorded immediately in earnings, generally in the fourth quarter of the year, which can create volatility in our results of operations. We currently expect that non-service related pension and postretirement income for 2026 will be approximately $3 million. However, our expectation of 2026 non-service related pension and post-retirement income does not include the impact of an actuarial gain or loss. As a result of volatility in the financial markets, there is significant uncertainty with respect to the actuarial gain or loss we may record on our retirement plans in 2026. We may record a significant actuarial gain or loss in 2026 if there is a significant increase or decrease in discount rates, respectively, or if there is a difference between the actual and expected return on plan assets. As such, our actual 2026 non-service related pension and postretirement income may be significantly different than our projections.
Other Gain
We recorded a gain of $10 million related to the sale of a warehouse and distribution center in the third quarter of 2024 in connection with the Growth Driver 5 Actions. Please see Note 17, “Exit Activity Costs,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
We recorded a gain of $15 million in the fourth quarter of 2023 in connection with the closing of the Heritage Brands intimates transaction and an incremental gain of $10 million in the first quarter of 2024 due to the accelerated realization of the earnout provided for in the agreement with Basic Resources. Please see Note 4, “Divestitures,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
Equity in Net Income of Unconsolidated Affiliates
The equity in net income of unconsolidated affiliates was $45 million, $48 million, and $46 million in 2025, 2024, and 2023 respectively. These amounts relate to our share of income (loss) from (i) our joint venture for the TOMMY HILFIGER and Calvin Klein brands, and certain licensed trademarks in Mexico, (ii) our joint venture for the TOMMY HILFIGER and Calvin Klein brands in India, (iii) our joint venture for the TOMMY HILFIGER brand in Brazil, and (iv) our PVH Legwear joint venture for the TOMMY HILFIGER and Calvin Klein brands and certain licensed trademarks in the United States and Canada. Please see Note 6, “Investments in Unconsolidated Affiliates,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
The equity in net income of unconsolidated affiliates for 2025 was relatively flat compared to 2024, relatively flat in 2024 compared to 2023 and expected to continue to be flat in 2026 compared to 2025.
Income Before Interest and Taxes
Our income before interest and taxes were as follows:
(Dollars in millions)
Income before interest and taxes
% of total revenue
Fiscal 2025 Compared to Fiscal 2024
Income before interest and taxes in 2025 was $231 million, or 2.6% of revenue compared to $772 million or 8.9% of revenue in 2024, and included changes in our segments’ income before interest and taxes and other reconciling items as follows:
• EMEA – Income before interest and taxes in 2025 was $749 million, or 17.5% of total revenue, compared to $728 million, or 17.9% of total revenue in 2024. The 40 basis point decrease was driven by a decrease in gross margin. SG&A expenses as a percentage of revenue were flat compared to the prior year period as savings resulting from the Growth Driver 5 Actions were offset by the deleveraging of expenses resulting from the decrease in revenue excluding the impact of foreign currency translation.
• Americas – Income before interest and taxes in 2025 was $252 million, or 9.2% of total revenue, compared to $320 million, or 12.4% of total revenue in 2024. The 320 basis point decrease was driven by a gross margin decline inclusive of the negative impact of the tariffs enacted in the first quarter of 2025 that were in place for goods coming into the United States, partially offset by a decrease in SG&A expenses as a percentage of revenue due to (i) s avings primarily resulting from the Growth Driver 5 Actions and (ii) the leveraging of expenses resulting from the increase in revenue.
• APAC – Income before interest and taxes in 2025 was $292 million, or 19.3% of total revenue, compared to $317 million, or 20.1% of total revenue in 2024. The 80 basis point decrease was primarily driven by an increase in SG&A expenses as a percentage of revenue driven by the deleveraging of expenses resulting from the decline in revenue partially offset by a slight increase in gross margin.
• Licensing – Income before interest and taxes was $357 million in 2025, compared to $352 million in 2024.
• Corporate and other costs were $859 million in 2025, an increase of $7 million compared to $852 million in 2024, primarily due to an increase in global brands costs, partially offset by a decrease in corporate costs which includes savings resulting from the Growth Driver 5 Actions along with other efficiencies.
• Restructuring and other items included $560 million of net expenses in 2025, including (i) $480 million of noncash goodwill and other intangible asset impairment charges and (ii) $93 million of restructuring costs in connection with the Growth Driver 5 Actions, partially offset by (iii) a $13 million actuarial gain on retirement plans. Restructuring and other items included $93 million of net expenses in 2024, including (i) $51 million of costs in connection with the Mr. Hilfiger amendment, (ii) a $28 million actuarial loss on retirement plans, and (iii) $24 million of net restructuring costs related to the Growth Driver 5 Actions, partially offset by (iv) a $10 million gain related to the Heritage Brands intimates transaction.
Fiscal 2024 Compared to Fiscal 2023
Income before interest and taxes in 2024 was $772 million, or 8.9% of total revenue compared to $929 million or 10.1% of total revenue in 2023, and included changes in our segments’ income before interest and taxes and other reconciling items as follows:
• EMEA – Income before interest and taxes in 2024 was $728 million, or 17.9% of total revenue, compared to $837 million, or 19.4% of total revenue in 2023. The 150 basis point decrease was driven by an increase in SG&A expenses as a percentage of revenue due primarily to the deleveraging of expenses resulting from the decrease in revenue, partially offset by an increase in gross margin.
• Americas – Income before interest and taxes in 2024 was $320 million, or 12.4% of total revenue, compared to $253 million, or 8.9% of total revenue in 2023. The 350 basis point increase was primarily due to an increase in gross margin and a decrease in SG&A expenses as a percentage of revenue.
• APAC – Income before interest and taxes in 2024 was $317 million, or 20.1% of total revenue, compared to $329 million, or 20.5% of total revenue in 2023. The 40 basis point decrease was primarily driven by a decrease in gross margin.
• Licensing – Income before interest and taxes in 2024 was $352 million, a 3% decrease compared to $363 million in 2023.
• Corporate and other costs were $852 million in 2024, relatively flat compared to $851 million in 2023.
• Restructuring and other items included $93 million of net expenses in 2024, including (i) $51 million of costs incurred in connection with the Mr. Hilfiger amendment, (ii) a $28 million actuarial loss on retirement plans, and (iii) $24 million of net restructuring costs related to the Growth Driver 5 Actions, partially offset by (iv) a $10 million gain related to the Heritage Brands intimates transaction. Restructuring and other items included $2 million of net expenses in 2023, including (i) $61 million of expenses in connection with the 2022 cost savings initiative, partially offset by (i) a $46 million actuarial gain on retirement plans and (ii) an aggregate net gain of $13 million in connection with the Heritage Brands intimates transaction, consisting of a $15 million gain partially offset by $2 million of severance and other termination benefits.
Interest Expense, Net
Interest expense, net increased to $79 million in 2025 from $67 million in 2024 primarily due to the impact of the accelerated share repurchase (“ASR”) agreements we entered into in April 2025 to repurchase $500 million shares of our common stock. Please see the section entitled “Acquisition of Treasury Shares” within “Liquidity and Capital Resources” below for further discussion.
Interest expense, net decreased to $67 million in 2024 from $88 million in 2023 primarily due to (i) an increase in interest income resulting from higher levels of invested cash and higher interest rates as compared to the prior year period and (ii) the impact of the repayment of the $100 million 7 3/4% debentures in November 2023.
Please see the section entitled “Financing Arrangements” within “Liquidity and Capital Resources” below for further discussion.
Interest expense, net for the full year 2026 is currently expected to be approximately flat as compared to $79 million in 2025.
Income Taxes
Income tax expense was as follows:
(Dollars in millions)
Income tax expense
Income tax as a % of pre-tax income
Significant items which have caused our tax rate to fluctuate each year include the items discussed below. The effect that discrete tax amounts have on the effective income tax rate in each year is not comparable due to changes in our pre-tax income.
Our effective income tax rate for 2025 was 83.3% primarily due to the impact of the $480 million pre-tax noncash goodwill and other intangible asset impairment charges that were recorded during the first quarter of 2025, which were non-deductible for tax purposes and factored into our annualized effective income tax rate, and resulted in a 60.8% increase to our effective income tax rate.
Our effective income tax rate for 2024 was 15.2% primarily due to (i) a favorable change in our uncertain tax positions including a benefit to our effective tax rate of 4.7% from the settlement of a multi-year audit in an international jurisdiction in the second quarter of 2024 and (ii) the favorable tax impacts of the foreign derived intangible income deduction and the generation of certain foreign tax credits, partially offset by (iii) an unfavorable change in our jurisdictional mix of earnings.
Our effective income tax rate for 2023 was 21.1% primarily due to the favorable tax impacts of the foreign derived intangible income deduction and the generation of certain foreign tax credits, offset by our jurisdictional mix of earnings.
We currently expect that our effective income tax rate in 2026 will be in a range of 22% to 23%.
We file income tax returns in more than 40 international jurisdictions each year. Our tax rate is influenced by several factors, including the mix of international and domestic pre-tax earnings, specific discrete transactions and events, new regulations, audits by tax authorities, and new information received. These elements may lead to adjustments in both our estimate for uncertain tax positions and the overall effective tax rate. Please see Note 9, “Income Taxes,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law, introducing a broad range of tax reform provisions. The enacted changes did not have a material impact on the 2025 effective tax rate. We do not expect the enacted changes to materially affect our 2026 estimated annual effective tax rate and we will continue to monitor future guidance related to the OBBBA.
The Organization for Economic Cooperation and Development released the Pillar Two framework which includes transition and safe harbor guidelines around the implementation of a global minimum effective tax rate of 15%. Pillar Two legislation was enacted in certain jurisdictions where we operate and was effective in 2024. The global minimum effective tax rate did not have a material impact on our 2025 and 2024 effective tax rates. Based on our current analysis of the Pillar Two provisions, we do not expect it to have a material impact on our 2026 effective tax rate. We continue to monitor and reflect the impact of such legislative changes in future financial statements as appropriate.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow Summary and Trends
Cash and cash equivalents at February 1, 2026 was $701 million, a decrease of $47 million from $748 million at February 2, 2025. The change in cash and cash equivalents included the impact of (i) cash generated from our operations, (ii) $561 million paid in connection with ASR agreements and open market purchases to repurchase common stock under our stock repurchase program (please see section entitled “Acquisition of Treasury Shares” below for further discussion), (iii) the redemption of $500 million principal amount of 4 5/8% senior notes due 2025 and (iv) $494 million of net proceeds from the issuance of $500 million principal amount of 5 1/2% senior notes due 2030. We ended 2025 with approximately $1.7 billion of borrowing capacity available under our various debt facilities, which included $250 million related to the delayed draw term loan facility that expired on February 4, 2026, as discussed below .
Cash flow in 2026 will be impacted by various factors, including, as discussed further below in this “Liquidity and Capital Resources” section, (i) expected common stock repurchases under the stock repurchase program of at least $300 million, (ii) projected capital expenditures of approximately $250 million and (iii) mandatory long-term debt repayments on our term loan under our 2022 senior unsecured credit facilities of approximately $13 million, subject to exchange rate fluctuations.
As of February 1, 2026, $334 million of cash and cash equivalents was held by international subsidiaries. Our intent is to reinvest indefinitely substantially all of our historical earnings in foreign subsidiaries outside of the United States in jurisdictions which we would expect to incur material tax costs upon the distribution of such amounts. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated due to the complexities associated with the hypothetical calculation.
Operations
Cash provided by operating activities was $680 million in 2025 compared to $741 million in 2024. The decrease in cash provided by operating activities as compared to 2024 was primarily driven by (i) a decrease in net income as adjusted for noncash charges and (ii) changes in our working capital, including changes in inventories net of the related change in payables.
Supply Chain Finance Program
We have a voluntary supply chain finance program (the “SCF program”) administered through a third party platform that provides our inventory suppliers with the opportunity to sell their receivables due from us to participating financial institutions in advance of the invoice due date, at the sole discretion of both the suppliers and the financial institutions. We are not a party to the agreements between the suppliers and the financial institutions and have no economic interest in a supplier’s decision to sell a receivable. Our payment obligations, including the amounts due and payment terms, which generally do not exceed 90 days, are not impacted by suppliers’ participation in the SCF program. Please see Note 22, “Other Comments,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion of our SCF program.
Investments in Unconsolidated Affiliates
Dividends received from our investments in unconsolidated affiliates of $46 million, $42 million and $30 million during 2025, 2024 and 2023, respectively, are included in our net cash provided by operating activities in our Consolidated Statements of Cash Flows for the respective period. Please see Note 6, “Investments in Unconsolidated Affiliates,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
Heritage Brands Intimates Transaction
We completed the sale of our women’s intimates businesses conducted under the Warner’s , Olga and True&Co. trademarks to Basic Resources on November 27, 2023 for net proceeds of $156 million, of which $160 million of gross proceeds are presented as investing cash flows and $4 million of transaction costs are presented as operating cash flows in the Consolidated Statement of Cash Flows for 2023. Due to the accelerated realization of the earnout provided for in the agreement with Basic Resources that occurred during the first quarter of 2024, we received additional proceeds of $10 million, which was paid to us in equal quarterly installments through the first quarter of 2025. Please see Note 4, “Divestitures,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
Sale of Warehouse and Distribution Center
We completed the sale of a warehouse and distribution center in the third quarter of 2024 for net proceeds of $10 million in connection with our multiyear initiative to simplify our operating model by centralizing certain processes and improving systems and automation to drive more efficient and cost-effective ways of working across the organization. Please see Note 17, “Exit Activity Costs,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
Karl Lagerfeld Transaction
We completed the sale of our approximately 8% economic interest in Karl Lagerfeld Holding B.V. to a subsidiary of G-III on May 31, 2022 for $20 million in cash, of which $19 million was received in 2022 and the remaining $1 million which was previously held in escrow was received in 2023.
Capital Expenditures
Our capital expenditures in 2025 were $142 million compared to $159 million in 2024. The capital expenditures in 2025 primarily consisted of (i) investments in new stores and store renovations, (ii) investments, upgrades and enhancements in our information technology platforms, systems and infrastructure worldwide, and (iii) enhancements to our warehouse and distribution network in Europe and North America. We currently project that capital expenditures for 2026 will increase to approximately $250 million and will primarily consist of continued investments in these same categories.
Dividends
Cash dividends paid on our common stock totaled $7 million, $9 million and $9 million in 2025, 2024 and 2023, respectively.
We currently project that cash dividends paid on our common stock in 2026 will be approximately $7 million.
Acquisition of Treasury Shares
The Board of Directors has authorized over time beginning in 2015 an aggregate $5 billion stock repurchase program through July 30, 2028. Repurchases under the program may be made from time to time over the period through open market purchases, accelerated share repurchase programs, privately negotiated transactions or other methods, as we deem appropriate. Purchases are made based on a variety of factors, such as price, corporate requirements and overall market conditions, applicable legal requirements and limitations, trading restrictions under our insider trading policy and other relevant factors. The program may be modified by the Board of Directors, including to increase or decrease the repurchase limitation or extend, suspend, or terminate the program at any time, without prior notice. Our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act of 2022.
On April 1, 2025, we entered into ASR agreements with financial institutions to repurchase an aggregate of $500 million of our shares of common stock under our existing $5 billion stock repurchase authorization. We paid $500 million to the financial institutions and received initial deliveries of an aggregate of approximately 4.6 million shares of our common stock at a price of $76.43 per share, the closing share price of our common stock on April 1, 2025. The value of the initial shares delivered represented approximately 70% of the aggregate purchase price. The ASR agreements were funded with cash on hand and $115 million of short-term borrowings. During the third quarter of 2025, the ASR agreements were settled, and we received an aggregate of approximately 2.3 million of additional shares of our common stock. The total number of shares purchased under the ASR agreements was approximately 6.9 million shares at a price paid per share of $72.44, which was based on the daily volume-weighted average price of our common stock over the term of the ASR agreements, less a discount, and subject to customary adjustments pursuant to the terms and conditions of the ASR agreements. The ASR agreements were accounted for as a share purchase transaction and forward stock purchase agreement indexed to our common stock.
During 2025, we additionally purchased 0.8 million shares (all prior to the execution of the ASR agreements) and during 2024 and 2023, we purchased 4.7 million shares and 5.7 million shares, respectively, of our common stock under the program in open market transactions for $61 million, $501 million and $550 million, respectively. Excise taxes of $6 million, $5 million and $5 million were excluded from the share repurchases for 2025, 2024 and 2023, respectively, including in respect of the shares repurchased under the ASR agreements. Purchases of $4 million that were accrued for in our Consolidated Balance Sheet as of February 2, 2025 were paid in 2025. Purchases of $2 million that were accrued for in our Consolidated
Balance Sheet as of February 4, 2024 were paid in 2024. As of February 1, 2026, the repurchased shares were held as treasury stock and $1.212 billion of the authorization remained available for future share repurchases, excluding excise taxes, as the excise taxes do not reduce the authorized amount remaining.
We currently expect common stock repurchases under the stock repurchase program of at least $300 million during 2026.
Treasury stock activity also includes shares that were withheld in conjunction with the settlement of restricted stock units and performance share units to satisfy tax withholding requirements.
Financing Arrangements
Our capital structure was as follows:
(In millions)
Short-term borrowings
Current portion of long-term debt
Finance lease obligations
Long-term debt
Stockholders’ equity
In addition, we had $701 million and $748 million of cash and cash equivalents as of February 1, 2026 and February 2, 2025, respectively.
Short-Term Borrowings
We have the ability to draw revolving borrowings under the senior unsecured credit facilities discussed below in the section entitled “2022 Senior Unsecured Credit Facilities.” We had no revolving borrowings outstanding under these facilities as of February 1, 2026 and February 2, 2025.
Additionally, we have the ability to borrow under short-term lines of credit, overdraft facilities and short-term revolving credit facilities denominated in various foreign currencies. These facilities provided for borrowing capacity of up to $235 million based on exchange rates in effect on February 1, 2026 and are utilized primarily to fund working capital needs. We had no borrowings outstanding under these facilities as of February 1, 2026 and February 2, 2025.
Commercial Paper
We have the ability to issue unsecured commercial paper notes with maturities that vary but do not exceed 397 days from the date of issuance primarily to fund working capital needs. Borrowings under the commercial paper note program, when taken together with the revolving borrowings outstanding under the multicurrency revolving credit facility included in the 2022 facilities (as defined below), cannot exceed $1.150 billion. We had no borrowings outstanding under the commercial paper note program as of February 1, 2026 and February 2, 2025.
2025 Unsecured Delayed Draw Term Loan Facilities
On April 4, 2025, we entered into a credit agreement that provided for a delayed draw term loan facility with aggregate lending commitments of $250 million for United States dollar-denominated senior unsecured term loans (the “April 4 facility”). On April 25, 2025, we entered into an additional credit agreement that provided for a delayed draw term loan facility with aggregate lending commitments of $450 million for United States dollar-denominated senior unsecured term loans (the “April 25 facility”).
The April 25 facility terminated by its terms during the second quarter of 2025 as a result of our issuance of the $500 million principal amount of 5 1/2% senior notes due June 13, 2030 discussed below. The April 4 facility terminated by its terms on February 4, 2026. We had not drawn on these facilities prior to their terminations.
Finance Lease Obligations
Our cash payments for finance lease obligations totaled $3 million, $4 million and $5 million in 2025, 2024 and 2023, respectively.
2022 Senior Unsecured Credit Facilities
On December 9, 2022 (the “Closing Date”), we entered into senior unsecured credit facilities (the “2022 facilities”). The 2022 facilities consist of (a) a €441 million euro-denominated Term Loan A facility (the “Euro TLA facility”), (b) a $1.150 billion United States dollar-denominated multicurrency revolving credit facility (the “multicurrency revolving credit facility”), which is available in (i) United States dollars, (ii) Australian dollars (limited to A$50 million), (iii) Canadian dollars (limited to C$70 million), or (iv) euros, yen, pounds sterling, Swiss francs or other agreed foreign currencies (limited to €250 million), and (c) a $50 million United States dollar-denominated revolving credit facility available in United States dollars or Hong Kong dollars (together with the multicurrency revolving credit facility, the “revolving credit facilities”). The 2022 facilities are due on December 9, 2027.
The multicurrency revolving credit facility also includes amounts available for letters of credit and has a portion available for the making of swingline loans. The issuance of such letters of credit and the making of any swingline loan reduces the amount available under the multicurrency revolving credit facility. So long as certain conditions are satisfied, we may add one or more senior unsecured term loan facilities or increase the commitments under the revolving credit facilities by an aggregate amount not to exceed $1.5 billion. The lenders under the 2022 facilities are not required to provide commitments with respect to such additional facilities or increased commitments.
The terms of the Euro TLA facility require us to make quarterly repayments of amounts outstanding, which commenced with the calendar quarter ending March 31, 2023. Such required repayment amounts equal 2.50% per annum of the principal amount outstanding on the Closing Date, paid in equal installments and subject to certain customary adjustments, with the balance due on the maturity date of the Euro TLA facility. The outstanding borrowings under the 2022 facilities are prepayable at any time without penalty (other than customary breakage costs). Any voluntary repayments made by us would reduce the future required repayment amounts. The outstanding principal balance for the Euro TLA facility was €408 million as of February 1, 2026.
We made payments totaling $13 million, $12 million and $12 million on our term loan under the 2022 facilities in 2025, 2024 and 2023, respectively.
The euro-denominated borrowings under the Euro TLA facility and multicurrency revolving credit facility bear interest at a rate per annum equal to a euro interbank offered rate (“EURIBOR”) and the euro-denominated swing line borrowings under the 2022 facilities bear interest at a rate per annum equal to an adjusted daily simple euro short term rate (“ESTR”), calculated in a manner set forth in the 2022 facilities, plus in each case an applicable margin.
The United States dollar-denominated borrowings under the 2022 facilities bear interest at a rate per annum equal to, at our option, either a base rate or an adjusted term secured overnight financing rate, calculated in a manner set forth in the 2022 facilities, plus an applicable margin.
The borrowings denominated in other foreign currencies under the 2022 facilities bear interest at various indexed rates specified in the 2022 facilities and are calculated in a manner set forth in the 2022 facilities, plus an applicable margin.
The applicable margin with respect to the Euro TLA facility as of February 1, 2026 was 1.250%. The applicable margin with respect to the revolving credit facilities as of February 1, 2026 was 0.125% for loans bearing interest at the base rate, Canadian prime rate or daily simple ESTR and 1.125% for loans bearing interest at the EURIBOR or any other rate specified in the 2022 facilities. The applicable margin for borrowings under the Euro TLA facility and each revolving credit facility is subject to adjustment (i) after the date of delivery of the compliance certificate and financial statements, with respect to each of our fiscal quarters, based upon our net leverage ratio or (ii) after the date of delivery of notice of a change in our public debt rating by Standard & Poor’s or Moody’s.
The 2022 facilities contain customary events of default, including but not limited to nonpayment; material inaccuracy of representations and warranties; violations of covenants; certain bankruptcies and liquidations; cross-default to material indebtedness; certain material judgments; certain events related to the Employee Retirement Income Security Act of 1974, as amended; and a change in control (as defined in the 2022 facilities).
The 2022 facilities require us to comply with customary affirmative, negative and financial covenants, including a maximum net leverage ratio, calculated in a manner set forth in the 2022 facilities. A breach of any of these operating or financial covenants would result in a default under the 2022 facilities. If an event of default occurs and is continuing, the lenders could elect to declare all amounts then outstanding, together with accrued interest, to be immediately due and payable, which would result in acceleration of our other debt.
7 3/4% Debentures Due 2023
We had $100 million of debentures due November 15, 2023 that accrued interest at the rate of 7 3/4%. We repaid these debentures at maturity.
3 5/8% Euro Senior Notes Due 2024
We had outstanding €525 million principal amount of 3 5/8% senior notes due July 15, 2024. We redeemed these notes on April 25, 2024 utilizing the net proceeds from the issuance of the €525 million principal amount of 4 1/8% senior notes due July 16, 2029 together with other available funds, as discussed below.
4 5/8% Senior Notes Due 2025
We had outstanding $500 million principal amount of 4 5/8% senior notes due July 10, 2025. We repaid these notes upon maturity utilizing the net proceeds from the issuance of the $500 million principal amount of 5 1/2% senior notes due June 13, 2030 together with other available funds, as discussed below.
3 1/8% Euro Senior Notes Due 2027
We have outstanding €600 million principal amount of 3 1/8% senior notes due December 15, 2027. We may redeem some or all of these notes at any time prior to September 15, 2027 by paying a “make whole” premium plus any accrued and unpaid interest. In addition, in advance of maturity, we may redeem the remaining outstanding notes beginning on September 15, 2027 at their principal amount plus any accrued and unpaid interest.
4 1/8% Euro Senior Notes Due 2029
We issued on April 15, 2024, €525 million principal amount of 4 1/8% senior notes due July 16, 2029. We paid €5 million ($6 million based on exchange rates in effect on the payment date) of fees in connection with the issuance of the notes, which are being amortized over the term of the notes.
During the first quarter of 2025, we completed the allocation of an amount equal to 100% of the net proceeds of the offering to sustainable materials, which qualify as environmental Eligible Projects (as defined in our prospectus relating to the notes offering). During the first quarter of 2024, we utilized the net proceeds of the offering, together with other available funds, to redeem the €525 million principal amount of 3 5/8% senior notes due July 15, 2024, as discussed above.
We may redeem some or all of these notes at any time prior to April 16, 2029 by paying a “make whole” premium, plus any accrued and unpaid interest. In addition, in advance of maturity, we may redeem the remaining outstanding notes beginning on April 16, 2029, or all of these notes at any time in the event of certain developments affecting taxation, at their principal amount plus any accrued and unpaid interest.
5 1/2% Senior Notes Due 2030
We issued on June 13, 2025, $500 million principal amount of 5 1/2% senior notes due June 13, 2030. We paid $6 million of fees in connection with the issuance of the notes, which are being amortized over the term of the notes.
We utilized the net proceeds of the offering, together with other available funds, to repay the $500 million principal amount of 4 5/8% senior notes due July 10, 2025, as discussed above.
We may redeem some or all of these notes at any time prior to May 13, 2030 by paying a “make whole” premium, plus any accrued and unpaid interest. In addition, in advance of maturity, we may redeem the remaining outstanding notes beginning on May 13, 2030 at their principal amount plus any accrued and unpaid interest.
Our ability to create liens on our assets or engage in sale/leaseback transactions is restricted under the indentures governing our senior notes.
As of February 1, 2026, we were in compliance with all applicable financial and non-financial covenants under our financing arrangements.
As of February 1, 2026, our issuer credit was rated BBB- by Standard & Poor’s with a positive outlook and our corporate credit was rated Baa3 by Moody’s with a stable outlook, and our commercial paper was rated A-3 by Standard & Poor’s and P-3 by Moody’s. In assessing our credit strength, we believe that both Standard & Poor’s and Moody’s considered, among other things, our capital structure and financial policies, our consolidated balance sheet, our historical acquisition activity and other financial information, including our revenue growth and operating margin, as well as industry and other qualitative factors.
Please see Note 8, “Debt,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion of our debt.
Additional Cash Requirements
The following table summarizes current and long-term cash requirements as of February 1, 2026, which we expect to fund primarily with cash generated from operating cash flows and continued access to financial and credit markets:
Cash Requirements
Description
Total
Thereafter
(In millions)
Long-term debt (1)
Interest payments on long-term debt
Operating and finance leases (2)
Inventory purchase commitments (3)
Other cash requirements (4)
Total
(1) At February 1, 2026, the outstanding principal balance under our senior unsecured Term Loan A facility was $483 million, which requires mandatory payments through December 9, 2027 (according to the mandatory repayment schedules). We also had outstanding $711 million of 3 1/8% senior unsecured euro notes due December 15, 2027, $622 million of 4 1/8% senior unsecured euro notes due July 16, 2029 and $500 million of 5 1/2% senior unsecured notes due June 13, 2030.
(2) We lease Company-operated free-standing retail store locations, warehouses, distribution centers, showrooms, office space, and certain equipment and other assets. Please see Note 16, “Leases,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further information.
(3) Represents contractual commitments that are enforceable and legally binding for goods on order and not received or paid for as of February 1, 2026. Inventory purchase commitments also include fabric commitments with our suppliers, which secure a portion of our material needs for future seasons. Substantially all of these goods are expected to be received and the related payments are expected to be made in 2026. This amount does not include foreign currency forward contracts that we have entered into to manage our exposure to exchange rate changes with respect to certain of these purchases. Please see Note 10, “Derivative Financial Instruments,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further information.
(4) Represents cash requirements primarily related to (i) information-technology service agreements, (ii) minimum contractual royalty payments under several license agreements we have with third parties, and (iii) advertising and sponsorship agreements.
Not included in the above table are contributions to our qualified defined benefit pension plans, or payments in connection with our unfunded non-qualified supplemental defined benefit pension plans and our unfunded postretirement health care and life insurance benefits plans. These cash requirements cannot be determined due to the number of assumptions
required to estimate our future benefit obligations, including return on assets and discount rate. The liabilities associated with these plans are presented in Note 12, “Retirement and Benefit Plans,” in the Notes to Consolidated Financial Statements included in Item 8 of this report. Currently, we do not expect to make any material contributions to our pension plans in 2026. Our actual contributions may differ from our planned contributions due to many factors, including changes in tax and other benefit laws, or significant differences between expected and actual pension asset performance or interest rates.
Not included in the above table are $47 million of net potential cash obligations associated with uncertain tax positions due to the uncertainty regarding the future cash outflows associated with such obligations. Please see Note 9, “Income Taxes,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further information related to uncertain tax positions.
Not included in the above table are $41 million of asset retirement obligations related to our obligation to dismantle or remove leasehold improvements from leased office, retail store or warehouse locations at the end of a lease term in order to restore a facility to a condition specified in the lease agreement due to the uncertainty of timing of future cash outflows associated with such obligations. Please see Note 22, “Other Comments,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further information related to asset retirement obligations.
MARKET RISK
Financial instruments held by us as of February 1, 2026 primarily include cash and cash equivalents, short-term borrowings, long-term debt, foreign currency forward contracts and cross-currency swap contracts. Note 11, “Fair Value Measurements,” in the Notes to Consolidated Financial Statements included in Item 8 of this report outlines the fair value of our financial instruments as of February 1, 2026. Cash and cash equivalents held by us are affected by short-term interest rates. Given our balance of cash and cash equivalents at February 1, 2026, the effect of a 10 basis point change in short-term interest rates on our interest income would be approximately $0.7 million annually. Borrowings under our senior unsecured term loan facility bear interest at a rate equal to an applicable margin plus a variable rate. As such, our senior unsecured term loan facility exposes us to market risk for changes in interest rates. As of February 1, 2026, approximately 80% of our long-term debt was at a fixed interest rate, with the remaining (euro-denominated) balance at a variable interest rate. Interest on the euro-denominated debt is subject to change based on fluctuations in the one-month EURIBOR. The effect of a 10 basis point change in the current one-month EURIBOR on our variable interest expense would be approximately $0.5 million annually. Please see “Liquidity and Capital Resources” in the Management’s Discussion and Analysis section included in Part II, Item 7 of this report for further discussion of our credit facilities.
Our Tommy Hilfiger and Calvin Klein businesses each have substantial international components that expose us to significant foreign exchange risk. Over 70% of our $9.0 billion of revenue in 2025, $8.7 billion of revenue in 2024 and $9.2 billion of revenue in 2023 was generated outside of the United States. Changes in exchange rates between the United States dollar and other currencies can impact our financial results in two ways: a translational impact and a transactional impact.
The translational impact refers to the impact that changes in exchange rates can have on our results of operations and financial position. The functional currencies of our foreign subsidiaries are generally the applicable local currencies. Our consolidated financial statements are presented in United States dollars. The results of operations of our foreign subsidiaries are translated into United States dollars using an average exchange rate over the representative period and the assets and liabilities of our foreign subsidiaries are translated into United States dollars using the closing exchange rate at the balance sheet date. Foreign exchange differences that arise from the translation of our foreign subsidiaries’ assets and liabilities into United States dollars are recorded as foreign currency translation adjustments in other comprehensive income (loss). Accordingly, our results of operations and other comprehensive income (loss) will be unfavorably impacted during times of a strengthening United States dollar, particularly against the euro, the Japanese yen, the Korean won, the British pound, the Australian dollar, the Canadian dollar, the Mexican peso, the Brazilian real and the Chinese yuan, and favorably impacted during times of a weakening United States dollar against those currencies.
Our 2025 revenue and net income increased by approximately $250 million and $25 million, respectively, as compared to 2024 due to the impact of foreign currency translation. We currently expect our 2026 revenue and net income to increase by approximately $100 million and $15 million, respectively, as compared to 2025 due to the impact of foreign currency translation.
In 2025, we recognized favorable foreign currency translation adjustments of $403 million within other comprehensive income (loss) principally driven by a weakening of the United States dollar since February 2, 2025 against the euro of 14%. Our foreign currency translation adjustments recorded in other comprehensive income (loss) are significantly impacted by the
substantial amount of goodwill and other intangible assets denominated in the euro, which represented 46% of our $5.1 billion total goodwill and other intangible assets as of February 1, 2026. This translational impact was partially mitigated by the change in the fair value of our net investment hedges discussed below.
There also is a transactional impact of foreign exchange because we have foreign subsidiaries that purchase inventory in a currency other than their functional currency. We also have exposure to changes in foreign currency rates related to certain intercompany transactions and SG&A expenses. We currently use and plan to continue to use foreign currency forward contracts or other derivative instruments to mitigate the cash flow or market value risks associated with these inventory and intercompany transactions, but we are unable to entirely eliminate these risks. We enter into foreign currency forward contracts pertaining to these inventory transactions up to 15 months in advance of payment for a portion of the projected purchases and may enter into incremental contracts leading up to the time the payments occur.
The transactional impact of foreign currency on our 2025 gross margin as compared to 2024 was immaterial. The transactional impact of foreign currency on our 2026 gross margin as compared to 2025 is expected to be favorable by approximately 50 basis points.
Given our foreign currency forward contracts outstanding at February 1, 2026, the effect of a 10% change in foreign currency exchange rates against the United States dollar would result in a change in the fair value of these contracts of approximately $120 million. Any change in the fair value of these contracts would be substantially offset by a change in the fair value of the underlying hedged items.
In order to mitigate a portion of our exposure to changes in foreign currency exchange rates related to the value of our investments in foreign subsidiaries denominated in the euro, we use both non-derivative instruments (the par value of certain of our foreign-denominated debt) and derivative instruments (cross-currency swap contracts), which we designate as net investment hedges. We designated the par value of our €1.125 billion aggregate principal amount of senior notes issued by PVH Corp., a U.S.-based entity, as net investment hedges of our investments in certain of our foreign subsidiaries that use the euro as their functional currency. In addition, we entered into multiple receive fixed-rate United States dollar-denominated interest and pay fixed-rate euro-denominated interest cross-currency swap contracts in 2023, with a maturity date of July 2025. In July 2025, we completed a transaction to effectively blend and extend those cross-currency swaps with new receive fixed-rate United States dollar-denominated interest and pay fixed-rate euro-denominated interest cross-currency swap contracts maturing in July 2027 and July 2028. We also designated these cross-currency swap contracts as net investment hedges of our investments in certain of our foreign subsidiaries that use the euro as their functional currency. Please see Note 10, “Derivative Financial Instruments,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
The effect of a 10% change in the euro against the United States dollar would result in a change in the fair value of the net investment hedges of approximately $185 million. Any change in the fair value of the net investment hedges would be more than offset by a change in the value of our investments in certain of our European subsidiaries. Additionally, during times of a strengthening United States dollar against the euro, we would be required to use a lower amount of our cash flows from operations to pay interest and make long-term debt repayments on our euro-denominated senior notes and to settle our cross-currency swap contracts, whereas during times of a weakening United States dollar against the euro, we would be required to use a greater amount of our cash flows from operations to pay interest and make long-term debt repayments on these notes and to settle our cross-currency swap contracts.
Included in the calculations of expense and liabilities for our pension plans are various assumptions, including return on assets, discount rates and mortality rates. Actual results could differ from these assumptions, which would require adjustments to our balance sheet and could result in volatility in our future pension expense. Holding all other assumptions constant, a 1% change in the assumed rate of return on assets would result in a change to 2026 net benefit cost related to the pension plans of approximately $4 million. Likewise, a 0.25% change in the assumed discount rate would result in a change to 2026 net benefit cost of approximately $15 million.
SEASONALITY
Our business generally follows a seasonal pattern. Our wholesale businesses tend to generate higher levels of sales in the first and third quarters, while our direct-to-consumer businesses tend to generate higher levels of sales in the fourth quarter. Licensing revenue tends to be earned somewhat evenly throughout the year, although the third quarter tends to have the highest level of revenue due to higher sales by licensees in advance of the holiday selling season. Working capital requirements vary throughout the year to support these seasonal patterns and business trends.
RECENT ACCOUNTING PRONOUNCEMENTS
Please see Note 1, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for a discussion of recently issued and adopted accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Our significant accounting policies are outlined in Note 1, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of this report. We believe that the following are the more critical judgmental areas in the application of our accounting policies that currently affect our financial position and results of operations:
Sales allowances and returns —We have arrangements with many of our department and specialty store customers to support their sales of our products. We establish accruals we believe will be required to satisfy our sales allowance obligations based on a review of the individual customer arrangements, which may be a predetermined percentage of sales in certain cases or may be based on the expected performance of our products in their stores. We also establish accruals, which are based on historical experience, an evaluation of current sales trends and market conditions, and authorized amounts, that we believe are necessary to provide for sales allowances and inventory returns. It is possible that the accrual estimates could vary from actual results, which would require adjustment to the allowance and returns accruals.
Inventories— Inventories are comprised principally of finished goods and are stated at the lower of cost or net realizable value, except for certain retail inventories in North America that are stated at the lower of cost or market using the retail inventory method. Cost for all wholesale inventories in North America and certain wholesale and retail inventories in Asia is determined using the first-in, first-out method. Cost for all other inventories is determined using the weighted average cost method. We review current business trends and forecasts, inventory aging and discontinued merchandise categories to determine adjustments which we estimate will be needed to liquidate existing clearance inventories and record inventories at either the lower of cost or net realizable value or the lower of cost or market using the retail inventory method, as applicable. We believe that all inventory write-downs required at February 1, 2026 have been recorded. Our historical estimates of inventory reserves have not differed materially from actual results. If market conditions were to change, including as a result of the conflict in the Middle East and global trade policies (including tariffs) and their broader macroeconomic implications, as well as the impact of inflation and other macroeconomic factors, it is possible that the required level of inventory reserves would need to be adjusted.
Income taxes —Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe a portion will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings experience and expectations of future taxable income by taxing jurisdiction, the carryforward periods available to us for tax reporting purposes and other relevant factors. The actual realization of deferred tax assets may differ significantly from the amounts we have recorded.
During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting for income taxes requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if available evidence indicates it is more likely than not that the tax position will be fully sustained upon review by taxing authorities, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount with a greater than 50 percent likelihood of being realized upon ultimate settlement. For tax positions that are 50 percent or less likely of being sustained upon audit, we do not recognize any portion of that benefit in the financial statements. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. Our actual results have differed materially in the past and could differ materially in the future from our current estimates.
Goodwill and other intangible assets —Goodwill and other indefinite-lived intangible assets are tested for impairment annually, at the beginning of the third quarter of each fiscal year, and between annual tests if an event occurs or circumstances change that would indicate that it is more likely than not that the carrying amount may be impaired. Impairment testing for goodwill is done at the reporting unit level. A reporting unit is defined as an operating segment or one level below the operating
segment, called a component. However, two or more components of an operating segment will be aggregated and deemed a single reporting unit if the components have similar economic characteristics. Impairment testing for other indefinite-lived intangible assets is done at the individual asset level.
We assess qualitative factors to determine whether it is necessary to perform a more detailed quantitative impairment test for goodwill and other indefinite-lived intangible assets. We may elect to bypass the qualitative assessment and proceed directly to the quantitative test for any reporting units or indefinite-lived intangible assets. Qualitative factors that we consider as part of our assessment include a change in our market capitalization and its implied impact on reporting unit fair value, a change in our weighted average cost of capital, industry and market conditions, macroeconomic conditions, trends in product costs and financial performance of our businesses. If we perform the quantitative test for any reporting units or indefinite-lived intangible assets, we generally use a discounted cash flow method to estimate fair value. The discounted cash flow method is based on the present value of projected cash flows. Assumptions used in these cash flow projections are generally consistent with our internal forecasts and include revenue growth rate, gross margin, operating expenses and earnings before interest, taxes, depreciation and amortization margin. The estimated cash flows are discounted using a rate that represents our weighted average cost of capital. The weighted average cost of capital is based on a number of variables, including the equity-risk premium and risk-free interest rate. Management believes the assumptions used for the impairment tests are consistent with those that would be utilized by a market participant performing similar analysis and valuations. Adverse changes in future market conditions or weaker operating results compared to our expectations may impact our projected cash flows and estimates of weighted average cost of capital, which could result in a potential impairment charge if we are unable to recover the carrying value of our goodwill and other indefinite-lived intangible assets. For goodwill, if the carrying amount of a reporting unit exceeds its fair value, an impairmentloss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. For other indefinite-lived intangible assets, an impairmentloss is recognized to the extent the carrying amount of the asset exceeds its fair value.
Goodwill Impairment Testing
2025 Interim Impairment Test
Macroeconomic and geopolitical factors that occurred during the first quarter of 2025 resulted in significant market volatility and a decrease in our stock price. As a result, we determined there was a triggering event that required us to perform a quantitative interim goodwill impairment test as of the end of the first quarter of 2025.
As a result of this interim impairment test, we recorded $426 million of noncash impairment charges during the first quarter of 2025, which were included in goodwill and other intangible asset impairments in our Consolidated Statement of Operations and included in restructuring and other items for segment data reporting purposes. The impairments were primarily due to a significant increase in discount rates, which incorporated elevated risk premiums, in particular for the Americas and APAC reporting units. Impairment charges of $8 million and $418 million fully impaired the goodwill balances in the Americas and APAC segments, respectively.
The fair value of the reporting units for goodwill impairment testing was determined using an income approach. The income approach was based on discounted projected future (debt-free) cash flows for each reporting unit. The discount rates applied to these cash flows were based on the weighted average cost of capital for each reporting unit, which takes market participant assumptions into consideration, inclusive of a risk premium for each reporting unit to account for the additional risk and uncertainty perceived by market participants related to each reporting unit’s cash flows due to macroeconomic and geopolitical factors.
2025 Annual Impairment Test
For the 2025 annual goodwill impairment test performed as of the beginning of the third quarter of 2025, we elected to assess qualitative factors first to determine whether it was more likely than not that the fair value of each reporting unit with allocated goodwill was less than its carrying amount.
We assessed relevant events and circumstances, including industry, market and macroeconomic conditions, as well as Company and reporting unit-specific factors. In performing this assessment, we considered the results of our quantitative interim goodwill impairment test performed in the first quarter of 2025 and the impact of changes in the weighted average cost of capital and updated financial forecasts since the date of the interim impairment test.
After assessing these events and circumstances, we determined that it was not more likely than not that the fair value of each reporting unit with allocated goodwill was less than its carrying amount and concluded that the quantitative goodwill impairment test was not required. No impairment of goodwill resulted from our annual impairment test.
No impairment of goodwill resulted from our annual impairment tests in 2024 or 2023. Please see Note 7, “Goodwill and Other Intangible Assets,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
We also determined the macroeconomic and geopolitical conditions that occurred during the first quarter of 2025 and resulting impacts discussed above were also a triggering event that prompted the need to perform interim impairment testing of our other indefinite-lived intangible assets as of the end of the first quarter of 2025. For the TOMMY HILFIGER and Calvin Klein tradenames and the reacquired perpetual license rights for TOMMY HILFIGER in India, we elected to first assess qualitative factors to determine whether it was more likely than not that the fair value of any asset was less than its carrying amount. For these assets, no impairment was identified as a result of our annual indefinite-lived intangible asset impairment test for 2024 and the fair values of these indefinite-lived intangible assets substantially exceeded their carrying amounts. The asset with the least excess fair value had an estimated fair value that exceeded its carrying amount by approximately 93% as of the date of our 2024 annual test. Considering this and other factors, we determined qualitatively that it was not more likely than not that the fair values of these indefinite-lived intangible assets were less than their carrying amounts and concluded that a quantitative impairment test was not required.
For the reacquired perpetual license rights in Australia, we elected to bypass the qualitative assessment and proceeded directly to the quantitative impairment test. As a result of this quantitative interim impairment testing, we recorded $54 million of noncash impairment charges during the first quarter of 2025 to write down the license rights, which had a carrying amount of $191 million, to a fair value of $137 million. The $54 million of impairment charges was included in goodwill and other intangible asset impairments in our Consolidated Statement of Operations and included in restructuring and other items for segment data reporting purposes. The impairment was primarily due to a significant increase in discount rates. Holding all other assumptions constant, a 100 basis point change in the annual revenue growth rate of the Australia business would result in a change to the estimated fair value of the license rights of approximately $22 million. Likewise, a 100 basis point change in the weighted average cost of capital would result in a change to the estimated fair value of the license rights of approximately $25 million.
The fair value of our reacquired perpetual license rights in Australia was determined using an income approach which estimates the net cash flows directly attributable to the subject intangible asset. These cash flows were discounted to present value using a discount rate of approximately 17% that factors in the relative risk of the intangible asset.
2025 Annual Impairment Test
For the 2025 annual indefinite-lived intangible assets impairment test performed as of the beginning of the third quarter of 2025, we elected to assess qualitative factors first to determine whether it was more likely than not that the fair value of any asset was less than its carrying amount.
We assessed relevant events and circumstances, including industry, market and macroeconomic conditions, as well as Company and asset-specific factors. In performing this assessment, we considered the results of our interim impairment testing performed in the first quarter of 2025 and the impact of changes in the weighted average cost of capital and updated financial forecasts since the date of the interim impairment test. After assessing these events and circumstances, we determined that it was not more likely than not that the fair value of our indefinite-lived intangible assets were less than their carrying amounts and concluded that a quantitative impairment test was not required. No impairment of indefinite-lived intangible assets resulted from our annual impairment test. Except for the reacquired perpetual license rights in Australia, for which the most recent quantitative impairment test was performed in the first quarter of 2025, the results of which are described above, all indefinite-lived intangibles had significant excess fair value in the most recent quantitative impairment test performed in 2024.
No impairment of indefinite-lived intangible assets resulted from our annual impairment tests in 2024 or 2023. Please see Note 7, “Goodwill and Other Intangible Assets,” in the Notes to Consolidated Financial Statements included in Item 8 of this report for further discussion.
Considerations Since the 2025 Annual Impairment Tests
There have been no significant events or change in circumstances since the date of the 2025 annual impairment tests that would indicate the remaining carrying amounts of our goodwill and other indefinite-lived intangible assets may be impaired as of February 1, 2026. If different assumptions for our goodwill and other indefinite-lived intangible assets impairment tests had been applied, significantly different outcomes could have resulted. There continues to be significant uncertainty with respect to the conflict in the Middle East and global trade policies (including tariffs) and their broader macroeconomic implications, as well as the impact of inflation and other macroeconomic factors, and foreign currency volatility. If economic conditions or market factors utilized in the impairment analysis deteriorate or otherwise vary from current assumptions (including those resulting in changes in the weighted average cost of capital), industry conditions deteriorate, or business conditions or strategies for a specific reporting unit change from current assumptions, our businesses do not perform as projected, or there is an extended period of a significant decline in our stock price, we could incur additional goodwill and other indefinite-lived intangible asset impairment charges in the future.
