A US clothing retailer that’s actually doing well feels like an anomaly these days. Labels such as the Limited, American Apparel, and Abercrombie & Fitch are shuttering locations across the country, as are department stores such as Macy’s. “The retail apocalypse has officially descended on America,” Business Insider declared, pointing out that more than 3,500 retail stores, many of which sell clothes, are expected to close within the next few months.
But Tommy Hilfiger and Calvin Klein are successfully weathering the storm, and even thriving. In 2016, Calvin Klein’s sales grew 7%, while Tommy Hilfiger’s rose 4%. The main reason is that, despite being quintessential American labels, many of their sales don’t come from any one US outlet, or the US at all.
Several years ago, the brands’ owner, PVH Corp., began diversifying their sales bases beyond the US department stores that many other brands continued to rely on. It has also invested heavily in e-commerce to connect directly with shoppers. Those moves have paid off.
Now, even though both Tommy’s and Calvin’s US businesses are suffering like many others’, with sales growth falling, overseas sales growth thrived in the most recent quarter.
“Today, 50% of our revenues are outside the United States,” Manny Chirico, the CEO of PVH, said on a March 23 call with investors. “I think that’s larger than just about every other US apparel maker.”
International sales at Tommy Hilfiger, for instance, were about $93 million greater than its US sales. Chirico called the brand’s $2 billion business in Europe one of the standouts among PVH’s portfolio. Calvin Klein’s European business ended up having to discount less product than it expected, something practically unheard of in the US these days.
On top of that, those international businesses have much higher operating margins, which means close to 60% of PVH’s profits now come from overseas, Chirico said. The strength in Europe and Asia—China, in particular—doesn’t show signs of slowing either. PVH believes it can double the size of the Tommy Hilfiger and Calvin Klein businesses in China over the next five years.
Over the last year, Tommy Hilfiger benefited particularly from a collaboration with model and social-media star Gigi Hadid. The more than 30 million followers she has on Instagram have allowed Tommy Hilfiger to connect with a new female customer base, according to Chirico, and helped the brand generate double-digit sales growth in its women’s business across all regions.
At Calvin Klein, jeans and underwear continue to be the top sellers, while Raf Simons, the newly appointed creative head for the brand, has brought a new buzz to its high-end collection that had been missing for some time. (The Belgian designer’s popularity in Europe certainly won’t hurt sales in the years ahead either.)
But the key seems to be not putting all your eggs in one basket. Chirico said there’s no retailer that represents even 10% of the company’s sales at this point. The clothing companies struggling as US department stores falter must be jealous.