ACQUISITIONS

12 Months Ended

Feb. 04, 2024

Business Combinations [Abstract]

ACQUISITIONS AND DIVESTITURES

ACQUISITIONS AND DIVESTITURES

Australia Acquisition

The Company acquired in 2019 the approximately 78% ownership interest in Gazal Corporation Limited (“Gazal”) that it did not already own (the “Australia acquisition”).

Mandatorily Redeemable Non-Controlling Interest

Pursuant to the terms of the acquisition agreement, key executives of Gazal and PVH Brands Australia Pty. Limited exchanged a portion of their interests in Gazal for approximately 6% of the outstanding shares of the Company’s previously wholly owned subsidiary that acquired 100% of the ownership interests in the Australia business. The Company was obligated to purchase this 6% interest within two years of the Australia acquisition closing in two tranches: tranche 1 – up to 50% of the shares one year after the closing; and tranche 2 – all remaining shares two years after the closing. The Company recognized a liability for this obligation on the date of the Australia acquisition, which the Company accounted for as a mandatorily redeemable non-controlling interest. The Company recorded subsequent adjustments to the liability in interest expense in the Company’s Consolidated Statements of Operations.

The Company paid the management shareholders an aggregate purchase price of $17.3 million for the tranche 1 shares in June 2020 and an aggregate purchase price of $24.4 million for the tranche 2 shares in June 2021 based on exchange rates in effect on the applicable payment dates. The tranche 2 payments are presented within the Company’s Consolidated Statement of Cash Flows in 2021 as follows: (i) $15.2 million as financing cash flows, which represented the initial fair value of the liability for the tranche 2 shares recognized on the acquisition date, and (ii) $9.2 million as operating cash flows for tranche 2 shares attributable to interest. The Company had no remaining liability for the mandatorily redeemable non-controlling interest as of January 30, 2022.

Sale of Warner’s, Olga and True&Co. Women’s Intimates Businesses

The Company entered into a definitive agreement on November 10, 2023 to sell its Warner’s, Olga and True&Co. women’s intimates businesses to Basic Resources for $160.0 million in cash and completed the sale on November 27, 2023 for net proceeds of $155.6 million, after transaction costs. The carrying value of the net assets sold on the closing date was $140.3 million, which consisted of $44.5 million of inventory and $95.8 million of tradenames. There is a potential earnout of up to $10.0 million that the Company may receive subsequent to the earnout period, based on calendar year 2024 net sales of a portion of the sold businesses.

In connection with the closing of the transaction, the Company recorded a gain of $15.3 million, which represented the excess of the amount of consideration received over the net carrying value of the assets, less costs to sell. The gain was recorded in other gain in the Company’s Consolidated Statement of Operations and included in the Heritage Brands Wholesale segment. An incremental gain, if any, will be recorded once realized at the conclusion of the earnout period equivalent to the amount of the earnout up to $10.0 million.

Sale of Van Heusen, IZOD, ARROW and Geoffrey Beene Trademarks and Other Assets

The Company entered into a definitive agreement on June 23, 2021 to sell its Van Heusen, IZOD, ARROW and Geoffrey Beene trademarks, as well as certain related inventories, to ABG and other parties for $222.9 million in cash and completed the sale on August 2, 2021 for net proceeds of $216.3 million, after transaction costs. The carrying value of the net assets sold on the closing date was $97.8 million.

In connection with the closing of the transaction, the Company recorded a pre-tax gain of $118.5 million in the third quarter of 2021, which represented the excess of the amount of consideration received over the net carrying value of the assets, less costs to sell. The gain was recorded in other gain in the Company’s Consolidated Statement of Operations and included in the Heritage Brands Wholesale segment.

In connection with the sale, the employment of certain employees based in the United States engaged in the Heritage Brands business was terminated in the third quarter of 2021. However, the Company retained the liability for any deferred vested benefits earned by these employees under its retirement plans. No further benefits were accrued under the plans for these employees and as a result, the Company recognized a gain of $1.8 million in the third quarter of 2021 with a corresponding decrease to its pension benefit obligation. For certain eligible employees affected by the transaction, the Company provided an enhanced retirement benefit and as a result recognized $1.4 million of special termination benefit costs in the third quarter of 2021 with a corresponding increase to its pension benefit obligation. These amounts were included in other gain in the Company’s Consolidated Statement of Operations. Please see Note 12, “Retirement and Benefit Plans,” for further discussion.