EXIT ACTIVITY COSTS

6 Months Ended

Aug. 04, 2024

Growth Driver 5 Actions

In line with the fifth growth driver of the PVH+ Plan - drive efficiencies and invest in growth - the Company embarked on a multi-year initiative to simplify its operating model by centralizing certain processes and improving systems and automation to drive more efficient and cost-effective ways of working across the organization, through four main pillars: (i) delivering a single global technology stack, (ii) redesigning the Company’s global distribution network, (iii) reengineering the operating model in Europe, and (iv) streamlining and optimizing the Company’s support functions globally (referred to as “Growth Driver 5 Actions”).

The Company expects to generate annual cost savings of approximately $200 million to $300 million, net of continued strategic investments by 2026, with the actions to support this initiative largely completed by the end of 2025. In connection with this initiative, the Company recorded pre-tax severance, termination benefits and other employee costs of $15.3 million during the thirteen and twenty-six weeks ended August 4, 2024 related to initial actions taken, and expects to incur additional pre-tax costs consisting primarily of severance, termination benefits and other employee costs of approximately $20 million during the remainder of 2024. The Company expects to incur additional costs in 2025 in connection with this initiative, however the additional costs cannot be quantified at this time.

The pre-tax costs incurred in connection with the Growth Driver 5 Actions were recorded in SG&A expenses of the Company’s segments as follows:


(In millions)	Costs Incurred During the Thirteen and Twenty-Six Weeks Ended 8/4/24
Tommy Hilfiger North America	$	1.4
Tommy Hilfiger International	7.3
Calvin Klein North America	1.4
Calvin Klein International	5.2
Total	$	15.3

Please see Note 16, “Segment Data,” for further discussion of the Company’s reportable segments.

The liabilities related to these costs were principally recorded in accrued expenses in the Company’s Consolidated Balance Sheet and were as follows:


(In millions)	Liability at 2/4/24		Costs Incurred During the Twenty-Six Weeks Ended 8/4/24		Costs Paid During the Twenty-Six Weeks Ended 8/4/24		Liability at 8/4/24
Severance, termination benefits and other employee costs	$	—	$	15.3	$	0.5	$	14.8

2022 Cost Savings Initiative

The Company announced in August 2022 that it would be taking steps to streamline its organization and simplify its ways of working. Included in this was a planned reduction in people costs in its 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, which was completed. These reductions have resulted in annual cost savings of over $100 million, net of continued strategic people investments. In connection with this initiative, the Company recorded pre-tax severance, termination benefits and other employee costs of $81.5 million during 2022 and 2023, of which $39.0 million was incurred during the thirteen and twenty-six weeks ended July 30, 2023. All expected costs related to this initiative were incurred by the end of 2023.

The pre-tax costs incurred in connection with the 2022 cost savings initiative were recorded in SG&A expenses of the Company’s segments as follows:


(In millions)	Costs Incurred During the Thirteen and Twenty-Six Weeks Ended 7/30/23		Cumulative Costs Incurred
Tommy Hilfiger North America	$	6.4	$	17.4
Tommy Hilfiger International	12.3		19.8
Calvin Klein North America	5.9		13.7
Calvin Klein International	8.5		14.3
Heritage Brands Wholesale	4.6		10.4
Corporate (1)	1.3		5.9
Total	$	39.0	$	81.5

(1) Corporate expenses are not allocated to any reportable segment.

Please see Note 16, “Segment Data,” for further discussion of the Company’s reportable segments.

The liabilities related to these costs were principally recorded in accrued expenses in the Company’s Consolidated Balance Sheet and were as follows:


(In millions)	Liability at 2/4/24		Costs Paid During the Twenty-Six Weeks Ended 8/4/24		Liability at 8/4/24
Severance, termination benefits and other employee costs	$	20.4	$	14.5	$	5.9