EXIT ACTIVITY COSTS

12 Months Ended

Feb. 02, 2025

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 beginning in the second quarter of 2024 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 during 2024 of $33.5 million. In addition, the Company sold a warehouse and distribution center during the third quarter of 2024 in connection with this initiative, resulting in a pre-tax gain of $9.5 million that was included in other gain in the Company’s Consolidated Statement of Operations. Such amount represents the consideration received, less costs to sell. The warehouse and distribution center assets had no remaining value at the time of the sale. The Company expects to incur additional costs in 2025, however the additional costs cannot be quantified at this time.

The pre-tax severance, termination benefits and other employee 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 2024
Tommy Hilfiger North America	$	2.8
Tommy Hilfiger International	14.6
Calvin Klein North America	3.2
Calvin Klein International	7.1
Corporate (1)	5.8
Total	$	33.5

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

The pre-tax gain of $9.5 million related to the sale of a warehouse and distribution center was recorded in other gain in corporate expenses not allocated to any reportable segment.

Please see Note 19, “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 2024		Costs Paid During 2024		Liability at 2/2/25
Severance, termination benefits and other employee costs	$	—	$	33.5	$	10.9	$	22.6

2022 Cost Savings Initiative

The Company announced in August 2022 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, of which $20.2 million was incurred during 2022 and $61.3 million was incurred during 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 2022		Costs Incurred During 2023		Cumulative Costs Incurred
Tommy Hilfiger North America	$	4.7	$	12.7	$	17.4
Tommy Hilfiger International	2.5		17.3		19.8
Calvin Klein North America	4.6		9.1		13.7
Calvin Klein International	3.5		10.8		14.3
Heritage Brands Wholesale	2.6		7.8		10.4
Corporate (1)	2.3		3.6		5.9
Total	$	20.2	$	61.3	$	81.5

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

Please see Note 19, “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 Sheets and were as follows:


(In millions)	Liability at 2/4/24		Costs Paid During 2024		Liability at 2/2/25
Severance, termination benefits and other employee costs	$	20.4	$	17.6	$	2.8

Russia Business Exit Costs

As a result of the war in Ukraine, the Company made the decision in 2022 to exit from its Russia business, including the closure of its retail stores in Russia and the cessation of its wholesale operations in Russia and Belarus. In connection with this exit, the Company recorded pre-tax costs during 2022 as shown in the following table. All expected costs related to the exit from the Russia business were incurred during 2022.


(In millions)	Costs Incurred During 2022
Severance, termination benefits and other employee costs	$	2.1
Long-lived asset impairments	43.6
Gain on lease terminations, net of contract termination and other costs (1)	(2.7)
Total	$	43.0

(1) Gain on lease terminations, net of contract termination and other costs includes a $7.5 million gain related to the early termination of certain store lease agreements and $4.8 million of contract termination and other costs.

The pre-tax costs incurred in connection with the exit from the Russia business were recorded in SG&A expenses of the Company’s segments as follows: $31.6 million in the Tommy Hilfiger International segment and $11.4 million in the Calvin Klein International segment. Please see Note 19, “Segment Data,” for further discussion of the Company’s reportable segments.

Please see Note 10, “Fair Value Measurements,” for further discussion of the long-lived asset impairments recorded during 2022.

The liabilities related to these costs were paid as of February 4, 2024.