Please ensure Javascript is enabled for purposes of website accessibility

Calvin Klein, Tommy Hilfiger Owner May 'Pack and Hold' Inventory Until Next Spring

By Daniel B. Kline - Apr 7, 2020 at 9:53AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With stores closed, it's easy to see why that decision may make sense.

It makes very little sense to fill closed stores with inventory. That's why PVH Corp. (PVH -1.92%), the parent company of Calvin Klein and Tommy Hilfiger, says it may "pack and hold" some of its spring and summer inventory.

The move would allow the clothing manufacturer to be able to sell its merchandise at full price (or close to it), CEO Emanuel Chirico said during his company's fourth-quarter earnings call.

 A man wearing Tommy Hilfiger.

PVH may hold onto some of its inventory for a year. Image source: PVH.

Trying a bunch of things

Normally, spring would be a peak sales season. That's clearly not the case this year, as the coronavirus pandemic has forced many stores to close. Online stores are, of course, still open, but the demand for clothing has dropped dramatically with so much of the country closed.

In addition to packing and holding some inventory, the company also plans to work with vendors "to push inventory commitments out at least an additional four to five weeks," Chirico said, according to a report by RetailDive.

"We try to turn the inventory into cash," he said. "The old story is in apparel, if you're having a sales problem, this is not like wine that gets better with age. Your inventory gets worse. This is a completely different situation and we have to have a completely different mindset."

A moving target

It's impossible to know when people will go back to work and when stores will reopen. Even people who are working probably aren't spending money on new outfits. That means that there's limited demand for new clothing.

PVH is taking the steps it can to preserve cash and maintain the value of its inventory. It's hard to know what the interest will be in year-old clothes but it will almost certainly be higher than it is right now.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

PVH Corp. Stock Quote
PVH Corp.
PVH
$60.81 (-1.92%) $-1.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.