It makes very little sense to fill closed stores with inventory. That's why PVH Corp. (PVH +0.97%), 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.
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.
