A GLOBAL LEADER IN THE APPAREL INDUSTRY

Report
Financial Risk Management at
Tommy Hilfiger
DACT Noordwijk
11 November 2011
Agenda
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PVH/Tommy Hilfiger Group
Brand history and company development
Treasury organization
Thomson Reuters Eikon supporting our workflow
Risk Management policies
FX strategy and instruments used
INTRODUCTION
Tommy Hilfiger is part of PVH, One of the World’s Largest Branded Lifestyle and Apparel
Companies
We Grow Powerful Global Lifestyle Brands
A GLOBAL LEADER IN THE APPAREL INDUSTRY
2010 REVENUES
($ in billions)
A WORLD CLASS PORTFOLIO OF BRANDS
GLOBAL GROWTH BRANDS
IZOD •
ARROW • BASS
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VAN HEUSEN
Owned*
Licensed*
CHAPS
DKNY
Geoffrey Beene
Hart Schaffner Marx
JOE Joseph Abboud
Kenneth Cole Reaction
Kenneth Cole New York
MICHAEL Michael Kors
Nautica
Sean John
Ike Behar
*Reflects a partial list.
TOMMY HILFIGER: BRAND OVERVIEW
Global Retail PF 2010 Revenues: ~$4.6 BN
10%
36%
10%
N. America
Asia
Rest of the World
44%
Europe
Classic American Cool/Preppy With A Twist
Strong Global Brand Awareness
Proven Affordable Designer Lifestyle Brand
TOMMY HILFIGER: EXTENSIVE & GROWING
GLOBAL DISTRIBUTION
Over 1,050 Stores and over 10,000 Doors Globally in 90 countries as of July 31, 2011
Over 500 Company Operated Stores
Asia (excl.
Japan)
Licensees’ stores:
108
North America
(1)
Japan
Total Stores:
225
Total Stores: 129
Europe (2)
Rest of World
Total Stores: 439
1. Includes the U.S. and Canada.
2. Includes franchisee stores.
3. Includes Australia and Central and South America.
(3)
Licensees’
stores: >150
Distribution
No Distribution
PVH/TOMMY HILFIGER GROUP
PVH Corp
Tommy Hilfiger USA
Tommy Hilfiger BV
Tommy Hilfiger
Europe BV
Retail
entities
Wholesale
entities
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PVH Europe BV
Tommy Hilfiger
Japan
Joint ventures
-China
-India
TREASURY ORGANIZATION
PVH Treasury
PVH
TH USA
TH Canada
Cash & Liquidity Management
US Bank Relations
Currency Hedging
(Standby) Letters of Credit
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Overall bank relationship management
Financing
Compliance
Tommy
Hilfiger
International
-Europe
-Japan
-Asia
Cash & Liquidity Management
European Bank Relationships
Currency Hedging
Bank Guarantees
Why Thomson Reuters Eikon?
• Decision to invest in Market Information System
– Growing volume of FX and further professionalization of
Treasury function
– Need for better information on Markets
– Bloomberg or Reuters
– Money Markets and FX Markets are most important
– User friendly
– Pricing
• Decided to sign contract with Thomson Reuters in
Sep 08 for Reuters 3000 extra
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Ongoing evaluation
• New offerings by other vendors
• Compare offering with existing situation
• In 2011 migration from Reuters 3000 Xtra to
Thomson Reuters Eikon
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THOMSON REUTERS EIKON:
Supporting our workflow
• Supporting our FX Risk Management needs:
– Delivering real-time data on current rates and the drivers/news behind
movements in the market
– Providing deep analysis supported by graphical information on trends in
the market
– Detailed Input for budget rate process
– Fully mobile – not only available on desktop but Blackberry, iPad and
iPhone
• Looking to the future:
– We plan to use the RTFX tool for executing transactions with direct
buy/sell as well as limit and stop/loss orders.
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RISK MANAGEMENT POLICIES
• Investments & Credit Risk
• FX
• Interest
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INVESTMENT & CREDIT RISK
• Crisis attracts more attention from senior
management on credit risk
• Avoid concentration of deposit/investments in a
single risk
• Watch credit risk banks, sovereigns/country risk
• Valuation of bank guarantees from customers
• Regular update and check of approved instruments
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FX STRATEGY
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FX coverage horizon 12-15 months
Coverage of inventory purchase for 2 main seasons
Main risk is EUR/USD
Other are EUR/GBP, EUR/TRY, EUR/NOK
65-70% of goods are coming from Asian countries
Mainly traditional instruments are used
Instruments need to qualify for hedge accounting
M&A and financing related hedging
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INTEREST RISK
• Funding divided between US (USD) and Europe
(EUR)
• Interest Risk is decided centrally
• Instruments used are swaps and caps
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And the favourite of every Treasurer…
• How are my shares doing?
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