Financial Risk Management at Tommy Hilfiger DACT Noordwijk 11 November 2011.

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Presentation transcript:

Financial Risk Management at Tommy Hilfiger DACT Noordwijk 11 November 2011

2 Agenda 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

Tommy Hilfiger is part of PVH, One of the World’s Largest Branded Lifestyle and Apparel Companies We Grow Powerful Global Lifestyle Brands INTRODUCTION

A GLOBAL LEADER IN THE APPAREL INDUSTRY 2010 REVENUES ($ in billions)

A WORLD CLASS PORTFOLIO OF BRANDS 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. Licensed* Owned* GLOBAL GROWTH BRANDS I Z O D A R R O W B A S S V A N H E U S E N

Global Retail PF 2010 Revenues: ~$4.6 BN Classic American Cool/Preppy With A Twist Strong Global Brand Awareness Proven Affordable Designer Lifestyle Brand TOMMY HILFIGER: BRAND OVERVIEW 10% 44% 36% N. America Asia Rest of the World Europe 10%

Over 1,050 Stores and over 10,000 Doors Globally in 90 countries as of July 31, 2011 Over 500 Company Operated Stores 1. Includes the U.S. and Canada. 2. Includes franchisee stores. 3. Includes Australia and Central and South America. TOMMY HILFIGER: EXTENSIVE & GROWING GLOBAL DISTRIBUTION North America (1) Total Stores: 225 Europe (2) Total Stores: 439 Rest of World (3) Licensees’ stores: >150 Japan Total Stores: 129 Asia (excl. Japan) Licensees’ stores: 108 DistributionNo Distribution

PVH/TOMMY HILFIGER GROUP 8 PVH Corp Tommy Hilfiger BV Tommy Hilfiger Europe BV Tommy Hilfiger Japan Joint ventures -China -India Tommy Hilfiger USA Retail entities Wholesale entities PVH Europe BV

TREASURY ORGANIZATION PVH Treasury Tommy Hilfiger International -Europe -Japan -Asia PVH TH USA TH Canada 9 Cash & Liquidity Management US Bank Relations Currency Hedging (Standby) Letters of Credit Cash & Liquidity Management European Bank Relationships Currency Hedging Bank Guarantees Overall bank relationship management Financing Compliance

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 10

Ongoing evaluation New offerings by other vendors Compare offering with existing situation In 2011 migration from Reuters 3000 Xtra to Thomson Reuters Eikon 11

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. 12

RISK MANAGEMENT POLICIES Investments & Credit Risk FX Interest 13

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 14

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FX STRATEGY FX coverage horizon 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 16

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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 21

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And the favourite of every Treasurer… How are my shares doing? 23

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