Tommy Hilfiger and Calvin Klein expand into New Zealand despite Covid-19 risks

30 Aug 2020 11:08 AM | Mike Hearn (Administrator)

International retail brands Tommy Hilfiger and Calvin Klein are gearing up to open their first New Zealand stores next week once Auckland has moved to alert level 2.

The American clothing and underwear retailers have each taken up a tenancy at Auckland's Commercial Bay shopping precinct and expect to open their doors for the first time on Monday, August 31 after facing months of delays because of Covid-19.

Tommy Hilfiger and Calvin Klein, owned and operated by NYSE-listed PVH Corporation, has had its eye on a launch in the New Zealand market since 2017.

The retail company will invest about $2 million and create 44 jobs this side of Christmas to expand into the country.

Craig Barnett, chief executive of PVH Brands Australia, said plans to launch in New Zealand were briefly put on the back burner as it focused on meeting a surge in demand in Australia, where the group operates 30 Tommy Hilfiger and 38 Calvin Klein stores.

Barnett said Commercial Bay owner Precinct Properties reached out to PVH Brands to offer its brands tenancies in the billion-dollar development in 2018.

PVH took over Tommy Hilfiger in Australia in 2015 and Calvin Klein has been trading in the market since 2002. Barnett said both brands were "going nuts" across the Tasman, resonating with the millennial consumer, and expected them to be received here similarly.

"Even during Covid, our e-commerce has gone nuts. The stores that are open are trading well up on last year," Barnett told the Herald.

"We hope these initial stores in Auckland are going to be so successful that we want to do more. We think there is a lot more potential."

New Zealand's population size could service "at least" two stores of each brand, he said, but was coy about any plans underway or locations for future stores.

The company's online businesses were growing at a significant rate, partly because of the onset of the Covid-19 pandemic, and it would launch local domain websites for both brands by November, Barnett said.

"We're reading what the consumer wants, at the moment; they certainly like the physical showroom of a flagship ... but they probably don't need as many of them as they used to.

"We're a little bit more guarded than we were six months ago in terms of the mix of physical stores and online. We're seeing such strong growth online - it's clearly what the consumer wants and we've got to take that into our decision making."

PVH has a stock warehousing facility in Auckland, which it will eventually use to fulfil online orders. In the first instance, orders will be fulfilled from Sydney.

The company operates a wholesale business in New Zealand through Smith & Caughey's and David Jones. Barnett said it would take some time for the two new stores to overtake that business as the breadwinner.

The opening of the two stores would create 44 jobs this side of Christmas, he said.

Barnett said PVH Brands had no worries or concerns about opening the Commercial Bay stores despite the borders being closed to cruise ships visitors and international tourists.

When we saw the whole cruise thing shut down we didn't flinch; it doesn't make a big difference to our model or our concerns.

"We actually don't really on tourism that much - it's not a big part of our demographic. We typically have a younger demographic than those cruise ships are filled with - the core demographic is 18 to 25."

Barnett was unable to share any sales or visitor number forecasts for both stores before the company's half-yearly earnings result.

Global retail sales of products sold under the Tommy Hilfiger brand were about US$9.2 billion ($13.8b) and US$9.4b ($14.1b) under the Calvin Klein brand in 2019.

Van Hessen chain to set up shop

Other brands in the PVH portfolio include Pierre Cardin, Nancy Ganz and men's suits and business wear brand Van Heusen, which is evolving to become more of a casual offering

Van Heusen has a retail network of 16 stores in Australia and Barnett said PVH was looking into way it could expand that into New Zealand.

He said the company would wait for Covid to be behind it before it looked to invest in physical stores, but it was "already on the lookout for retail opportunities" in the market.

It was looking for high street and traditional shopping centre store locations, he said.

Barnett said the company was not concerned about the impact Covid might have on its business under various restrictions in the New Zealand market.

"We've set up our retail presence in New Zealand for the long term. What happens in the next six months isn't material to our long-term ambitions for retailing," he said.

"Kiwis love fashion and big international brands, all evidence is that they are going to embrace our brands, and the four seasons New Zealand has really appeals to us for fashion [collections] and we think we're going to do well."

The Tommy Hilfiger and Calvin Klein stores were originally planned to open alongside the official opening of Commercial Bay in March before the Covid-19 pandemic. However, the centre's opening was once again delayed and opened in June.

The stores were unable to open in June because of a series of Covid-related delays including part of its store fit-out stuck in China.

Retail analyst Chris Wilkinson said the Tommy Hilfiger and Calvin Klein stores at Commercial Bay would draw people into the centre after the initial fanfare it received when it opened in June.

The presence of the well-known international brands, along with other big names in the centre, and when the transport works were complete, would replicate a similar world-class offering to that found in the likes of London and Sydney, he said.

"The success of retail going forward is to be able to develop strong clusters where you have a lot of complementary offers within a smaller area, where consumers can have confidence going there to find a range of products and experiences."

Wilkinson said he expected both brands would be successful in the New Zealand market.

Source: NZ Herald. By: Aimee Shaw