Stefan Larsson
Chief Executive Officer at PVH
Thank you, Sheryl, and good morning, everyone, and thank you for joining our call today. For the fourth quarter and full year, we drove strong performance that was ahead of our guidance for both top and bottom line, driven by the strength of our two iconic brands Calvin Klein and Tommy Hilfiger and the disciplined execution of our PVH+ Plan. This included a very strong holiday season. For the fourth quarter, we drove double-digit growth in our owned and operated e-commerce and high-single digit growth in our stores. This was offset by a challenging wholesale channel resulting in flat revenues overall for the quarter on a reported basis and down 1% in constant currency.
We continued to drive quality of sales up with higher AURs and we expanded our gross margins by 440 basis points year-over-year. On a non GAAP basis, we delivered 40% increase in EBIT dollars and 12.1% EBIT margin and an EPS growth of over 50%. For the full year, we grew revenue 2% on a reported basis and 1% in constant currency, including high-single digit D2C growth, while expanding our gross margins by 140 basis points and we drove a 9% increase in EBIT dollars and a 60 basis point increase in EBIT's margins to 10.1% and we delivered EPS growth of nearly 20% and achieved a record high EPS. We ended the year with inventory in great shape down 21% compared to last year and produced significant cash flow, which we used to buy back approximately 550 million of stock.
Looking back on the first two years of PVH+ Plan execution, you can see a clear trend in that where we lean in to execute, we deliver. We have put 100% of our focus on our globally beloved iconic brands Calvin and Tommy, and divested all other regionally focused brands. We are building a very strong leadership team with experience to move PVH from a legacy brand acquirer to leading brand builder. Today, I'm especially excited to share that Lea Rytz Goldman is starting this week as Tommy Hilfiger Global President. Lea most recently comes from successfully leading the COS brand's impressive global growth.
Through the PVH+ Plan, we have driven strong D2C growth for both 2022 and 2023 across all brands and all regions through strength in product, marketing, and marketplace execution. We have developed strong product category offense in key categories and must have hero products, significantly increasing AURs and gross margin rate. We are executing breakthrough campaigns with very strong global talent amplification to really cut through with the consumer. During 2023, Calvin drove more consumer engagement than at any other time in the history of the brand with mega talents such as Jennie Kim, Jung Kook, Kendall Jenner, Michael B. Jordan and most recently Jeremy Allen White.
And Tommy went back to his roots of classic American cool, most recently created cut through global attention with his return to New York Fashion Week. We have strengthened the brand experience across social, e-commerce and stores, and in an increasingly tough wholesale channel, we have deepened our relationships with our key partners and applied a strong quality of sales focus globally. Regionally, we have grown our European business in a very tough macro environment with our business today over $4 billion over 20% larger than 2019 and driving higher profits.
We have started to successfully unlock North America despite a choppy backdrop driving significant margin expansion, including an 8.3% EBIT margin for 2023 and we are taking back our license of core product categories as part of a multi-year transition beginning in 2025, which will allow us to draw on the power and expertise of our global brand teams. We have also turned Asia into a growth engine where we are now taking share on a consistent basis with double-digit constant currency revenue growth in both 2022 and 2023.
As a company, we have successfully started to build out our data and demand-driven operating model. We are reducing inventory as a percentage of sales while driving higher availability and stock freshness. The quality of our product is up, the cost of goods is down and the pricing power is up, all leading to higher gross margins. We continue to invest behind our growth initiatives including increasing marketing spend to approximately 6% of sales for 2023 to fuel cut-through campaigns and global talent amplification all while driving cost efficiencies across the company, and we have significantly increased our cash flow, enable us to invest in growth and increase our share buybacks to historically high levels.
Over the last two years, we have repurchased nearly $1 billion of our stock representing approximately 17% of our outstanding shares. Now, let me share a bit more of what drove our strong performance in the fourth quarter and full year, both from a global brand and regional perspective. Starting with Calvin Klein, the brand continued to cut through with record strong global campaigns. In the fourth quarter, our spring campaign with Jeremy Allen White captured global attention generating over $12 million in media exposure in the first 48 hours and reaching more than 40 million on the brand's Instagram.
Our hero underwear styles were in the heart of culture conversation, followed by Jeremy styled in Calvin's menswear for its Golden Globes win. In the U.S. alone, week one of the campaign generated more than 30% growth in underwear versus last year. The campaign continued with Idris Elba in menswear, Jennie Kim and Kendall Jenner in women's wear; and Jung Kook in our most iconic denim, all to amplify our Calvin Klein lifestyle offering. Turning to Tommy Hilfiger. In Tommy, we continue to drive relevance by leaning into the brand's unique DNA of classic American cool. We started off the year with Tommy's return to New York Fashion Week creating a true New York moment and driving both high visibility and engagement.
The Runway show had massive talent reach resulting in over 3,000 PR placements and a reach of over 6 billion. We were the most talked about brand at New York Fashion Week dominating online conversation. In February, we announced Sofia Richie as the new partner for Tommy Womenswear and last month Tommy launched its Spring 2024 campaign featuring Kendall Jenner. And yesterday, we launched a global cut-through campaign featuring StrayKids, one of the top three K-pop bands worldwide. Now, let me turn to our regional performance, starting with North America. I'm very proud of how our team continued to lean into the PVH+ Plan drivers in the fourth quarter achieving strong D2C growth, up high-single digits for both brands and delivering a significant improvement in profitability.
For the fourth quarter, we again delivered a double-digit EBIT margin for the region including higher gross margins and AURs. Overall revenue for Tommy and Calvin was stronger than we expected driven by strong growth in direct-to-consumer, which was offset by declines in wholesale. For 2023, our Calvin and Tommy businesses together delivered an 8.3% EBIT margin, a big step up of nearly 500 basis points year-over-year despite modestly lower revenues. This demonstrates the significant progress we are making in building the foundation for long-term brand accretive growth in the North America region.
Let me share a few North America highlights. For Tommy, the D2C growth was broad based led by seasonal premium essentials in key categories with strong AUR increases. We returned a number of stores back to 2019 profitability levels despite much lower international tourism. And for Calvin, leading with our category offers, we successfully reestablished our refined assortment. We continue to elevate online shopping experience and have delivered four consecutive quarters of high quality double-digit growth on CK.com. For both brands, we continue to build strength with our key wholesale partners led by men's sportswear.
Looking to 2024 for North America. We plan to deliver another year of strong D2C growth with further increases in quality of sales across the marketplace to deliver another year of significant improvement in profitability. Turning to our international business. In Europe, building on our historically large business, market leading awareness and brand strength across both Tommy and Calvin, for 2023, the region delivered low-single digit revenue growth in euros. In the fourth quarter, revenue again exceeded EUR1 billion and most importantly delivered much stronger overall profitability. Revenue for the quarter declined low-single digits in euros compared to last year and in an increasingly tough macro, we drove mid-single digit growth in D2C, which was offset by declines in wholesale.
Since we spoke in December, we have seen consumer sentiment further slow across Europe, especially, in our two biggest markets, Germany and the U.K., and we have seen our wholesale partners there become even more cautious. Let me share a few examples of what this tougher European macro means for us, and how we're choosing to sacrifice sales growth in the near term to strengthen our unique brand position in the market for the long term. Our number one focus here has been to avoid having too much inventory in the market, and we have succeeded very well with this starting the year with much less old clearance inventory than the same time last year, driven by our supply chain improvements. As an example, in February, we were up against a greater proportion of discounted sales last year and this year, we made the proactive decision to come into the month with lower outgoing stock and higher share of the new spring season inventory.
As an effect, we're starting the spring season with significantly improved stock freshness, which is driving double-digit comp increases for our spring product while prior season clearance sales and inventory are down over 20%. In wholesale, forward orders from our partners have become more cautious. This is reflected in our fall 2024 order books, which we expect will be down high-single digits versus the prior year. It's important to remember that our wholesale partners are coming off a very tough fall season across the sector from last year, driven by the warmest fall starts since the 1,800s which led to too much inventory and high promotionality in the market.
In this tougher environment, we are making proactive decisions towards quality of sales to build our brands for the long term and position us for sustainable brand accretive growth. In wholesale, this means in mid-year 2024, we are stopping sales of our brands by third parties on digital platforms and significantly reducing the number of digital platforms that we sell to. This will increase the quality of sales with our most important wholesale partners across both bricks-and-mortar and online.
And across all channels, we are buying inventory much closer to demand significantly reducing our need to manage discounted prior season inventory. The collective impact of these quality of sales decisions is a reduction equivalent of approximately 5% of our total sales for our 2024 European business. It will drive gross margin expansion and more importantly enable brand accretive growth over time. In parallel to these quality of sales improvements, we're also stepping up our product category offers, driving innovation in key categories and must have essentials for fall 2024, where we will have more transitional products, more technical fabrics, more dress casual and this has been very well received by our key wholesale partners.
It will also further strengthen our D2C execution where we have the most control over the brand experience and we continue to drive increased pricing power and margin expansion. Moving to Asia-Pacific, our Asia team's disciplined PVH+ Plan execution across both Calvin and Tommy drove strong growth for both the quarter and the year. For the year, the region delivered revenue growth of 15% in constant currency including growth of 17% in the fourth quarter led by D2C.
China is an important growth engine with growth over 20% in local currency for both the fiscal year and fourth quarter as we successfully captured key consumer moments. Outside of China, fourth quarter performance was also strong with over 30% growth in Korea and double-digit growth in Japan in constant currency. We delivered strong e-commerce growth with both brands achieving double-digit growth during Double 11 and ranked among the top international brands on Tmall. Revenue and market share set new records on Douyin as we continue to engage consumers in new ways.
We continue to win in the important Lunar New Year holiday fueled by successful capsule launches and consumer activations for both brands. Our brands and products have a clear premium positioning with opportunity to grow further in all markets. We continue to focus on driving overall brand awareness, especially in China where both Calvin and Tommy are underpenetrated. Now, let's switch gears and turn to our overall company outlook. Following the strong 2023 where we gain traction on each of the underlying growth drivers of the PVH+ Plan, we will build on this momentum in 2024.
Across the company, we are leaning into the next level of PVH+ execution. This will directly translate into growth in Asia and North America, while in Europe where the macro has become more challenging, our focus is on quality of sales to further strengthen our market leading position. From a number's perspective, this translates into our guidance for 2024 of revenue down 6% to 7% or down approximately 3% to 4% on a comparable basis, excluding the sale of our Heritage Brands intimates business at 53rd week in 2023. We're driving further gross margin expansion and despite the deleverage from our European business, we will maintain our EBIT margins versus 2023.
At the same time, Zac will take you through how we are leaning in to unlock significant cost efficiencies in a way that we will even better align our cost structure to the PVH+ growth drivers leading to another year of EPS growth in 2024. As we go forward, we will further strengthen Calvin and Tommy's brand desirability by building out our global product, marketing experience engines under the strong global brand leadership that we now have in place. We will continue to amplify our category offense and key hero product strategies globally.
We will further win with consumer engagement by executing strong cut through campaigns amplified by the best global mega talent. And in the marketplace, we are relentlessly focused on driving higher quality of sales across all regions and channels which will continue to drive pricing power and margin expansion across the company. Everywhere the consumer and macro will allow we will drive high quality revenue growth and where the consumer and macro are tougher, we are willing to sacrifice short term, low quality revenues in order to strengthen our brand position and pricing power. This is the right way to build our brands and business for the long term.
In D2C where we have the most direct control of the shopping experience, you will see us drive high quality growth across both brands and all regions. We will continue to elevate the consumer experience online and offline in our owned and operated channels as well as with key wholesale partners. You will see us continue to build out our demand driven supply chain, maximizing inventory productivity and across the company, you will see us investing in long term growth in areas including marketing as well as capex for technology, store renovations, new store expansion and supply chain initiatives.
At the same time, we're getting in even better shape from a cost-efficiency perspective which Zac will share more details on. And lastly, we will continue to significantly improve our cash flow, which will enable us to make further stock repurchases. In closing, in 2023, we fully focused on and strengthened the desirability of our two globally iconic brands, Calvin Klein and Tommy Hilfiger, and we drove very strong financial performance across both brands and all regions.
For 2024, we will continue to build on the PVH+ execution momentum across the company that will translate directly to growth in Asia and North America, while we sacrifice near-term sales growth in Europe to further strengthen our unique market position there for long-term brand accretive growth. Our PVH plus momentum is building in both the consumer-facing parts driving the brand desirability up in product, marketing and marketplace, and in how we build out the data and demand-driven business engine step by step guided by our PVH+ Plan, we're building Calvin Klein and Tommy Hilfiger into the most desirable lifestyle brands in the world and making PVH one of the highest-performing brand groups in our sector. And I want to thank my entire team for all your great work in making our vision come to life. And now, I'll turn the call over to Zac.
