PVH Corp has recorded a US$53.5 million non-cash impairment charge against the Tommy Hilfiger brand's reacquired perpetual licence rights in Australia in the first quarter of fiscal 2025.
This is according to the company's annual report filed with the US Securities and Exchange Commission.
In 2019, PVH made a $124 million offer to acquire the remaining interests in Gazal, its then-Australian joint venture partner, which operated licences for Calvin Klein, Tommy Hilfiger, Van Heusen, Pierre Cardin, Bracks and Nancy Ganz in Australia, New Zealand and other parts of Oceania.
Today, PVH manages Calvin Klein and Tommy Hilfiger, and manages Van Heusen under license, with all three brands operating in Australia with stores, outlets, stockist deals and e-commerce channels.
The 2025 write-down on the Tommy Hilfiger brand reduced the carrying value of its Australian licence rights from US$190.8 million to a fair value of US$137.3 million.
The Australian impairment formed part of a broader US$480 million noncash impairment charge taken by PVH in Q1 2025, which also included US$426 million in goodwill write-downs. PVH attributed the impairments primarily to a significant increase in discount rates arising from macroeconomic and geopolitical conditions in the first quarter of 2025.
For its Q1 2025 interim impairment test, PVH bypassed the qualitative assessment for the Australian licence rights and proceeded directly to a quantitative test. For the Tommy Hilfiger and Calvin Klein trademarks globally, and for the Tommy Hilfiger reacquired perpetual licence rights in India, PVH applied qualitative assessments first and identified no impairment.
The fair value of the Australian licence rights was determined using an income approach, discounting projected cash flows at a rate of approximately 17 per cent. PVH disclosed that a 100 basis point change in the annual revenue growth rate of the Australian business would result in a change to the estimated fair value of approximately US$22 million, and a 100 basis point change in the weighted average cost of capital would result in a change of approximately US$25 million.
PVH's annual impairment test, conducted at the beginning of the third quarter of 2025, did not result in any further impairment of indefinite-lived intangible assets. PVH assessed qualitative factors and determined that a quantitative test was not required, taking into account updated financial forecasts and changes in the weighted average cost of capital since the Q1 interim test.
Ernst & Young, PVH's auditor since 1938, identified the valuation of the Australian indefinite-lived intangible asset as a critical audit matter in the fiscal 2025 annual report. EY described the impairment testing and goodwill reallocation process as complex and judgmental, noting the sensitivity of estimates to assumptions, including weighted average cost of capital, revenue growth rate, gross margin, operating expenses and EBITDA margin.
All this comes as Tommy Hilfiger’s global revenue increased four per cent in fiscal 2025 compared to fiscal 2024, including a three per cent positive foreign currency impact. The annual report did not detail how much Tommy Hilfiger and Calvin Klein made separately, but noted both made up 95 per cent of total revenue in 2025. PVH's total revenue hit US$8.95 billion, which is up on 2024 numbers but down from 2023 numbers.
The group's Asia Pacific revenue, which would include Australia and New Zealand, saw a revenue drop of US$60 million, or 4 per cent, compared to 2024, including an approximately 2 per cent decline resulting from the timing of the Lunar New Year, which occurred in the first and fourth quarters of 2024 but did not occur at all in 2025.
According to the report, APAC's revenue slip in 2025 reflected declines in both the direct-to-consumer and wholesale businesses, but noted that the impact of foreign currency translation on its APAC segment was not significant.