Fashion CEOs Hit the Goldman Catwalk to Talk Up Businesses
New York was one big catwalk on Tuesday.
While models showed off the latest designer looks around the city, the chief executive officers were strutting their stuff at the first day of the Goldman Sachs Global Retailing Conference.
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Whether sold with a confident gait or a detailed reading of a profit-and-loss statement, the message was about the same — we’re looking good.
While the captains of industry speaking at Goldman each had a long list of carefully crafted and communicated strategic priorities that they pointed to, they are also getting a lot of help from consumers, who have held up surprisingly well.
Doug McMillon, president and chief executive officer of retail giant Walmart Inc., no doubt spoke for many when he said: “In the U.S., things are better than I would have expected them to be when we started the year … But things have held up better than I would have guessed.
“I’m feeling pretty good about where the consumer is in the U.S. and encouraged by what happened with back-to-school,” McMillon said. “Back-to-school started off strong and normally that means that holiday is going to be good.”
It’s reading of the consumer landscape that is both broadly held now and encouraging.
But the time when a company could just ride the consumer to a better business is long past gone and CEOs were primarily out pitching their strategic plans — underscoring how they can grow both bigger and better headed into the back half and beyond.
Here, how the CEOs were positioning their businesses for the investment set at the conference.
Doug McMillon, president and CEO, Walmart Inc.
Walmart has been using a two-track approach to remake its business for the future.
In addition to its bread-and-butter retail business, where the company is remodeling stores and highlighting the fashion offering, the company also has big plans to keep growing online with its marketplace filled with third-party goods.
“Inside the company, I’ll describe it as the old income statement looks like a store P&L,” McMillon said. “It’s got sales, gross margin, SG&A [sales, general and administrative expenses] and an operating income percentage at the bottom.
“The new income statement’s got gross merchandise value, GMV, a marketplace, membership, advertising, fulfillment services, data monetization and other components,” he said, describing the finances underpinning the e-commerce business.
“When you hear us talk about business model change at Walmart, it’s simply taking the previous income statement, still running that store business…building that second one [for e-commerce], adding them together to get a third business model,” he said. “That shift enables us to have a higher level of profitability as a percent of total without having to raise prices for anybody. It’s just a business model change.”
Calvin McDonald, CEO, Lululemon Athletica Inc.
Lululemon has become one of America’s premier growth stories with sales increasing 30 percent last year — twice as fast as planned.
But McDonald told investors that the active brand is still just getting started, one-and-a-half years into its latest five-year strategic plan, dubbed “Power of Three x2.”
The plan’s three pillars are product, guest experience and market expansion.
McDonald said the brand still has “very low unaided brand awareness, single-digit internationally — outside of U.K. and Australia where we’re low-teens. In the U.S., we’re less than 50 percent, and men’s is in the teens.”
And once Lululemon connects with consumers, McDonald said the brand works hard to keep them with product innovation.
“Once we get a guest, they really are a guest for a very long — I don’t want to say life, but guests for a very long period of time,” McDonald said. “And as we continue to innovate, we’re able to expand share of wallet with them. And that momentum continues.”
Stefan Larsson, CEO, PVH Corp.
Tommy Hilfiger and Calvin Klein parent PVH has been building around a new set of strategic priorities since Larsson laid out his PVH+ plan last year.
And lately, the CEO has had some progress to celebrate and his message to Wall Street is that he’s building an approach that is systematic and repeatable.
“We have a year of execution behind us,” said Larsson, who clearly sees a gold mine in the company’s two brands.
“What I see in the fashion space is the barriers of entry have come down; anybody [can be] a fashion brand, but it’s become very difficult to break through,” Larsson said. “Building another Calvin, another Tommy, another Ralph, another Levi’s, another Nike, very, very difficult. We already have a consumer that globally loves our brand, then it’s our job — and that’s what the PVH+ plan is all about, is to tap into that beloved DNA on Calvin and Tommy and make it more and more desirable.”
Dani Reiss, chairman and CEO, Canada Goose Holdings Inc.
While it can seem like there’s a Canada Goose parka — or two — on every street corner in the New York winter, Reiss said there’s plenty of room for the brand to grow globally.
“We’re actually a small brand,” Reiss said. “Our company is just past the $1 billion last year and [there are] these companies … that are many billions of dollars, and they’re not over-penetrated, they’re not oversaturated, and they don’t get those sorts of questions…we have demonstrated that we can diversify our product categories, we can grow in all of the markets the way that we anticipate and believe we could, and we’ve proven that we can do that. And I think that when you look at the size of other brands and the size of the potential, it’s in the many billions of dollars.”
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