Apparel conglomerate PVH on Thursday announced plans to sell its Speedo North America swimwear business to Pentland Group, the parent company of Speedo International Limited, for $170 million in cash, subject to a working capital adjustment.
In a statement, PVH CEO Emanuel Chirico called the move "strategic" as the company works to "optimize and streamline" its portfolio and focus on its Calvin Klein and Tommy Hilfiger brands.
The companies have entered into a definitive agreement, and the deal is expected to close in the first quarter of PVH's fiscal 2020 year, subject to customary closing conditions, including regulatory approval, according to a press release.
PVH is following a playbook similar to VF Corporation, which in 2018 spun off its denim business to focus on its better-performing brands.
There was some turmoil in PVH's Calvin Klein operation last year, including a new chief, Cheryl Abel-Hodges, who moved up to become brand CEO last May, the closure of its Madison Avenue flagship in New York City, the termination of its high-end 205W39NYC men's line and the sale of its women's jeans brand license to apparel company G-III.
The brand also had a high profile breakup with superstar designer Raf Simons, who left his position as chief creative officer a year ago.
But such woes may be largely behind it. PVH shares took a tumble on Friday, which Credit Suisse analyst Michael Binetti attributed to the company's omission of its revenues in its fourth-quarter update. But he said the company is on solid ground heading into the first half of 2020, in part thanks to product improvements at Calvin Klein, clean inventory at Tommy Hilfiger and the prospect of fewer markdowns thanks to the upcoming closure of 29 underperforming Macy's stores.
While the loss of Speedo sales could sting to the tune of $225 million, it will nevertheless free up resources for those two brands, Binetti also noted.