Even though PVH Chairman and CEO Manny Chirico told CNBC he was “disappointed” by the GOP tax bill, he couldn’t be dismayed by the momentum behind this holiday shopping season.
“It’s the strongest holiday season so far that I’ve seen in the last four years, especially here in North America,” Chirico told “Mad Money” host Jim Cramer on Wednesday. “I think inventories in particular are under much tighter control as we go in, and I think you’re going to see sales improvements and I think you’re going to see, if the trends continue, gross margin improvements across retail.”
Chirico noted a “strong surge” in November among the perpetually struggling department stores, many of which carry his company’s Calvin Klein and Tommy Hilfiger brands.
While the fourth quarter is commonly seen as a strong one for retailers, most of which capitalize on holiday shopping, Chirico said the recent strength has blown away even his powerhouse company’s estimates.
“Right now, in the United States, we’ve seen business really get very strong over the last six weeks,” the CEO said. “Just getting started in our beginning of December, [we’re] really just seeing very, very strong performance, much better than what we are projecting.”
Yet as retail stocks soared both on holiday strength and on increased potential for successful tax reform, Chirico couldn’t help but express his dismay at the bill’s details.
“In general, for our industry it’s probably a positive,” Chirico said. “On a personal level, I’m somewhat disappointed with the whole reform. You know, the focus was supposed to be on middle-class tax cuts, and this really seems like all of the benefits [are] going to the top 1 percent and corporations. So it’s disappointing from that because I don’t know that it’s really going to drive the growth that everybody hopes for.”
Chirico reiterated his disappointment in mentioning the $1.5 trillion the bill is projected to add to the U.S. deficit, saying that he hoped “we get some payback on it.”
Even so, the CEO said that balance sheets across corporate America in general are in “great shape,” and that a corporate tax cut would only add a small boost to the already healthy business sector.
“The ability now, if this tax proposal goes through, to bring back monies from overseas, I think clearly will be a positive,” Chirico acknowledged. “Where there’s appropriate investments, I think corporate managers will make those investments. But I’m not sure that the tax reform is what’s really going to drive it. I think it’s been strong business and CEOs have done a really good job of managing their balance sheets.”