‘Retail companies are not built to have their stores closed’

With stores closed, the retail industry is struggling with inventory piling up in warehouses and no place to sell it, the head of the company that owns such names as Calvin Klein and Tommy Hilfiger told CNBC on Wednesday.

“Retail companies are not built to have their stores closed for extended periods of time,” PVH CEO Manny Chirico said in an interview with Becky Quick on “Squawk Box.”

PVH’s stores in North America and Europe have been closed since mid-March, along with many other businesses. The closures as expected to drag on for weeks if not months as the world tries to contain the coronavirus pandemic.

The company has furloughed about 75{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of its workforce in North America, Chirico said, adding to the hundreds of thousands of furloughs taking place in an industry that employees more than 50 million people in the U.S. alone.

He said PVH does only about 15{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of its business online, meaning it has lost 85{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of traffic during the pandemic.

The U.S. government could help retailers by offering deferrals on duties for inventory still being imported, Chirico said.

“Inventory comes in today, [and] a week later we need to pay our duties,” he said. “If we had a deferral of those duties for a period of time, we could have avoided putting as many people on furloughs as we have.”

PVH has reopened most of its stores in Asia. They are running on reduced hours and limiting the number of people who can be inside. The coronavirus originated in Wuhan, China, and consumer activity has slowly been picking up in the region. Denim maker Levi Strauss, for example, was just recently able to open its store in Wuhan again.

PVH has drawn $750 million from its revolving credit facility for extra liquidity. The company has suspended share repurchases and suspended its cash dividend as of the second quarter.

Retailers at this time need to “plan for the worst and hope for the best,” Chirico told CNBC.

PVH shares are down about 55{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} this year. The company has a market cap of about $3.3 billion.