Stefan Larsson
Chief Executive Officer at PVH
Thank you, Dana and good morning, everyone. Thank you for joining our call today. Looking back on my first year as CEO for PVH, I'm proud of the progress we have made and the strong performance of the business. In 2021, we intensified our focus on our two globally iconic brands, Calvin Klein and Tommy Hilfiger, and drove an accelerated recovery while successfully navigated continued COVID-19 disruption. These efforts resulted in very strong financial performance for the fourth quarter and full year.
For the year, we delivered double-digit consolidated revenue growth, led by international which exceeded pre-pandemic levels. We also generated record gross margins and earnings per share, and delivered a non-GAAP EBIT margin of 10.7% which is over 100 basis points above 2019 pre-pandemic levels, all while positioning PVH to win with the consumer in the new normal and deliver sustainable, profitable long-term growth.
This was the first full year driven by the execution of our accelerated recovery priorities, and across PVH, we see time and time again that when we lean into our two iconic brands, continue to move closer to the consumer, deliver the most relevant products in the market and supercharge digital to meet the consumer where they want to shop, we deliver top tier market performance, and we do it in a high quality and sustainable way.
You can see it in Europe through our strong product execution and own and operated e-commerce growth, and in brand-building partnerships with digital pure players. You can also see it increasingly in Asia where we lean into big consumer moments like Chinese New Year, and win with strength in product on the most important e-commerce and social platforms. And step by step, you'll see more of that in North America as well where we are focused on driving higher-quality digital-led growth and improving product and channel execution.
Our Company-wide focus on key growth categories, hero products and cutting unproductive assortment tail is yielding strong results. We drove increased pricing power and margin expansion in both Calvin and Tommy across our largest markets and channels. We supercharged our digital business which increased over 30% in 2021 on top of over 40% growth in 2020, with digital now representing 25% penetration, double pre-pandemic levels. And we continue to invest in high-growth, high-return areas to support our future growth, while at the same time, starting to drive cost efficiencies.
In addition, underscoring our strong financial position and cash flow generation, we paid down over $1 billion of debt to reduce our leverage to below pre-pandemic levels. We reinstated our quarterly cash dividend and repurchased approximately $350 million of stock. Moving forward, we will continue investing in our business to fuel our growth, while at the same time, deploying our excess cash to maximize shareholder returns.
I'd like to thank all of our associates around the world for your hard work and critical contributions which helped us to deliver on what we set out to do this year and more. And as we continue to closely monitor the war in Ukraine, I also want to extend my gratitude to our associates for their continued support and compassion for each other in the face of this tragic humanitarian crisis.
As we look ahead to 2022, we are excited by the strong momentum in the business, but also mindful that the market is experiencing unprecedented volatility from the heightened impacts of a number of macroeconomic and geopolitical challenges. These include the war in Ukraine as well as inflationary pressures, which impact both our own business and the overall consumer spending.
We also continue to navigate the ongoing pandemic headwinds, particularly supply chain and logistics delays, especially in North America in addition to the recent virus resurgences in Asia. As such, we're even more focused on what we can control. And just like we demonstrated through our strong performance in 2021, we are confident in the underlying strength across our business. Through the disciplined execution of our strategic priorities, we are driving underlying double-digit top and bottom-line growth for 2022, while maintaining our strong gross margins.
Our international business continue to perform very well and will drive our growth this year. In North America, we're in the early phases of a multi-year positioning of the region to win more with the domestic consumer. As a reminder, the tourist consumer that was 30% to 40% of our total North America business, pre-pandemic has not yet returned, and we are taking proactive measures to set ourselves up for long-term sustainable and much more profitable growth in the region. As a result, we expect our business in the region to remain below pre-pandemic levels.
Let me now turn to our regional update. Starting with Europe, despite COVID resurgences which resulted in renewed restrictions, the region delivered another quarter of very strong execution which completed an outstanding year of performance. Revenues increased double digits against pre-pandemic levels for both the quarter and year, combined with gross margin expansion driven by strong full-price sell-through. When we connect our brands as close to the consumer as we do in Europe, we deliver market-leading performance and win with strength in product, increased pricing power and across the digitally-led marketplace.
We continue to gain market share across both Tommy and Calvin, driven by strong consumer demand, including Tommy is focused on elevated casual, seasonal categories and iconic must-haves, combined with accelerating elevated hero products at Calvin from the brand's lifestyle expansion. We remain focused on driving the digital business across our owned and operated sites as well as with pure players, with the region generating significantly stronger overall digital penetration well in excess of the Company average.
Our connected retail capabilities enabled us to capture digital demand which mitigate the lower brick-and-mortar trends driven by COVID. While reported revenue in the region in 2022 will be impacted by the lack of business in Ukraine and Russia, overall consumer demand for our brands has remained on plan so far in the first quarter. Momentum in our future order book remains strong for both brands, with fall 2022 planned up double digits versus the prior year, which was on top of double-digit order books we experienced for spring.
Moving on to Asia, we drove revenues above pre-pandemic levels for both the fourth quarter and full year. While certain cities in China are currently facing COVID measures, we are pleased with the recovery in markets such as Australia and Korea, where recovery trends are strong. We're seeing real strength from our efforts to accelerate the region's growth and remain excited about the progress and underlying performance.
We saw considerable gains in brand awareness for both Tommy and Calvin, especially in China compared to pre-pandemic levels driven by our progress in creating strong hero product with locally relevant capsules and collaborations, supported by regional marketing. We continue to drive strong activations during key consumer moments in the region to generate engagement. For example, we experienced double-digit sales growth this past quarter for Chinese Lunar New Year. We are driving comp growth through optimized product allocations, and our spring hero products supported by digital campaigns is resonating with consumers in the region, as highlighted by strong comps over Valentine's Day.
We continue to connect with consumers wherever and however they want to shop. Our digital business drove double-digit growth in 2021, and we are leveraging CRM collaborations with pure players like Tmall, investing to expand with new digital platforms such as Douyin [Phonetic] and growing our presence on WeChat with interactive gaming. Offline, we are engaging our consumers through in-store VIP events and unique pop-up store locations.
Looking ahead, COVID resurgences in China are certainly impacting our growth near term, but as markets reopen, we are seeing a strong bounce back in trends which is evidence of the underlying strength of our business in China. And we also see that in our other markets such as Australia, Korea, and increasingly in Japan. Overall, we remain optimistic in the region's ability to drive long-term growth.
Turning to North America. As I mentioned, the lack of tourism has further highlighted the importance of our renewed efforts to win more with the domestic consumer in a more sustainable and more profitable way. We are currently navigating supply chain and logistics delays, which are more pronounced in North America, significantly negatively impacting our inventory flows across channels. Nevertheless, we are making sure that all decisions we take now are positioning our two iconic brands for the long term.
While for the fourth quarter, both Calvin and Tommy drove improved revenue trends sequentially compared to pre-pandemic levels, the significant COVID-related supply chain challenges resulted in inventory delays that we will be navigating through with the biggest impact in the first half of 2022. As I just shared, we are doubling down on our engagement with the domestic consumer, by driving increased product strength with pricing power and focusing on growth in the digitally-led marketplace in a balanced way across channels. We are sharpening our execution with more targeted assortments across key accounts and channels, and ensuring our brands are appropriately positioned in brand-enhancing channels.
Despite the challenges the region is facing, we are seeing green shoots of progress, including controlled inventory levels and lower promotions enabled us to drive higher gross margins and AURs in the fourth quarter. As we further expand our assortment of hero products, we are seeing positive reads on new updated product, although the inventory challenges are impacting trends. For Calvin, hero products in underwear continue to outperform, and we've seen sequential improving trends in key men's apparel categories. And for Tommy, focus categories and seasonal key items are driving performance.
Looking ahead for the region we remain focused on positioning and strengthening our business in North America for more sustainable and more profitable growth over time, all while we are step by step making progress. 2022 will be a year of transition on a multi-year effort to unlock our full potential in the market.
Next, I'll share a few brief global brand highlights, beginning with Calvin Klein. Brand awareness remains very high and we continue to see increases in relevance and consideration. We are deepening our engagement with consumers with culturally relevant talent. During the holiday season, we had a few surprise guests hacked our regular schedule content for Calvin Klein on Instagram, including Squid Games' HoYeon Jung, who set the record for our Instagram post with over 6 million likes.
Last month, we launched our spring collection and all-together campaign, featuring an international cast including Jennie Kim, and Euphoria star Dominic Fike. The collection reinterprets the brand's iconic past for the future, refreshing our tieable pieces. Looking ahead, the brand will continue to build out our collaboration strategy with the announcement of a second global collaboration partner already in April this year, further driving our connection to the consumer and driving cultural relevance.
Moving on to Tommy Hilfiger. Similar to Calvin, brand awareness remains strong and above pre-pandemic levels. Our product strategy drive relevance with aspirational in younger consumers. Through our collaborations, we continue to drive brand heat. Our global Tommy Jeans AAPE by A Bathing Ape collaboration generated strong performance across regions, as highlighted by a sell-through rate of over 90% in Europe and North America within the first week of tommy.com with high AURs. In addition, we saw very strong media coverage.
Tommy also stepped into the metaverse with online game platform Roblox through the capsule launch on must-have digital fashion items that people can use to dress their avatars within their Roblox virtual world. Lastly, for spring, the brand's Make Your Move campaign recently launched, featuring our first hashtag challenge on TikTok #movewithtommy, and led by Anthony Ramos, bringing together the world of music and pop culture. With increased media investments, the campaign spans multiple consumer touchpoints in innovative ways.
In closing, we had a very strong 2021, where we showed that our increased focus on our two globally iconic brands, Calvin Klein and Tommy Hilfiger, and connecting them closer to where the consumer is going than any time before is paying off. When we do that really well, like we do today in our international markets, we're able to deliver market-leading performance.
We are continuing to build on that strength in both Europe and Asia, and will over time unlock the same type of strength in North America. While there regional differences, the key value drivers are the same, brand and product relevance with pricing power, combined with strong consumer engagement and a focus on winning in the digitally-led marketplace. We are looking forward to sharing our multi-year growth plan with you at our Investor Day in just a couple of weeks on April 13. It will be our first Investor Day in over 10 years, so you can imagine how much we are looking forward to it.
I'm also pleased to welcome Zac Coughlin to PVH as our new CFO effective April 4. Zac comes most recently from DFS, part of the LVMH Group, and brings over 20 years of high-performance financial and operational leadership with best-in-class global brands. And he will be a key leader when we build out our next growth chapter.
Before I hand it over to Jim for the financial update, I would like to thank him for his critical leadership and strong support during the transition period as Interim CFO. You did a great job Jim. Thank you.
