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Calvin Klein Paying Off for PVH

Phillips-Van Heusen Corp. took a gamble a few years back when it acquired the Calvin Klein brand for $700 million, and it looks like the risk is paying off handsomely.

NEW YORK — Phillips-Van Heusen Corp. took a gamble a few years back when it acquired the Calvin Klein brand for $700 million, and it looks like the risk is paying off handsomely for a company that was known more for its men’s dress shirts.

Management said on a conference call Tuesday with analysts that it was adding more Calvin Klein stores, and that its Izod women’s wear line was a hit with its retail partners. An equity firms said it expects the recent license with Timberland to grow into a $200 million business.

Emanuel Chirico, chief executive officer, said during the call that the “Calvin Klein business continues to deliver strong growth for us, exceeding our targeted growth levels of 10 percent, and for the last three years has averaged over 14 percent top-line growth, and we are really enjoying the benefits of that.”

For PVH, nearly every Cal­vin Klein business, whether it’s own or licensed, has been on fire. In fragrance, PVH last year posted a double-digit revenue increase, driven by strength in Calvin Klein, ck, Eternity and the launch of the Euphoria fragrance. Earlier this month, it launched ck IN2U, a new line for the twentysomething consumer. “We’ve had some positive results throughout Europe. We are seeing very strong selling and sell-through performance in Europe. In the U.S., the product is just starting to hit the showcases and aisles and department stores,” Chirico said.

In underwear, the product has been equally strong in men’s and women’s, as well as on both international and domestic fronts. The women’s Perfect Fit launch has exceeded the company’s plans, the ceo said, noting that the company also saw strong performance in the introduction last year of 365 for men. Chirico acknowledged Warnaco’s contribution to the product lines on the call. Warnaco holds the license to Calvin Klein intimates, and owns outright the jeans business, which also saw growth, particularly in China.

Less challenged now than a year ago, the Calvin Klein women’s sportswear business with Kellwood has doubled its number of doors in the fourth quarter ended Feb. 4 compared with a year ago. Chirico said PVH is seeing improved sell-throughs at retail and more full-priced selling.

This story first appeared in the March 28, 2007 issue of WWD.  Subscribe Today.

Finally, the company also is planning on opening five to 10 Calvin Klein stores in top mall locations to showcase the Calvin Klein white label product. The openings are expected later this year.

The company also will begin shipping in the second half of 2007 an Izod women’s line that so far has been well received by its retail partners. And also on the agenda is the recently announced Timberland sportswear license for men in fall 2008 and for women in fall 2009.

“Phillips-Van Heusen continues to perform at the top of its game. In looking ahead, we are excited about the new initiatives being launched in 2007 and beyond, and believe this will only add to the power of this company….We believe Timberland apparel is a $200 million growth opportunity over the next five years. In addition, the five Calvin Klein specialty stores being launched in 2007 and an additional five in 2008 provide another avenue to showcase the Calvin Klein brand. We also believe the addition of the Izod women’s line enhances and complements the existing portfolio of brands,” wrote analyst Jennifer Black of the firm that bears her name.