Phillips-Van Heusen Corp. has big plans for Calvin Klein this year.
Discussing fourth-quarter and year-end results in a conference call with analysts Tuesday, Emanuel Chirico, PVH’s chairman and chief executive officer, unveiled several product launches and initiatives planned for 2009 to further develop the Calvin Klein subsidiary. Among the steps are a new women’s and men’s ad campaign for Calvin Klein Underwear; a new ck Calvin Klein fragrance, and a new sublabel of Calvin Klein Jeans.
PVH, hit by a number of restructuring and downsizing charges, reported Monday that it lost $37.9 million, or 74 cents a diluted share, in the quarter ended Feb. 1, compared with net income of $30.3 million, or 55 cents, in the year-ago period. Revenue dipped 1.2 percent to $577.8 million in the quarter. Excluding charges, earnings per share was 30 cents a share, 2 cents better than analysts expected, helping to push PVH shares up $2.55, or 13.5 percent, to $21.48 on Tuesday.
Calvin Klein Jeans, licensed to Warnaco Group Inc., this fall will debut a new sublabel called Body, for men and women. “We are not only launching it on a dual-gender basis, but we are also launching it across all geographies — Europe, Asia and the U.S. — at the same time,” said Chirico.
The new campaign for Calvin Klein underwear, also licensed to Warnaco, will debut this fall as well. The dual-gender campaign will feature new celebrity spokespeople, said Chirico, adding further details are pending.
Calvin Klein fragrance royalties were down about 25 percent in the quarter. The business was hurt by weak sales at department stores and duty free airport shops, due to the recession. Fragrance licensee Coty will launch a new ck Calvin Klein initiative in September, targeting young men, also supported by a big media push.
Even with these launches, total Calvin Klein advertising expenditures are expected to be down $10 million this year, but still over the $150 million mark.
Calvin Klein retail stores suffered a 14 percent decline in comparable-store sales in the quarter, after 27 consecutive months of comps improvements, due to pressure on designer brands in the weak economy. On the upside, Calvin Klein outerwear and dresses, licensed to G-III Apparel Group Ltd., posted strong sales, with royalties ahead of plan by 10 percent for the quarter. The footwear business, licensed to Jimlar Corp., posted sales growth of 30 percent in the quarter.
In the second half of 2008, CKI launched e-commerce at calvinklein.com, and the company believes the channel can grow into a $40 million to $50 million business within four to five years. It is currently generating about 10 percent of that figure, said Chirico.
PVH ended the year with $328.2 million in cash and no bank debt. A $325 million line of credit matures in 2012, and the company expects to generate free cash flow of $70 million this year.
Chirico said the company continues to seek synergistic acquisitions but hasn’t yet found suitable deals.
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