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Charges Lead to Loss at Phillips-Van Heusen

Restructuring moves left Phillips-Van Heusen Corp. with a fourth-quarter loss, but its Calvin Klein licensing operation boosted results.

Restructuring moves in its wholesale and retail divisions left Phillips-Van Heusen Corp. with a fourth-quarter loss, but its Calvin Klein licensing operation boosted results despite a small decline in royalties.

This story first appeared in the March 24, 2009 issue of WWD.  Subscribe Today.

For the three months ended Feb. 1, the New York-based firm incurred a net loss of $37.9 million, or 74 cents a diluted share, versus net income of $30.3 million, or 55 cents, in the year-ago quarter. Stripping out $53.6 million in after-tax charges to cover items including the downsizing of the retail division and the elimination of domestic machine-made neckwear production, the company posted a profit of 30 cents a share, 2 cents higher than expected by analysts.

Overall revenues declined 1.2 percent, to $577.8 million from $584.5 million, including a 2 percent drop in royalty revenue to $53.9 million from $55 million. Calvin Klein licensing revenues were down 1.1 percent to $48.5 million as earnings before interest and taxes (EBIT) at the unit picked up 14.8 percent to $38.3 million.

The company’s wholesale and retail operations saw sales decline 2.6 percent to $494 million and had an EBIT loss of $66 million, including $79 million in pretax charges. Its outlet stores weathered a 9 percent decline in same-store sales during the quarter.

“Our diversified business strategy of operating a portfolio of brands across multiple channels of distribution helped minimize the impact of the difficult environment while continuing to generate significant cash flow,” said Emanuel Chirico, chairman and chief executive officer. He noted capital expenditures will be cut 55 percent in the new year, to $40 million.

PVH expects earnings of $1.88 to $2.18 a share for the year, including charges, with first-quarter EPS of between 40 and 50 cents. Calvin Klein royalty revenue is expected to remain “relatively flat,” the company said.

For the full year, the company earned $91.8 million, or $1.76 a share, on a GAAP basis, half of the $183.3 million, or $3.21, earned in fiscal 2007. Revenues grew 2.8 percent to $2.49 billion from $2.43 billion.