Phillips-Van Heusen reported a 26 percent jump in third-quarter earnings, surpassing company and Wall Street's expectations as the company's Calvin Klein business bolstered results.
For the three months ended Oct. 29, net income rose to $50.8 million, or 89 cents a diluted share, from $40.3 million, or 73 cents, in the year-ago period. Analysts expected earnings of about 84 cents a share. Sales for the quarter increased 6.6 percent to $568.3 million from $533.2 million in last year's period.
For the nine-month period, earnings surged 44.7 percent to $128.5 million, or $2.19 a diluted share, from $88.8 million, or $1.44, last year. Sales rose to $1.53 billion from $1.44 billion.
"The strength of the Calvin Klein brand and the execution of our business model for that brand continue to be key drivers in our earnings growth," said Emanuel Chirico, chief executive officer, in a statement. "The performance of Calvin Klein, along with the growth exhibited by our outlet retail and wholesale sportswear businesses, enabled us to again exceed our previous guidance."
During the quarter, the company announced an agreement to acquire Superba Inc., a neckwear company with estimated annual revenues of $140 million. Phillips-Van Heusen is paying $180 million for the company, which includes buyouts. The deal is expected to be completed by Jan. 1, and will not have an impact on 2006 earnings, and only will contribute modestly to 2007 earnings, the company said in a statement.
The company also said it plans on a $20 million increase in national advertising spending during this holiday season to support its Calvin Klein, Van Heusen, Izod and Arrow brands.
"Our brands continue to perform extremely well across all channels of distribution, enabling us to intensify the investments we are making in marketing our brands," Chirico said.
The company raised its fourth-quarter guidance to 43 cents a share from 41 cents. Management said they expect full-year earnings in the range of $2.97 to $3.05 a share.
Shares of Phillips-Van Heusen rose 1.7 percent in after-market activity to $47.90, after closing down 0.2 percent at $47.12.
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