By  on November 19, 2008

The Calvin Klein licensing business helped ease Phillips-Van Heusen Corp.’s third-quarter profit decline, although the company lowered full-year earnings estimates because of the strengthening dollar and the weakened global economy.

For the three months ended Nov. 2, net income fell 11.8 percent to $53.7 million, or $1.03 a diluted share, from $60.9 million, or $1.05, in the same year-ago quarter. Excluding the operating results and exit costs connected with the firm’s Geoffrey Beene outlet retail operation, earnings were $1.10 a share, exceeding analysts’ consensus estimates of $1.07 for the quarter. Total revenues for the period, including those from royalties and other sources such as advertising, rose 4.5 percent to $727.5 million from $696.4 million. Revenues included a sales gain of 4.1 percent to $636.2 million from $611.4 million.

Calvin Klein licensing revenue ended the quarter up 8.8 percent to $83.2 million from $76.5 million.

“The strength and recognition of the Calvin Klein brand across the world continued to drive revenue and earnings,” said Emanuel Chirico, chairman and chief executive officer. The revenue increase came “despite the strengthening U.S. dollar and slowing growth in international markets. Equally as important, we continue to manage our inventory tightly, with an 8 percent reduction in inventory levels excluding new businesses, which we believe positions us appropriately for the fourth quarter.”

The company cited strength in the Calvin Klein jeans and underwear businesses overseen by the Warnaco Group Inc. The wholesale and retail businesses in the quarter were propelled by the Calvin Klein men’s sportswear and retail businesses and the new Timberland wholesale men’s sportswear businesses, which offset declines in the firm’s heritage brand outlet retail businesses.

Outlet retail comparable-store sales declined 5 percent, while the Calvin Klein outlet retail business posted a comps gain of 1 percent.

Chirico said PVH was lowering full-year earnings guidance because of “recent and rapid deterioration” in the overall economic environment in the U.S. and overseas, as well as shifts in currencies.

For the full year, the company forecast earnings per share in the range of $2.71 to $2.81, compared with previous projections of $3.03 to $3.12. Excluding the Geoffrey Beene operating results and exit costs, EPS is estimated at $3 to $3.10, versus previous guidance of $3.32 to $3.41 and analysts’ consensus estimates of $3.21.

For the fourth quarter, the company’s EPS guidance is between 23 and 33 cents.

Despite the tough retail environment, Chirico said the company’s “diversified stable of brands continues to generate strong profits and cash flows.…Even in this difficult year, we expect to generate approximately $70 million of cash flow.”

In the nine months, income fell 15.2 percent to $129.7 million, or $2.48 a diluted share, from $153 million, or $2.65, in the year-ago period. Revenues gained 4 percent to $1.91 billion from $1.84 billion.

PVH ended the quarter with $197.6 million in cash, a decrease of $139.1 million from a year ago because of the completion of the firm’s $200 million stock repurchase program during the fourth quarter of 2007. PVH expects to end the year with $340 million in cash.

PVH’s owned brands also include Izod, Bass, Van Heusen and Arrow.

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