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.
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews