Phillips-Van Heusen Corp. shares slid 13.1 percent Tuesday after the company forecasted fourth-quarter and 2008 earnings below Wall Street expectations.
The apparel maker said in its earnings release after the market closed Monday that it expects fourth-quarter earnings in the range of 51 cents to 53 cents a diluted share, and 2008 earnings in the range of $3.55 to $3.65 a diluted share. Wall Street was predicting 55 cents in the fourth quarter and $3.66 for 2008.
In trading Monday, shares of Phillips-Van Heusen dropped to a new 52-week low of $36.65, before rallying slightly. The stock closed the day at $37.64.
In a conference call to Wall Street, the company said it is planning for aggressive markdowns in the fourth quarter.
"Looking at the fourth quarter, we are very comfortable with the guidance we gave the street," said Emanuel Chirico, chairman and chief executive officer, on the call. "We have factored in what we believe is more than efficient markdown to deal with the promotions and environment that we are dealing with, so we are very comfortable that we will deliver our guidance."
Phillips-Van Heusen is also being impacted by start-up costs from its Timberland and Izod businesses.
Chirico said he is taking a cautious view on the economy and consumer heading into the first half of 2008. But he believes the second half of the year will fare better as launches begin to contribute to the company's profit and it benefits from a share repurchase program.
The company expects same-store sales to be flat to up 1 percent in the first half of the year and increase 2 to 3 percent in the second half.
On Monday, Phillips-Van Heusen posted a 20 percent jump in third-quarter earnings, driven by strong sales in its Calvin Klein business. Net income rose to $60.9 million, or $1.05 a diluted share, from $50.8 million, or 89 cents, in the year-ago period on sales that climbed 22 percent to $611.4 million from $500.2 million.
Chirico said on the conference call the firm's underwear business posted a "30 percent increase in royalties for the quarter."
The ceo said business grew in the U.S. "just about 20 percent and the international business grew about 40 percent. The international growth was fueled by new product, but also by the continued opening of Calvin Klein underwear stores around the world, particularly throughout Asia." He went on to say the company's "jeans business was really driven by the international component of that. Our international jeans business overall was up about 20 percent."
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)