Add Phillips-Van Heusen Corp. to the list of apparel vendors cutting back in response to a brutal business climate.
The New York-based owner of the Calvin Klein, Izod and Van Heusen trademarks, among other brands, will take an $85 million pretax charge in the fourth quarter in connection with a restructuring of operations that includes the elimination of about 400 jobs, closure of 175 stores and the shutdown of its domestic production of men’s neckwear.
The moves, made in response to the economic downturn, are expected to result in annualized pretax savings of about $40 million.
The company expects to shed 250 salaried positions, about 10 percent of its salaried workforce, primarily in its principal offices in New York and in Bridgewater, N.J., and 150 hourly positions at the company’s neckwear facility in Los Angeles, part of the company’s exit from domestic production of machine-made neckwear. PVH entered the domestic neckwear business with the acquisition of Superba Inc. in early 2007.
Additional terminations over a two- to three-year period will result from the reduction of PVH’s retail network.
Other restructuring initiatives include the realignment of the firm’s global sourcing organization structure and reductions in warehousing capacity as well as in travel, payroll, marketing and administrative expenses.
Of the $85 million pretax charge, $60 million covers noncash items mostly due to write-offs for retail store fixed assets, and $25 million is for cash expenses related primarily to severance and lease terminations. On an after-tax basis, PVH will incur a $50 million charge, or 96 cents a share, in the fourth quarter of 2008, with the balance of $5 million to be taken in 2009.
For the year, the company said it expects full-year 2008 earnings per share, excluding charges, of between $2.90 and $2.95, down from the $3 to $3.10 EPS forecast in November when the company reported third-quarter results. On a generally accepted accounting principles basis, including charges, EPS is now expected to land between $1.69 and $1.74.
In the fourth quarter, including charges, PVH expects a loss of between 74 cents and 79 cents a diluted share.
The company narrowed its expectations for a drop in same-store sales during the fourth quarter to a range of down 8 to 10 percent from an earlier guidance of an 8 to 13 percent slide.
“Wholesale revenue is expected to be up slightly to last year,” the company said, “but will fall short of previous estimates, reflecting the sluggish sales environment during the fourth quarter.”
Full-year revenue is projected at about $2.5 billion, on par with last year’s $2.43 billion.
For both the year and the quarter, charges include those designated for the previously announced closure of the company’s Geoffrey Beene outlet stores.
PVH emphasized that it expects to end the year with a strong balance sheet and an estimated $320 million to $325 million in cash after making a voluntary pension contribution of approximately $25 million. The company added that there are no debt maturities until 2011 and that it has significant availability under its revolving credit facility, which is in place until mid-2012.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews