Phillips-Van Heusen Corp. will begin taking over the operation of Wal-Mart Stores Inc.’s neckwear business with first shipments in May, an initiative that could add $20 million to wholesale volume next year.
Emanuel Chirico, chairman and chief executive officer of PVH, discussed details of the new business on Tuesday morning on a conference call to discuss fourth-quarter results released late Monday.
According to Chirico, the Wal-Mart neckwear business will initially be in 600 doors but could grow to 1,000 and possibly even 2,500 units in time.
Noting Wal-Mart currently doesn’t carry neckwear in that many doors, Chirico said, “If we are able to demonstrate performance, then they would roll out to more doors. It’s really going to come down to execution and performance over the next two years. So it’s clearly an opportunity to be at least $20 million in sales, wholesale sales, for fiscal 2011.”
The ceo had unveiled the deal during the firm’s third-quarter earnings conference call in November, but didn’t elaborate on specifics of the arrangement other than the timing of shipments to the discounter. Details came just eight days after the firm said it would acquire Tommy Hilfiger BV from Apax Partners for $3 billion, plus the assumption of liabilities.
Wal-Mart officials did not respond to a request for comment by press time Tuesday.
Executives on the PVH call Tuesday also elaborated on the Hilfiger domestic line at Macy’s. They noted Macy’s has the line in a number of categories including women’s sportswear, accessories and kids’ footwear and that store officials see “significant” opportunities to expand it and possibly double the size of the business over three years.
It is still the Calvin Klein licensed business model that contributes to much of PVH’s bottom line. In the year ended Jan. 31, Calvin Klein Licensing’s earnings before interest and taxes came to $166.5 million, versus EBIT of $148.7 million for PVH’s other wholesale and retail operations.
“Overall, our royalty revenues [for Calvin Klein] in the quarter were up over 20 percent, operating income in the quarter increased $4 million, or about 11 percent,” Chirico said. “We had strong growth in jeans, underwear, fragrance, women’s sportswear, dresses and outerwear categories.”
Calvin Klein royalty revenue grew 21.5 percent, to $58.9 million, while the unit’s operating income rose 11.1 percent to $42.5 million in the quarter.
On Tuesday, PVH shares rose 66 cents, or 1.2 percent, to $56.09 in New York Stock Exchange trading.
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