NEW YORK — For Emanuel Chirico, chairman and chief executive officer of Phillips-Van Heusen Corp., a tough retail environment means opportunity.Chirico said at the PVH annual shareholders meeting here Thursday the conglomerate is aggressively pursuing acquisitions. He said PVH has the brand strength, logistics, infrastructure and necessary cash in place to strike it big in the near future and cited the company's 2003 purchase of Calvin Klein Inc. as a strategic move at a time that was not consumer- or finance-friendly."Great companies make daring moves in times of struggle, and that is the situation we're in now," Chirico said. "We are being very aggressive on the acquisition front, and we continue to look for brands that we can layer onto our platform."We continue to generate a significant amount of cash in all of our operations," he said. "Last year, we entered the year with over $250 million in cash on our books. We will generate close to $100 million this year. Given $350 million in cash, and a borrowing base that is in excess of $400 million, we can very easily make acquisitions between $500 million and $1 billion by just writing a check."However, Chirico downplayed speculation that PVH is in active talks with a potential acquisition target.After the meeting, Chirico said a brand of interest to PVH must resonate with consumers."We don't have a concern if the operations are damaged, or the back office doesn't work, because, for the most part, we would eliminate them and put them on our platform," he said. "We want to take brands that we think have strong consumer recognition, target them for a specific channel of distribution, and then maximize their growth. The one thing I'd say is that we continue to look internationally to balance our portfolio, not only from a brand point of view, but from an operating platform."Beyond acquisitions, Chirico cited the international reach of PVH's brand portfolio several times during the meeting."As much as we consider ourselves a U.S.-based company, we have a very [far] reach with our brands," he said. "Twenty-five percent of our operating profit is generated outside the U.S., so it's a clear indication of the diversity of our portfolio and brands."Much of the overseas brand recognition comes from full-price stores. By the end of this year, Calvin Klein will have more than 500 full-priced units throughout Europe, Asia and South America. Izod, just at the beginning of its global rollout, will have close to 30 stores.In the U.S., CKI is pushing ahead with its rollout of Calvin Klein white label stores. The company opened five such mega-stores in the fourth quarter of 2007, and four stores this year. It also plans to open a unit at the Americana at Brand in Glendale, Calif., before yearend. Chirico said the Calvin Klein licensing business represents about 12 percent of PVH's revenues, and an estimated 40 percent of its profitability. Since 2007, CKI stepped up its international store count to 538 from 419.The brand, including apparel, accessories, underwear, jeans, home and fragrances, generates total global sales of more than $5.4 billion. At yearend 2007, the top-tier Calvin Klein Collection apparel and accessories had $200 million in sales; the bridge ck Calvin Klein brand apparel, accessories, beauty and fragrances generated $1 billion, and the better-priced Calvin Klein white label (including underwear, jeans, home and fragrances) had sales of $4.2 billion.Warnaco is the largest CKI licensee, responsible for the Calvin Klein Jeans and Underwear brands, which take in about $1.1 billion and $750 million in sales worldwide, respectively. CKI's largest licensed category is fragrance, with sales worldwide in excess of $1.5 billion."We believe over the next five years, we can layer on additional $2 billion to $3 billion of global retail sales," Chirico said. "By 2010, we believe global retail sales will be in excess of $7 billion."As for its other women's sportswear brands, Chirico said PVH plans to launch the licensed women's Timberland collection for spring 2010, and continues to grow the women's Izod brand. PVH reacquired the Izod women's license from Kellwood in 2006."We had some very strong success with the [Izod] brand in a difficult environment," he said. "Our best performance has been in the last month at retail, and I believe over time, this is a $200 million sales opportunity. We will do about $50 million to $60 million in sales this year."As for the growth at CKI, the ceo said international expansion will play an important role, and the company will closely study the white label retail rollout in the next 24 months to see how to grow the division."If we can demonstrate that they can be profitable and growth vehicles for us, we can be much more aggressive and open 10 to 20 stores a year," Chirico said.
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