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Second-quarter income soared at Phillips-Van Heusen Corp., beating its own guidance through the strength of the Calvin Klein brand.
This story first appeared in the August 23, 2007 issue of WWD. Subscribe Today.
The company said Wednesday that for the three months ended Aug. 5, net income rose 31.6 percent to $39.1 million, or 68 cents a diluted share, from $29.7 million, or 53 cents, in the same year-ago quarter. Included in the quarter were $2.2 million pre-tax costs, or 2 cents a share, in connection with the start-up of the firm’s Timberland wholesale sportswear business and Calvin Klein better specialty retail stores. In May the company expected earnings per share of 61 cents. Total revenues rose 20.4 percent to $552.4 million, which included a 20.1 percent jump in sales to $488.9 million, from $458.9 million.
The company’s outlet retail business saw a same-store sales gain of 7 percent, or 5 percent after adjusting for the shift in the retail calendar. The balance of the company’s revenues came from royalty income, as well as advertising and other sources.
For the six-month period, net income soared 35.4 percent to $92.1 million, or $1.60 a diluted share, from $68 million, or $1.26, last year. Total revenues grew 18.5 percent to $1.14 billion, which included a 17.2 percent gain in sales to $1.01 billion, from $965.4 million last year.
“Our strategy of marketing nationally recognized brands across multiple channels of distribution continues to benefit our bottom line and helps to insulate us from a downturn in any one of our business segments,” said Emanuel Chirico, chairman and chief executive officer, in a statement.
Chirico said the “strength of the Calvin Klein brand continues to fuel strong revenue and earnings increases and was the key driver in enabling us to exceed our previous guidance. The global demand for the Calvin Klein brand continues to expand as we introduce new product categories and enter into new markets around the world.”
The company said that continued “strong growth in royalty revenue results in the Calvin Klein Licensing business resulted in operating income growth of 28 percent.” It also said that revenues in the Calvin Klein licensing business rose 27 percent, driven by strength in the fragrance business owing primarily to the first-quarter launch of the new men’s and women’s CKIN2U line.
The company raised full-year 2007 earnings per share guidance to between $3.15 and $3.17 from its previous estimate of $3.06 and $3.10. This is the second time the company has raised guidance. It upped estimates in May to between $3.06 and $3.10 from earlier forecasts between $3 and $3.06. It also said it expects total revenue for the year to be around $2.44 billion, or a 17 percent gain over 2006.