By and  on June 14, 2006

NEW YORK — Phillips-Van Heusen may be exceeding its quarterly financial projections, but it remains hot on the acquisitions hunt to maintain the momentum.

"Acquisitions are a key part of our growth. We are going to end this fiscal year with over $400 million in cash, so we are looking for appropriate growth vehicles," said PVH chief executive officer Emanuel Chirico following the company's annual meeting Tuesday here at the CUNY Graduate Center.

And one company that sources say PVH has its eyes on is Warnaco. Executives at PVH could not be reached for comment Tuesday, and a spokeswoman for Warnaco declined comment.

While sources said there are no indications a deal is in the offing, financial sources have been discussing how the two firms would be an ideal combination, given that Warnaco owns the Calvin Klein underwear business and has the license for Calvin Klein jeans in perpetuity, while PVH owns the rest of Calvin Klein. However, the combined businesses would give PVH a stronger foothold in the women's business, both as a result of its Calvin Klein operation and the swimwear and intimates divisions.

PVH at one point was considered a potential buyer of Tommy Hilfiger, which eventually was sold to private equity firm Apax Partners. It was Apax that helped PVH with the financial wherewithal to acquire the Calvin Klein business three years ago. Apax, which once held 18 million shares of PVH stock, in recent months has sold off most of its stake except for one million shares that it still holds.

While he did not address the Warnaco speculation or address any brands PVH might be eyeing, Chirico said there are two criteria that any potential acquisition would have to meet. "One would be a very strong brand. It's critical to us that it's a brand that has great consumer recognition. We don't really care if the business is damaged or the back office needs work. We will probably eliminate that anyway and [put it onto] our platform."

The ceo noted the other area the company would look to is product category extensions. Of interest are lines that could be layered onto existing businesses, but with new opportunities such as a complementary retail operation or additional licensing venues.

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