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Phillips-Van Heusen:Men ’s Maven Buys Megabrand

NEW YORK —Phillips-Van Heusen Corp.has come a long way since it was founded in 1907 as a Phillips-Jones Corp. For most of its history,the firm focused on the men ’s dress shirt business,and was a significant player in that busi- ness when...

NEW YORK —Phillips-Van Heusen Corp.has come a long way since it was founded in 1907 as a Phillips-Jones Corp. For most of its history,the firm focused on the men ’s dress shirt business,and was a significant player in that busi- ness when the big advances were self-folding collars and, later,shirts that came with the collars already attached.

This story first appeared in the December 18, 2002 issue of WWD.  Subscribe Today.

How things have changed.Sportswear represented half of last year ’s $1.43 billion in sales,with footwear contributing 26 percent and dress shirts coming in last, at 24 percent.

The company has also become a more active player in the women ’s market in recent years.Just last month,it signed a licensing deal with Kellwood Co.allowing that company to produce a moderate-priced women ’s Izod sportswear line.

PVH officials have high hopes for that line,which is due to hit stores in spring 2004,saying they think it could hit the $500 million sales mark,making Izod a $1 billion brand,including men ’s and women ’s sales.

Calvin Klein Inc.’s sales of women ’s and men ’s design- er apparel are said to be in the $30 million to $50 million range.But with more than $3 billion in licensed Calvin Klein sportswear,underwear and cosmetics sold at retail each year,CKI is likely to be flush with royalty income.

While PVH has been solidly profitable for most of the past decade,its numbers have been up and down.It started the Nineties with a few years of double-digit sales gains that couldn ’t prevent its earnings from erod- ing.The company in 1995 decided to pull back on its out- let operations,and kicked off a downsizing campaign that brought four years of sales erosion and in 1997 left the firm $66.6 million in the red.

Since then,the maker has maintained steady prof- itability,and last year recorded a net profit of $10.7 mil- lion on sales of $1.43 billion.Through the nine-month pe- riod ended Nov.3,PVH ’s sales slipped 1 percent,but its earnings rose 22.7 percent.

Its shares slipped 16 cents Tuesday on the New York Stock Exchange,to close at $12.52.That left its market capitalization at $347.9 million.

While the company came out of the Eighties with a heavy debt burden —the scars of its successful fight against a hostile takeover attempt —today it carries a smaller debt load.At the end of its third quarter,long- term debt stood at $249 million,and its cash holdings came to $63.4 million,up from $593,000 a year earlier.

The Calvin Klein business would most likely fit into the New York-based firm ’s sportswear arm,which PVH management in its 2001 annual report to shareholders called “our engine of growth.”The Calvin Klein brand would buttress a sportswear assortment that includes the Izod,Geoffrey Beene,Van Heusen and Arrow brands,as well as significant private label offerings.

On the dress shirt side,PVH has the licenses for two other major designer names:DKNY and Kenneth Cole.

Like many apparel companies,PVH also uses its sales of brand-name goods as an in with major retail chains that allows it to develop private label sales.

The sportswear division is headed by vice chairman Francis K.Duane,who joined PVH in 1998 after a two- year stint at Guess Inc.

Also like many apparel firms,PVH in recent years has been cutting its reliance on Western Hemisphere manu- facturing in favor of using Asian suppliers.Reflecting that trend,it has named a key supplier to the board. Harry N.S.Lee,managing director of Hong Kong-based TAL Apparel Ltd.became a director in 1995.At the time of PVH ’s last proxy filing,Lee directly owned 20,197 shares — comparable to other outside directors and rep- resenting a less-than-1 percent stake.However,he is also associated with Vaneton International,which owns a 16.9 percent stake in the firm.

PVH last year bought the worldwide rights to the Van Heusen name from Coats Viyella PLC,which had li- censed the name for Europe and Asia.That name rose to fame in the shirt business in 1910,when inventor John Van Heusen developed the one-piece collar.Phillips- Jones bought the rights to that patent in North and South America in 1919,around the time that Coats Viyella bought the rights for the rest of the world.

The company introduced Van Heusen name at retail in 1921 and in 1957 changed its name to Phillips-Van Heusen.