Phillips-Van Heusen Corp. handily beat analysts’ expectations for the second quarter and raised its guidance for the year, but still suffered profit and revenue slides in the period. For the three months ended Aug. 2, the owner and marketer of Calvin Klein, Izod and Arrow posted net income of $26.6 million, or 51 cents a diluted share, a 9.1 percent decrease from $29.2 million, or 56 cents, in the year-ago quarter.
Total revenue was $529.3 million, down 5.6 percent from $561 million a year ago.
Excluding special items, net income was 60 cents a share, topping Wall Street’s consensus estimate of 44 cents. Nonrecurring items that impacted the quarter included costs from PVH’s restructuring initiatives unveiled in the fourth quarter of 2008, which encompassed the shutdown of the company’s domestic machine-made neckwear, a realignment of the global sourcing organization and a reduction in warehouse capacity. In addition, the quarter was affected by the 2008 shuttering of PVH’s Geoffrey Beene outlet retail stores.
Emanuel Chirico, chairman and chief executive officer of PVH, said the company was pleased with the quarter’s results as they exceeded previous revenue and earnings guidance despite the difficult economy. “As both consumers and our wholesale customers focus more and more on value, our nationally recognized brands, particularly Van Heusen, Arrow and Izod, are well positioned to respond to their demands,” he noted.
Royalty revenue in the Calvin Klein licensing division dipped 6.3 percent to $46.8 million in the quarter, with a $1.6 million negative impact from a stronger U.S. dollar. A sales slide slowed in the company’s retail division, with same-store sales declining 3 percent in the quarter, compared with an 8 percent drop in the first quarter.
The company ended the quarter with $369.6 million in cash on its balance sheet, an increase of $109.1 million from last year.
PVH increased its full-year earnings guidance to $2.16 to $2.26 a fully diluted share, up from $1.93 to $2.18. In 2008, net income was $1.76 per share. Total revenue for the year is forecast at $2.32 billion to $2.34 billion, a 6 to 7 percent decline from 2008.
Calvin Klein royalty revenue for the year is forecast to be flat to down 2 percent, as a stronger U.S. dollar is expected to offset anticipated full-year royalty growth of 1 to 2 percent on a constant currency exchange basis. These figures include an expected double-digit decline in fragrance royalties, a flat performance in jeans and underwear, and strong increases in footwear, outerwear and women’s apparel.
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