Phillips-Van Heusen revises full year 2008 earnings guidance
Phillips-Van Heusen Corporation reported 2008 third quarter and year to date results.
For the third quarter of 2008:
-- Earnings per share excluding the operating results and exit costs associated with the Company's Geoffrey Beene outlet retail division was $1.10, which was in line with the Company's previous guidance and exceeded the consensus estimate. GAAP earnings per share was $1.03. (Please see reconciliations of GAAP to non-GAAP earnings per share for 2008 later in this release.) The prior year's third quarter earnings per share was $1.05.
-- Total GAAP revenue increased 4% to $727.5 million from $696.4 million in the prior year's third quarter.
For the nine months of 2008:
-- Total GAAP revenue increased 4% to $1,914.1 million from $1,840.7 million in the prior year's nine month period.
-- Earnings per share excluding the operating results and exit costs associated with the Company's Geoffrey Beene outlet retail division was $2.65. GAAP earnings per share was $2.48. (Please see reconciliations of GAAP to non-GAAP earnings per share for 2008 later in this release.) For the prior year's nine month period, earnings per share was $2.65.
-- The current year's nine months includes approximately $12 million of start-up costs associated with new businesses, all of which was incurred in the first half of 2008, and which represents an increase of $6 million, or $0.08 per share, over the prior year's nine month start-up costs of $6 million.
Third Quarter Results
Total GAAP revenue increased 4% for the quarter, driven by a 9% increase in the Calvin Klein licensing business attributable principally to recently licensed product categories and strength in jeans and underwear. The increase in Calvin Klein licensing revenue was tempered by the slowdown in the global economy during the third quarter and the strengthening of the U.S. dollar against most world currencies. The GAAP revenue of the Company's wholesale and retail businesses increased 3%, driven by dress furnishings, the Calvin Klein men's sportswear and retail businesses, and the new Timberland wholesale men's sportswear business. Partially offsetting this were revenue declines in the Company's heritage brand outlet retail businesses, which experienced a comparable stores sales decline of 7%. The Calvin Klein outlet retail business experienced comparable store sales growth of 1%. Overall, total outlet retail comparable store sales declined 5% in the third quarter.
Earnings in the third quarter were negatively impacted by the declines in comparable store sales of the heritage outlet retail business and the related decline in gross margin resulting from increased promotional selling given the difficult economic climate. Additionally, there was a shift of $9 million of advertising spending from the fourth quarter to the third quarter impacting both the combined wholesale and retail businesses and Calvin Klein licensing, which celebrated the 40th anniversary of Calvin Klein during the quarter.