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Revenue in Calvin Klein licensing biz relatively flat at PVH

24 Mar '09

5 min read

Phillips-Van Heusen Corporation reported 2008 fourth quarter and full year results.

For the fourth quarter of 2008:
Earnings per share excluding restructuring items was $0.30, which was at the top end of the Company's guidance and exceeded the consensus estimate. GAAP loss per share was $0.74, which included $85.1 million of pre-tax costs related to restructuring items. The prior year's fourth quarter GAAP earnings per share was $0.55.
GAAP revenue was $577.8 million, a decrease of 1% compared to the prior year's fourth quarter of $584.5 million.

For the year 2008:
• Earnings per share excluding restructuring items was $2.95. GAAP earnings per share was $1.76, which included $99.3 million of pre-tax costs related to restructuring items. For the prior year, GAAP earnings per share was $3.21.
• GAAP revenue increased 3% to $2.49 billion from $2.43 billion in the prior year.

Fourth Quarter Results
GAAP revenue decreased 1% for the quarter. Revenue in the Calvin Klein licensing business was relatively flat to the prior year's fourth quarter, as growth attributable to recently launched product categories was offset by a decline in the fragrance business, which was particularly affected by reductions in travel and discretionary spending resulting from the difficult economic environment.

Revenue in the Company's wholesale and retail businesses decreased 3% due principally to the negative impact of the economic slowdown on the Company's wholesale sportswear and outlet retail businesses, combined with the completion of the exit from the Company's Geoffrey Beene outlet retail division during the fourth quarter of 2008. The Company's outlet retail comparable stores sales declined 9% in the fourth quarter. Partially offsetting the revenue decreases was revenue generated by the new Timberland wholesale men's sportswear business and additional Calvin Klein retail stores that were opened in 2008.

Earnings before interest and taxes, excluding $85.1 million related to restructuring items, was $35.4 million. This is a 33% decrease compared to the prior year's GAAP earnings before interest and taxes of $52.7 million and resulted from the sales declines in the Company's wholesale and retail businesses mentioned above and a significant reduction in gross margin due to heavy promotional selling during the holiday season in response to the Company's aggressive focus on reducing inventory levels. On a GAAP basis, the Company had a loss before interest and taxes in the fourth quarter of $49.8 million.

In the Calvin Klein licensing business, earnings before interest and taxes increased 16%, excluding $0.5 million related to restructuring items. On a GAAP basis, the increase in earnings before interest and taxes was 15%, driven principally by a shift in advertising spending from the fourth quarter into the third quarter in 2008 as compared to the prior year. The shift in timing of the spending related to activities in 2008 surrounding the celebration of the 40th anniversary of Calvin Klein.

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