US: Phillips-Van Heusen holds outlook as Q2 profit falls 25%
Second quarter profit at Phillips-Van Heusen Corporation has dropped by 25.3% after the apparel maker was hit by the cost of closing its Geoffrey Beene outlet division and starting up new Timberland and Calvin Klein businesses.
Net income fell to $29.2m, or $0.56 per share, from $39.1m, or $0.68 per share, a year earlier.
Results included costs of $0.66 per share for the Geoffrey Beene outlet exit, and $5m, or $0.06 per share, of start-up costs for its Timberland wholesale men's sportswear business and Calvin Klein specialty retail stores.
Recent bankruptcy filings by some wholesale customers also hit sales and cut pre-tax earnings by $3m, or $0.03 per share.
Total quarterly revenue increased 2% to $561.0m from $552.4m the year before, helped by a strong performance from the Calvin Klein licensing business which posted revenue and earnings growth of 30% and 47%, respectively.
This performance was driven by continued growth across most product categories and regions of the globe, Phillips-Van Heusen said, with jeans and underwear performing "exceptionally well."
This growth helped offset a 2% drop in revenue in the company's combined wholesale and retail heritage brand businesses, which were "adversely affected by the difficult macroeconomic retail environment."
Same-store outlet retail sales fell 2%, with a 9% rise in the Calvin Klein outlet retail business unable to offset a 5% decline at the heritage brand outlets.
Chairman and chief executive officer Emanuel Chirico, said: "Calvin Klein remains a key driver of our growth and profitability as it continues to outperform our expectations, both internationally and domestically."
He added: "We continue to invest in our heritage brands, which, despite being impacted by the difficult economic environment, continue to generate strong profits and cash flows."
In its guidance for the rest of the year, the company says it expects earnings per share to be $1.07 to $1.13, excluding Geoffrey Beene exit costs, on revenue of $730m to $740m.
For the full year, it sees earnings per share of $3.32 to $3.41, on revenues up 6% to $2.56bn to $2.58bn.
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