Phillips-Van Heusen Q1 profit falls 11.7%

US: Phillips-Van Heusen Q1 profit falls on start-up costs

By just-style.com | 21 May 2008

First quarter profit at apparel maker Phillips-Van Heusen Corporation has fallen 11.7% as higher sales were offset by the cost of starting up new businesses.

Profit for the quarter to 4 May dropped to $46.8m, or $0.90 per share, from $53m, or $0.92 per share, a year ago.

This year's quarter includes costs of $7m, or $0.08 per share, related to the company's Timberland wholesale sportswear business and Calvin Klein specialty retail stores.

Revenue for the three months increased 6% to $625.7m from $591.9m, with the Calvin Klein licensing business offsetting lower earnings at the heritage outlet retail and moderate sportswear businesses.

Total revenue and earnings growth in the Calvin Klein licensing business were 19% and 17%, respectively, driven by demand in Europe and Asia.

Same-store sales were down 2%, with a 10% growth at the Calvin Klein outlet retail business offsetting a 6% decline at the heritage outlet retail businesses.

Inventories ended the quarter up 5%, including the new Izod women's and Timberland sportswear businesses, the new Calvin Klein specialty retail stores and the recently-acquired Calvin Klein Collection wholesale business.

Excluding these new businesses, inventories were down 3% - in line with the company's focus on maintaining clean inventory levels in a difficult environment.

Commenting on these results, Emanuel Chirico, chairman and chief executive officer, said: "The strength of the Calvin Klein brand was the key driver in enabling us to achieve these results."

He added "approximately 30% of our total earnings was generated internationally, which further helped to lessen the impact on us from the economic downturn in the US."

The company is increasing its 2008 earnings per share guidance to a range of $3.32 to $3.41, which reflects a cautious view of 2008 and a belief that the current difficult economic environment will continue throughout the year.

Total revenue for the full year 2008 is projected to be $2.6bn, or an increase of approximately 8% over 2007.

Sectors: Apparel, Finance, Manufacturing

Companies: Calvin Klein, Phillips-Van Heusen, Timberland