Apparel maker Phillips-Van Heusen Corp. (PVH) said Tuesday after the markets closed that third quarter earnings fell from last year, hurt by the declines in same-store sales of the heritage outlet retail business and the related decline in gross margin resulting from increased promotional selling amid the difficult economic environment.
However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations. At the same time, the company forecast fourth quarter earnings below analysts' current consensus estimate and lowered its revenue and earnings forecast for the full year.
The New York-based company, which is best known for its Calvin Klein brand, reported GAAP net income for the third quarter of $53.7 million or $1.03 per share, compared to $60.9 million or $1.05 per share for the year-ago quarter.
Excluding the operating results and exit costs associated with the company's Geoffrey Beene outlet retail division, non-GAAP net income for the latest third quarter was $57.5 million or $1.10 per share.
On average, 11 analysts polled by First Call / Thomson Financial expected the company to earn $1.07 per share for the third quarter. Analysts' estimates typically exclude special items.
In May, Phillips-Van Heusen decided not to renew its license agreements to operate Geoffrey Beene outlet retail stores. The company said that it would close its Geoffrey Beene outlet retail division by the end of fiscal 2008. About 25 stores will be converted to Calvin Klein outlet retail stores, with the remaining stores being exited, the company had said at that time. The company expected to record after tax charges of about $15 million, or $0.29 per share, which will be recognized over the balance of the current year.
Total GAAP revenue for the third quarter increased 4% to $727.48 million from $696.37 million in the prior year's third quarter. Total non-GAAP revenue for the current year third quarter was $698.89 million. Six analysts had a consensus revenue estimate of $713.16 million for the third quarter.
Commenting on the third quarter results, Emanuel Chirico, Phillips-Van Heusen Chairman and Chief Executive Officer, said, "Given the overall economic environment, we are proud of our third quarter performance. The strength and recognition of the Calvin Klein brand across the world continued to drive revenue and earnings."
The company said third quarter revenue growth was driven by a 9% increase in the Calvin Klein licensing business due mainly 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.
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 offset by revenue declines in the company's heritage brand outlet retail businesses, which experienced a same-stores sales decline of 7%.
Phillips-Van Heusen also spent $9 million in advertising during the third quarter that it usually spends in the fourth.
For the first nine-months of the year, the company reported GAAP net income of $129.7 million or $2.48 per share, compared to $153.0 million or $2.65 per share for the same period last year.
Non-GAAP net income for the current year nine-month period was $138.6 million or $2.65 per share.
GAAP revenue for the nine-month period increased 4% to $1.91 billion from $1.84 billion in the prior year period. Non-GAAP revenue for the current year nine-month period was $1.84 billion.
Looking forward to the fourth quarter, the company said it expects GAAP revenue of $595 million to $615 million, GAAP earnings of $0.23 to $0.33 per share and non-GAAP earnings of $0.35 to $0.45 per share, which excludes Geoffrey Beene operating results and exit costs of approximately $10 million pre-tax, or $6 million after tax. Analysts currently expect the company to earn $0.58 per share on revenue of $587.74 million for the fourth quarter.
For the full year 2008, the company said it now expects GAAP revenue of $2.51 billion to $2.53 billion, GAAP earnings of $2.71 to $2.81 per share and non-GAAP earnings of $3.00 to $3.10 per share, which excludes Geoffrey Beene operating results and exit costs of approximately $24 million pre-tax, or $15 million after tax.
Previously, the company expected revenue of $2.56 billion to $2.58 billion, GAAP earnings of $3.03 to $3.12 per share and non-GAAP earnings of $3.32 to $3.41 per share for the full year 2008.
Analysts currently expect the company to earn $3.21 per share on revenue of $2.45 billion for the full year 2008.
Chirico noted, "The recent and rapid deterioration in the overall economic environment in the U.S. and abroad has decreased consumer confidence and spending beyond what we had previously anticipated. This, coupled with the significant strengthening of the U.S. dollar, has caused us to lower our fourth quarter and full year guidance. However, even during this very difficult time, our diversified stable of brands continues to generate strong profits and cash flows."
Chirico also said the company had "significant" availability under its revolving credit facility and no long-term debt maturities until 2011. The company expects to generate about $70 million of cash flow this year, he added.
According to Chirico, the company believes the current economic environment will continue into 2009 and as such it is reviewing its operating structure, real estate portfolio and capital spending programs to identify opportunities to improve efficiency, generate cots savings and maximize cash flows.Another apparel maker Polo Ralph Lauren Corp. (RL) earlier this month reported a 40% rise in second quarter earnings, beating Street expectations. The company also maintained its earnings guidance for the fiscal year 2009.
Phillips-Van Heusen shares closed Tuesday's regular trading session at a new 52-week low of $15.51, down $1.20 or 7.18%. The stock is gaining 19 cents or 1.23% in after hours trading.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.