Apparel maker Phillips-Van Heusen Corp. (PVH) said Monday after the markets closed that it swung to a fourth quarter loss, hurt by one-time restructuring costs. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations. At the same time, the company forecast first quarter earnings below analysts' current consensus estimate.
The New York-based company, which is best known for its Calvin Klein brand, reported a GAAP net loss for the fourth quarter of $37.9 million or $0.74 per share, compared to GAAP net income of $30.3 million or $0.55 per share for the year-ago quarter.
The latest quarter results include $85.1 million of pre-tax costs related to restructuring items. That include impairment charges related to 200 of the company's retail stores, restructuring costs related to the closure of the company's machine-made neckwear production in the United States, costs associated with job cuts, and exit costs from the Geoffrey Beene outlet retail division.
Excluding items, non-GAAP net income for the 2008 fourth quarter was $15.7 million or $0.30 per share.
On average, 11 analysts polled by Thomson Reuters expected the company to ear $0.28 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Total GAAP revenue for the fourth quarter fell 1% to $577.79 million from $584.52 million in the prior year's fourth quarter. Total non-GAAP revenue for the 2008 fourth quarter was $561.29 million. Six analysts had a consensus revenue estimate of $584.58 million for the fourth quarter.
Commenting on fourth quarter results, Emanuel Chirico, Chairman and Chief Executive Officer, said, Given the exceptionally soft holiday selling season and the deepening recession, we are satisfied with our fourth quarter results, which came in at the top end of our guidance. Our diversified business strategy of operating a portfolio of brands across multiple channels of distribution helped minimize the impact of the difficult environment while continuing to generate significant cash flow.
In January, the company had lowered its non-GAAP earnings outlook for the fourth quarter and the full year, citing poor retail environment. At that time, the company had also announced the elimination of about 250 salaried positions, representing over 10% of its salaried workforce, and about 150 hourly neckwear-manufacturing positions.
Phillips-Van Heusen said Monday that fourth quarter revenue in the Calvin Klein licensing business was relatively flat to the prior year's fourth quarter, as growth in recently launched product categories was offset by a decline in the fragrance business that was particularly affected by reductions in travel and discretionary spending resulting from the difficult economic environment.
Wholesale and retail revenue for the quarter decreased 3%, as consumer spending slowed and the company closed its Geoffrey Beene outlet retail division during the quarter.
For the fiscal year ended February 1, 2009, the company reported GAAP net income of $91.8 million or $1.76 per share, compared to $183.3 million or $3.21 per share for the fiscal year ended February 3, 2008.
Non-GAAP net income for the fiscal year ended February 1, 2009 was $154.2 million or $2.95 per share.
Full year GAAP revenue increased 3% to $2.49 billion in 2008 from $2.43 billion in 2007, driven by revenue growth of 13% in the Company's Calvin Klein licensing business. Non-GAAP revenue for the full year 2008 was $2.40 billion.
Analysts expected the company to earn $2.92 per share on revenue of $2.45 billion for the full year 2008.
Looking forward to the first quarter, the company expects GAAP revenue of $530 million to $540 million, GAAP earnings of $0.33 to $0.43 per share and non-GAAP earnings of $0.40 to $0.50 per share, which excludes $6 million of pre-tax costs associated with the company's restructuring initiatives. Analysts currently expect the company to earn $0.60 per share on revenue of $567.01 million for the first quarter.
The company expects Calvin Klein royalty revenue to be down 2% to 4% in the first quarter, as global licensee sales growth is expected to be offset by the stronger dollar.
First quarter wholesale and retail revenue is expected to decline 10%, as the company is planning a continuation of fourth quarter retail sales trends and the continuing tightening of inventory levels in the department store channel.
For the full year 2009, the company expects revenue of $2.30 billion to $2.33 billion, GAAP earnings of $1.88 to $2.18 per share and non-GAAP earnings of $2.00 to $2.30 per share, which excludes $10 million of pre-tax costs related to restructuring items associated with the company's previously announced restructuring initiatives. Analysts currently expect the company to earn $2.22 per share on revenue of $2.27 billion for the full year 2009.
Chirico said, We recognize the importance of investing in our businesses and our brands to support our long term growth. However, we will also be prudent in our planning. For 2009, capital spending is planned down 55% to $40 million and marketing expenditures are being reduced in line with sales expectations.
Another apparel maker Polo Ralph Lauren Corp. (RL) last month reported a 7% drop in third quarter profit, hurt by a 13.7% drop in same-store sales at retail segment amid pullback in discretionary consumer spending. The company also lowered its earnings and revenue forecast, citing deterioration in the economic environment.
Phillips-Van Heusen shares, which have traded in a range of $13.04 to $47.94 over the past year, closed Monday's regular trading session at $18.97, up $1.55 or 8.90% but lost 82 cents or 4.32% in after hours trading.
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