Phillips-Van Heusen Corporation Reports 2008 First Quarter Results

-- FIRST QUARTER EPS OF $0.90 EXCEEDED COMPANY GUIDANCE AND
CONSENSUS ESTIMATE

-- CALVIN KLEIN ROYALTY REVENUES INCREASED 19%

-- 2008 FULL YEAR GUIDANCE RAISED
NEW YORK--(Business Wire)--
Phillips-Van Heusen Corporation (NYSE: PVH) reported first quarter
2008 results.

-- Earnings per share was $0.90, which exceeded the Company's
previous guidance and the consensus estimate.

-- Current year's first quarter includes $7 million, or $0.08 per
share, of start-up costs associated with new businesses. Prior
year first quarter earnings per share was $0.92.

-- Revenue increased 6% to $625.7 million from $591.9 million in
the prior year's first quarter.

First Quarter Results

The Calvin Klein licensing business continued its positive
momentum from the prior year, driving revenue growth and partially
offsetting the reduction in earnings experienced by the Company's
heritage outlet retail and moderate sportswear businesses. Total
revenue and earnings growth in the Calvin Klein licensing business
were 19% and 17%, respectively, compared to the prior year's first
quarter. This performance was driven by continued momentum in the
apparel and accessories business in Europe and Asia.

Revenue in the first quarter of 2008 increased 3% in the Company's
combined wholesale and retail businesses while earnings decreased 14%.
Performance in the quarter was positively impacted by the addition of
the Company's IZOD women's sportswear business and the continued
strong performance exhibited by the Company's dress furnishings,
Calvin Klein men's better sportswear and Calvin Klein outlet retail
businesses. The Company's heritage outlet retail and moderate
sportswear businesses, however, continued to be adversely affected by
the difficult macroeconomic retail environment. Total outlet retail
comparable store sales were slightly better than plan at minus 2%, as
the Calvin Klein outlet retail business achieved comparable sales
growth of 10% for the quarter and the heritage outlet retail
businesses had a comparable store sales decline of 6%.

Earnings in the current year's first quarter were negatively
impacted by approximately $7.0 million, or $0.08 per share, of
start-up costs associated with the Company's Timberland wholesale
sportswear business and Calvin Klein specialty retail stores.

Balance Sheet

The Company ended the first quarter with $184.2 million in cash, a
decrease of $115.5 million compared with the prior year's first
quarter. This decrease was primarily driven by the completion of the
Company's stock repurchase program during the fourth quarter of 2007,
in which the Company utilized $200 million of its cash to repurchase
approximately 5.2 million shares of its common stock. Inventories
ended the quarter clean and were 5% over the prior year's first
quarter. This increase includes 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 the inventories of these new businesses, inventories were
down 3%, which reflects the Company's focus on maintaining clean
inventory levels in a difficult environment.

CEO Comments

Commenting on these results, Emanuel Chirico, Chairman and Chief
Executive Officer, noted, "We are very pleased with our first quarter
results. Despite the difficult retail environment driven by the
continued pressure on consumer spending, we were able to exceed our
previous earnings guidance. The strength of the Calvin Klein brand was
the key driver in enabling us to achieve these results. The global
demand for Calvin Klein enables it to continue to outperform across
all product categories, both internationally and domestically. In the
first quarter of 2008, approximately 30% of our total earnings was
generated internationally, which further helped to lessen the impact
on us from the economic downturn in the U.S."

Mr. Chirico continued, "During the first quarter, we announced our
acquisition of certain assets of Mulberry Neckwear for $10 million. In
connection with this acquisition, we have acquired the neckwear rights
to additional brands, allowing us to build upon our competency in this
product area. The acquisition is not expected to have a material
impact on 2008 earnings as a result of integration costs, but is
expected to be modestly accretive to 2009 earnings."

Mr. Chirico concluded, "While the overall retail environment
remains difficult, we believe that we are well positioned to take
advantage of potential opportunities on the acquisition front. Our
solid financial position and the strength of our balance sheet are
valuable assets that will help us as we continue to pursue
opportunities that will contribute to our future growth and further
diversify our business model in terms of price points, channel or
geography."

2008 Guidance

Earnings Per Share and Revenue

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 approximately $2.6 billion, or an increase of approximately 8%
over 2007.

For the full year, the Company is currently projecting the Calvin
Klein licensing business revenue to grow approximately 12% and its
earnings to grow between 17% and 19%. Total revenue for the Company's
combined wholesale and retail businesses is planned to grow between 6%
and 7%. Operating margins for the Company's combined wholesale and
retail businesses, however, will be impacted by pressure at retail and
are projected to decrease 120 to 140 basis points.

For the second quarter of 2008, earnings per share is expected to
be $0.63 to $0.66. Second quarter revenue is expected to be $575
million to $585 million in 2008, or an increase of 4% to 6% over the
second quarter of 2007.

Comparable store sales growth is planned at 6% in the Calvin Klein
outlet retail business for both the second quarter and full year.
Reflecting the continuing difficult retail environment, the Company is
planning a comparable store sales decrease of 2% in its heritage
businesses for the second quarter and full year. Comparable store
sales for the Company's total outlet retail business are projected to
be flat for the second quarter and flat to down 1% for the full year.

The second quarter projection takes into account approximately $5
million of start-up costs associated with the Timberland wholesale
sportswear business and Calvin Klein specialty retail stores. As a
result, full year start-up costs of approximately $12 million are
expected to occur in the first half of 2008, while start-up costs in
2007 occurred principally in the second half.

Cash Flow

Cash flow for 2008 is estimated to be $80 million to $90 million,
which is after the acquisition of the Mulberry Neckwear assets and
approximately $90 million of capital spending to support the Company's
growth initiatives and for infrastructure investments to support the
growth of its existing businesses.

The Company webcasts its conference calls to review its earnings
releases. The Company's conference call to review its year end
earnings release is scheduled for Wednesday, May 21, 2008 at 11:00
a.m. EST. Please log on either to the Company's web site at
www.pvh.com and go to the News Releases page or to
www.companyboardroom.com to listen to the live webcast of the
conference call. The webcast will be available for replay for one year
after it is held, commencing approximately two hours after the live
broadcast ends. Please log on to www.pvh.com or
www.companyboardroom.com as described above to listen to the replay.
In addition, an audio replay of the conference call is available for
48 hours starting one hour after it is held. The replay of the
conference call can be accessed by calling 1-888-203-1112 and using
passcode #8858748. The conference call and webcast consist of
copyrighted material. They may not be re-recorded, reproduced,
re-transmitted, rebroadcast or otherwise used without the Company's
express written permission. Your participation represents your consent
to these terms and conditions, which are governed by New York law.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: Forward-looking statements in this press release
and made during the conference call / webcast, including, without
limitation, statements relating to the Company's future revenue,
earnings and cash flows, plans, strategies, objectives, expectations
and intentions, are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are
cautioned that such forward-looking statements are inherently subject
to risks and uncertainties, many of which cannot be predicted with
accuracy, and some of which might not be anticipated, including,
without limitation, the following: (i) the Company's plans,
strategies, objectives, expectations and intentions are subject to
change at any time at the discretion of the Company; (ii) the levels
of sales of the Company's apparel, footwear and related products, both
to its wholesale customers and in its retail stores, the levels of
sales of the Company's licensees at wholesale and retail, and the
extent of discounts and promotional pricing in which the Company and
its licensees and other business partners are required to engage, all
of which can be affected by weather conditions, changes in the
economy, fuel prices, reductions in travel, fashion trends,
consolidations, repositionings and bankruptcies in the retail
industries, repositionings of brands by the Company's licensors and
other factors; (iii) the Company's plans and results of operations
will be affected by the Company's ability to manage its growth and
inventory, including the Company's ability to continue to realize
revenue growth from developing and growing Calvin Klein; (iv) the
Company's operations and results could be affected by quota
restrictions and the imposition of safeguard controls (which, among
other things, could limit the Company's ability to produce products in
cost-effective countries that have the labor and technical expertise
needed), the availability and cost of raw materials (particularly
petroleum-based synthetic fabrics, which are currently in high
demand), the Company's ability to adjust timely to changes in trade
regulations and the migration and development of manufacturers (which
can affect where the Company's products can best be produced), and
civil conflict, war or terrorist acts, the threat of any of the
foregoing, or political and labor instability in the United States or
any of the countries where the Company's products are or are planned
to be produced; (v) disease epidemics and health related concerns,
which could result in closed factories, reduced workforces, scarcity
of raw materials and scrutiny or embargoing of goods produced in
infected areas; (vi) acquisitions and issues arising with acquisitions
and proposed transactions, including without limitation, the ability
to integrate an acquired entity into the Company with no substantial
adverse affect on the acquired entity's or the Company's existing
operations, employee relationships, vendor relationships, customer
relationships or financial performance; (vii) the failure of the
Company's licensees to market successfully licensed products or to
preserve the value of the Company's brands, or their misuse of the
Company's brands and (viii) other risks and uncertainties indicated
from time to time in the Company's filings with the Securities and
Exchange Commission.

The Company does not undertake any obligation to update publicly
any forward-looking statement, including, without limitation, any
estimate regarding revenue, earnings or cash flows, whether as a
result of the receipt of new information, future events or otherwise.

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*T
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Income Statements
(In thousands, except per share data)
Quarter Ended Quarter Ended
5/4/08 5/6/07
------------- -------------

Net sales $543,169 $520,452
Royalty revenue 59,988 51,606
Advertising and other revenue 22,541 19,848
------------- -------------
Total revenue $625,698 $591,906
============= =============

Gross profit on net sales $228,261 $221,119
Gross profit on royalty, advertising and
other revenue 82,529 71,454
------------- -------------
Total gross profit 310,790 292,573

Selling, general and administrative
expenses 230,081 207,029

Gain on sale of investments 1,864 3,335
------------- -------------

Earnings before interest and taxes 82,573 88,879

Interest expense, net 6,512 4,474
------------- -------------

Pre-tax income 76,061 84,405

Income tax expense 29,260 31,399
------------- -------------

Net income $ 46,801 $ 53,006
============= =============

Diluted net income per share(1) $ 0.90 $ 0.92
============= =============

(1) The Company computed its quarterly diluted net income per share as
follows:

Quarter Ended Quarter Ended
5/4/08 5/6/07
------------- -------------

Net income $ 46,801 $ 53,006
============= =============

Weighted average shares outstanding 51,337 55,928
Weighted average impact of dilutive
securities 942 1,676
------------- -------------

Total shares 52,279 57,604
============= =============

Diluted net income per share $ 0.90 $ 0.92
============= =============
*T

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*T
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Balance Sheets
(In thousands)

May 4, May 6,
2008 2007
---------- ----------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 184,223 $ 299,732
Trade Receivables 243,909 177,491
Other Receivables 13,928 6,468
Inventories 294,956 281,427
Other Current Assets 53,889 51,088
---------- ----------
Total Current Assets 790,905 816,206
Property, Plant and Equipment 242,691 170,767
Goodwill and Other Intangible Assets 1,079,090 1,019,245
Other Assets 45,024 29,769
---------- ----------
$2,157,710 $2,035,987
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses $ 291,733 $ 243,666
Other Liabilities 462,778 397,583
Long-Term Debt 399,556 399,541
Stockholders' Equity 1,003,643 995,197
---------- ----------
$2,157,710 $2,035,987
========== ==========
*T

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PHILLIPS-VAN HEUSEN CORPORATION
Business Data
(In thousands)

Quarter Quarter
Ended Ended
5/4/08 5/6/07
-------- --------
Revenue - Wholesale and Retail
--------------------------------------------------
Net sales $536,031 $520,452
Royalty revenue 6,245 6,372
Advertising and other revenue 1,895 2,319
-------- --------
Total 544,171 529,143

Revenue - Calvin Klein Licensing
--------------------------------------------------
Royalty revenue 53,743 45,234
Advertising and other revenue 20,646 17,529
-------- --------
Total 74,389 62,763

Revenue - Corporate/Other(1)
--------------------------------------------------
Net sales 7,138 -
-------- --------
Total 7,138 -

Total Revenue
--------------------------------------------------
Net sales 543,169 520,452
Royalty revenue 59,988 51,606
Advertising and other revenue 22,541 19,848
-------- --------
Total $625,698 $591,906
======== ========

Earnings before interest and taxes - Wholesale and
Retail $ 61,401 $ 71,437

Earnings before interest and taxes - Calvin Klein
Licensing 35,346 30,337

Earnings before interest and taxes -
Corporate/Other(1) (14,174) (12,895)
-------- --------

Earnings before interest and taxes $ 82,573 $ 88,879
======== ========
*T

(1)The results of the Company's Calvin Klein Collection wholesale
business, which was acquired in the fourth quarter of 2007, are
included in Corporate/Other.

The domestic and international components of earnings before
interest and taxes were as follows:

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*T
Quarter Ended Quarter Ended
5/4/08 5/6/07
------------------ ------------------
Dollars Percentage Dollars Percentage
------- ---------- ------- ----------

Domestic $57,348 69 % $68,432 77%
International 25,225 31 % 20,447 23%
------- ---------- ------- ----------
Total $82,573 100 % $88,879 100%
======= ========== ======= ==========
*T

Phillips-Van Heusen Corporation
Michael Shaffer, 212-381-3523
Executive Vice President and Chief Financial Officer
www.pvh.com

Copyright Business Wire 2008