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Original Source: FD (FAIR DISCLOSURE) WIRE
. Mike Shaffer, Phillips-Van Heusen, CFO . Allen Sirkin, Phillips-Van Heusen, President, COO . Jeff Klinefelter, Piper Jaffray, Analyst
. Manny Chirico, Phillips-Van Heusen, CEO . Adam , Lehman Brothers, Analyst . Melissa Otto, Delaware Investment Research, Analyst . Susan Sansbury, Miller Tabek, Analyst . Roy Olfer, Brownstone, Analyst
. David Glick, Buckingham Research, Analyst . Ronald Clark, JP Morgan, Analyst . Jennifer Black, J. Black & Associates, Analyst
. Omar Saad, Credit Suisse First Boston, Analyst . Dennis Rosenberg, DSR Consulting, Analyst
Co. reported an 11% increase in 4Q revenues to $460m with EPS $0.41, exceeding previous guidance. 2006 EPS non-GAAP EPS guidance is $2.16-2.22 and 1Q guidance is $0.59-0.60 per share.
A. Key Data From Call 1. 4Q05 revenues = $460m 2. 4Q05 EPS = $0.41
3. 2006 non-GAAP EPS guidance = $2.16-2.22 4. 1Q06 non-GAAP EPS guidance = $0.59-0.60.
S1. Overview (A.S.) 1. Comments: 1. Pleased with 4Q results.
2. All business units exceeded plans, outperforming competition.
3. Calvin Klein better men's sportswear had great 4Q. 1. Sell throughs well in excess of plan. 4. Door count grew to over 500 doors, expanded sq. footage. 1. Entering 2006 with great deal of momentum. 2. Expect to add 50 new doors net of Macy's and May Co. 40 store closings. 5. Coty's launch of new women's fragrance Euphoria was major success in 4Q. 1. Euphoria No. 1 selling women's fragrance in US and Europe in 4Q. 6. Footwear strong in both men's and women's shoes. 7. Accessories launched in 2H, handbags exceeded sales plan for quarter. 8. Also launched men's and women's outerwear and women's suits and had strong sell throughs and exceeded sales projections for these categories. 9. Calvin Klein internationally in Asia reported strong sales, ended with 17 retail stores in Asia, good growth potential.
10. Jeans and underwear business operated by Warnaco had strong
4Q sales, exceeding plans. 11. Calvin Klein businesses are beginning with great momentum. 12. A number of new licensing arrangements scheduled to launch in 2H06. 1. CK sportswear launching in Europe and CK cosmetics in 4Q06 in US. 2. These new businesses and existing licensing business will drive Calvin Klein growth in 2006 and beyond. 13. Sportswear group had outstanding performance.
1. IZOD is outperforming competition. 2. Sell through and GM was strong, continue to gain sq. footage in most productive doors.
3. Arrow sportswear growing in mid channel, particularly in Kohl's. 1. Arrow is exceeding sales and margin plans 4. Outlet retail business had strong performance in all five formats. 5. Comp sales at plus 9% exceeding expectations. 6. Dress shirt had strong performance. 7. Sales growth driven by large core brands in Dept. stores and Arrow in mid tier channel, Kohl's.
8. New dress shirt lines also had strong performance. 1. Chaps business at Kohl's exceeded sales and margin plans for the quarter.
9. Donald Trump Signature line at Federated performed well, being expanded to 400 Macy's doors by Fall 2006.
S2. Financial Performance (M.S.) 1. Results: 1. Reporting non-GAAP results here. 2. Revenues increased 11% to $460m in 4Q. 1. All divisions had revenue increases over prior year. 3. Core dress shirt business and new dress shirt lines performed well. 4. Calvin Klein sportswear collections added to strong performance with IZOD, Van Heusen, and Arrow. 1. Calvin Klein licensing revenue ahead of last year by 9% for 4Q. 2. New licensees growth and strength in existing base. 5. Retail group had comp sales increase of 9%. 6. 4Q EBIT up 38% over prior year to $42.5m. 7. EBIT margin up 170 bp to 9.2%. 1. Driven by 50 bp improvement in GM.
2. Strong sell throughs and 120 bp improvement in expenses.
8. EPS up 46% to $0.41, $0.04 ahead of guidance. 2. Balance Sheet:
1. Inventories are clean up only 6% over prior year. 2. Revenue increase 1Q06 estimated to be 5-6%. 3. Receivables up 3.5% over last year. 4. 2005 cash flow $143m includes $14m of costs of secondary
offering. 3. Guidance: 1. Projecting 2006 cash flow of $115-120m. 2. Projecting 2006 capex of $40-45m. 3. 2006 guidance excludes gains on sales of Calvin Klein jeans and sportswear in Europe, departure costs for former CEO, and other costs associated with closing the Ozark facility. 4. Past two years have had over 40% EPS growth. 1. On track to deliver 15-18% EPS growth.
2. Raising EPS guidance to $2.16-2.22, a 15-18% increase over last year's earnings adjusted for stock option expense which was $0.15 per share in 2005. 3. 2006 EPS estimate includes expensing $0.10-0.11 per share for stock options. 5. Projecting …