PVH Corp. (PVH)

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Phillips-Van Heusen Corporation (PVH)

F4Q07 Earnings Call

March 25, 2008 11:00 am ET

Executives

Emanuel Chirico - Chief Executive Officer, Director

Michael A. Shaffer - Chief Financial Officer, Executive Vice President - Finance

Allen E. Sirkin - President, Chief Operating Officer

Pamela N. Hootkin - Senior Vice President, Treasurer and Investor Relations

Analysts

Jennifer Black - Jennifer Black & Associates

Jeffrey Klinefelter - Piper Jaffray

Jeffrey B. Edelman - UBS

Robert Drbul - Lehman Brothers

Kate McShane - Citigroup

Emily Shanks - Lehman Brothers

Carla Cassella - J.P. Morgan

Brad A. Stephens - Morgan Keegan

Jeff Mintz - Wedbush Morgan Securities

Susan R. Sansbury - Miller Tabak & Co.

Andrew Byrd - Post Advisory Group

David J. Glick - Buckingham Research Group

Clark Orski - KTP Investment Advisors

Presentation

Operator

Good day, everyone and welcome to today’s Phillips-Van Heusen Corporation’s fourth quarter 2007 year-end earnings release conference call. This webcast and conference call is being recorded on behalf of PVH and consists of copyrighted material. It may not be recorded, reproduced, retransmitted, rebroadcast, downloaded or otherwise used without PVH’s express written permission. Your participation in the question-and-answer session constitutes your consent to have any comments or statements you make appear on any transcripts or broadcast of this call.

The information made available on this webcast and conference call contains certain forward-looking statements which reflect PVH’s view of future events and financial performance as of March 25, 2008. Any such forward-looking statements are subject to risks and uncertainties indicated from time to time in the company’s SEC filings. Therefore, the company’s future results of operations could differ materially from historical results or current expectations, as more fully discussed in our SEC filings.

The company does not undertake any obligation to update publicly any forward-looking statement, including without limitation any estimate regarding revenues or earnings. The information made available also includes certain non-GAAP financial measures as defined under SEC rules. A reconciliation of these measures is included in the company’s earnings release, which can be found on the company’s website, www.pvh.com, and in the company’s current report on Form 8-K furnished to the SEC in advance of this webcast and call.

Now at this time for opening remarks and introductions, I would like to turn the call over to the Chairman and CEO, Mr. Manny Chirico. Please go ahead, sir.

Emanuel Chirico

Thank you very much. Good morning, everyone. Joining me on the call are Allen Sirkin our President and Chief Operating Officer; Mike Shaffer, our Chief Financial Officer; and Pam Hootkin, our Treasurer and Director of Investor Relations.

We are quite pleased with our fourth quarter results, particularly given the difficult macro retail environment that we are dealing with. I am going to try to talk about all our businesses performance in the fourth quarter. Let me start with our Calvin Klein licensing business. It was another very strong quarter for Calvin Klein. We posted a 14% increase in royalty revenues in the quarter and our operating earnings were up just about 37%.

The growth on the top line came from international principally. Our international business grew about 20% in licensing while our domestic business grew about 5%. When you look at the breakouts for the year of our Calvin Klein licensing business, a little bit over 55% of our revenues are coming from outside the United States, principally the far east and Asia and Europe, and about 45% of our revenues are coming domestically in the U.S.

The components of the business, our fragrance business continued its strong performance. Royalty revenues were up about 20% in the fourth quarter. The launch of Man, which was in the third quarter of the year, continued very strong for Calvin Klein. We continued to have very strong business in their Euphoria franchise. That business just continues to exceed our expectations.

The CK N2U business, particularly international, continues to go very strong and that business by the end of 2007 was over $130 million in volume for the CK N2U business, so substantially ahead of all of our expectations in fragrance and we are up against a very strong business as we go into 2008 with a lot of momentum behind us.

Our next largest licensee, [inaudible], for underwear posted about a 20%-plus increase in royalties for the quarter. The launch of Steel, which was in the third quarter of the year, continued very strong performance, sell-in and sell-throughs. The marketing campaign was amazing with John Hudson. That business just has continued to be very strong for us and is a new component for us.

We continue to have good growth on the women’s side of the business with our Perfectly Fit business. The bra business continues to grow. The business in the United States grew about 10%. Internationally, it grew about 30%. The international growth was fueled by the new product initiatives and coupled with the continued expansion of retail stores throughout Asia and Europe, so our underwear business, another very strong performance.

The jeans business had a very good quarter for us overall. Internationally our jeans business grew, Asia and Europe by over 20%, while our business in the U.S. was relatively flat, up 2% or 3%. But again, for the jeans business, a very mature business. It had very strong performance.

One of our other large licensees, G3, continues to do an outstanding job for us. We had very strong performance in outerwear. For the year, that category was up in the 20% range. Also the women’s suit business has been very profitable for us and dresses, which launched in 2006 and we have our first full year in 2007, did extremely well and overall, G3’s business is up over 30% for us. So we had great performance coming out of G3.

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