Pop quiz, hotshot! Is CKIN2U:
- A message on a vanity license plate?
- Slang from your teenage daughter's latest text-message chat?
- Calvin Klein's new premier fragrance line?
As far as we know, the third option's the right answer here (depending on your license plate and/or teenage daughter). The fragrances' heady aromas drove their maker, Phillips-Van Heusen
On its first-quarter conference call, management sounded very pleased with the results, and even the analysts seemed to be in a congratulatory mood. Year over year, the retailer posted a 24% increase in quarterly EPS, on a 17% rise in total revenue. Management attributed much of that growth to a 37% increase in its Calvin Klein licensing business. Earlier this spring, Calvin Klein debuted its CKIN2U fragrance line for both men and women; it's become a megahit among consumers, padding the company's bottom line.
Fragrances aside, Phillips-Van Heusen experienced strong operating results across most of its business segments. The only soft spot I noted was a decrease in margins in the company's wholesale sportswear business. Management noted a generally challenging environment throughout the retail business and an unseasonably cold April as contributors to the lowered margins here.
Aside from Polo Ralph Lauren
For Phillips-Van Heusen shareholders, the stock's future prospects remain rosy. The retailer stayed strong in a rough market environment, and it has more up its sleeve for the back-to-school season. The company plans to launch its CK Man fragrance line this fall, in hopes of continuing CKIN2U's momentum. The strong Q1 results have also allowed company management to increase its full-year EPS forecast to a range of $3.06 to $3.10, from $3.00 to $3.06. This range reflects an increase of 17% to 18% over the company's 2006 non-GAAP EPS of $2.62.
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