Philip Van Heusen will continue to invest in its Timberland apparel business next year even as it halts expansion of its mall-based Calvin Klein stores to cut capital spending by half.


“Next year  I think the plan is to open somewhere in the neighborhood of about 100 new shops for Timberland between Macy's, Dillards and some of our partners,” said Emanuel Chirico, chairman and CEO for PVH. “I think that's appropriate for the brand and given our strong cash position, we are not going to back off of that.”


PVH expects Timberland and its IZOD women’s business to account for approximately half, or $15 million worth, of growth in its wholesale business in 2009. By contrast, its Calvin Klein stores continue to run at about 50% of the company pro forma plan, which contributed to the company's decision Wednesday to lower its fourth quarter and 2008 earnings.


PVH launched its Timberland men’s apparel collection this fall and will launch its women’s collection in the spring. The apparel is sold through about 600 department stores, specialty shops and Timberland’s own full-price and outlet retail stores. PVH expects to build the business, which generated $70 million in sales in 2006, to $150 million by 2013. 

 “At key item price points, that product performs very, very well for us,” Chirico said. “So we are going to continue to be aggressive on our positioning of that brand, putting it in line with where the footwear is priced as well… and really create a value equation for that customer.” On Wednesday, a Timberland Macro Fleece Vest was on sale at macys.com for $39.99, marked down from $69.50. Timberland cargo pants were priced at $59.50.
 
Although PVH’s retail comps were running ahead of plan through the first six weeks of the quarter, the trend reversed in mid-September and the company is now forecasting a comps decline in the 9% to 13% range in the fourth quarter. Comp growth at PVH stores along the Mexican and Canadian borders also slowed considerably as the dollar strengthened.


“We have also planned for significant markdowns in the fourth quarter, because we know the environment it is going to be very promotional and we want to make sure we end the year clean.” Chirico said. “Every time we bring our inventories down and we think they're in line with sales projections, the actual sales have consistently been below projected results at retail. That is going to be the bigger driver next year, getting inventories right sized, managing gross margins overall, both our margin support and in our own stores on mark down rates.”


Chirico said he sees raw material costs moderating considerably with increases of 3% for spring and less for fall.