PVH Corp (PVH) 2005 Q4 法說會逐字稿

Good day, everyone, and welcome to today's Phillips-Van Heusen Corporation's fourth quarter year-end conference call.

Today's call is being recorded.

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 Q&A portion constitutes your consent to have any comments or statements you make appear in any transcript 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 21, 2006.

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.

At this time, I would like to turn the call over to Mr. Mike Shaffer, Chief Financial Officer.

Please go ahead, sir.

All right.

I just want to start by welcoming everybody to our call.

This is Mike Shaffer.

I'm joined here today by Manny Chirico and Allen Sirkin.

Unfortunately, Manny has developed a severe case of laryngitis.

He will be available to answer questions at the end of of the meeting but as long as he lasts, he's really struggling here.

Allen Sirkin is going start off the meeting by reading Manny's comments so Allen?

Good morning.

We're very pleased with our fourth quarter results.

All of our business units exceeded plans and we are outperforming the competition.

In our Calvin Klein group, our better men's sportswear business had an extraordinary fourth quarter.

Sell-throughs and average out-the-door retails were well in excess of plan at all retail accounts.

Our door count grew to over 500 doors and we expanded square footage in the most productive doors.

We are entering 2006 with a great deal of momentum and expect that 50 new doors during the year, net of the May Company and Macy's door closures of 40.

Our licensees also had a number of very successful launches.

In particular, Coty's launch of our new women's fragrance Euphoria was a major success in the fourth quarter.

A significant advertising campaign helped Euphoria become the number one selling women's fragrance in the U.S. and Europe in the fourth quarter.

Our footwear licensee, Gym Lar, had a very strong performance with both men's and women's shoes.

We also launched accessories in the second half of the year with women's handbags which exceeded our sales plan for the quarter.

In addition, our licensees launched men's and women's outerwear as well as women's suits in limited doors and had strong sell-throughs which also exceeded our sales projections for these categories.

Internationally, our CK Calvin line bridge licensee in Asia, Club 21, reported very strong sales and ended the year with 17 retail stores throughout Asia.

We believe this business has tremendous future growth potential.

Our jeans and underwear businesses, which are operated by Warnoco, also turned in very solid fourth quarters, exceeding our sales plan both in the U.S. and internationally.

Overall our Calvin Klein businesses are beginning 2006 with great momentum.

We have a number of important new licensing arrangements scheduled to launch in the second half of 2006.

In particular, our CK Calvin Klein bridge sportswear will be launching in Europe and CK Cosmetics will begin shipping in the U.S. in the fourth quarter of 2006.

These new businesses, coupled with strong performance from our existing licensing businesses, should drive Calvin Klein growth in 2006 and beyond.

Moving onto our legacy businesses, our sportswear group had an outstanding performance.

Our IZOD business in department stores continued to outperform the competition.

Our sell-throughs in gross margin performance was very strong and we continued to gain square footage in the most productive doors.

Our Arrow sportswear continued to grow in the mid channel, particularly at Kohl's.

The Arrow business continues to exceed our sales and margin plans.

Our outlet retail business also had very strong performance across all five of our formats.

Comp sales came in at plus 9% which clearly exceeded our expectations.

Our dress shirt business continued its strong performance.

Sales growth was driven by our large core brands Van Heusen, Geoffrey Beene and Calvin Klein in department stores and Arrow in the important mid-tier channel, particularly Kohl's.

Some of the new dress shirt lines also had very strong performance.

Our Chaps business at Kohl's exceeded sales plan and margin goals for the quarter and our Donald Trump Signature line at Federated performed very well.

This line is being expanded to 400 doors in Macy's by fall of 2006.

With that, I will turn the call over to Mike Shaffer to quantify our financial results.

Thank you, Allen.

Let me start by saying all of my comments are based on non-GAAP results.

As Manny and Alan relayed, we are very happy with our fourth quarter and full year results.

Total revenues grew by 11% in the fourth quarter to $460 million.

All divisions had a revenue increase over the prior year.

Our core dress shirt businesses continued to perform well as did our newest dress shirt introductions Chaps, BCBG, Sean John and Donald Trump.

In our sportswear division, the Calvin Klein Sportswear Collection introduced in fall '04 contributed to our growth and added the strong performance in IZOD, Van Heusen and Arrow.

Our Calvin Klein licensing segment revenue for the quarter was ahead of last year by 9%, fueled by growth of new licensees, as well as strength in the existing base of licensees.

And lastly, our retail group had a very strong quarter with the comp sales increase of 9%.

EBIT for the fourth quarter increased 38% over the prior year to 42.5 million while EBIT margin improved 170 basis points to 9.2%.

This increase was driven by a 50 basis point improvement in gross margin as a result of strong sell-throughs at retail leading to more full price selling and 120 basis point improvement in expenses as we continued to leverage our expenses.

EPS increased over 46% to $0.41 per share and was $0.04 ahead of the consensus estimate and our guidance.

From a balance sheet perspective, our inventories are very clean and are up only 6% over the prior year, in-line with our planned first quarter revenue increase of approximately 5 to 6%.

Receivables, despite an 11% increase in the fourth quarter revenues, were up only 3.5% from last year.

We were very pleased with our 2005 cash flow which was 143 million.

That includes $14 million related to the inducement payment offering cost on the secondary offering which we completed earlier in the year.

We are projecting our 2006 cash flow to be between 115 and 120 million and capital expenditures to be between 40 and 45 million.

Let me remind everyone that the 2006 guidance I will be addressing exudes the one time gain on the sale of our minority interest in Calvin Klein Jeans and sportswear for Europe and Asia.

It excludes departure costs for Mark Weber and the costs associated with closing our manufacturing facility in Ozark, Alabama.

Despite the fact that we've had two years of over 40% earnings per share growth, we are on track to deliver earnings growth of 15 to 18%.

Looking ahead, we are raising our 2006 earnings guidance to a range of $2.16 to $2.22 per share which represents a 15 to 18% increase over last year's earnings, adjusted for stock option expense, which was $0.15 per share in 2005.

Our 2006 earnings per share estimate includes expensing stock options with an estimated impact of $0.10 to $0.11 per share.

We are projecting 2006 first quarter revenues of 495 to 500 million, an increase of 5 to 6% over last year.

Our first quarter earnings per share is projected to be $0.59 to $0.60, an increase in excess of 40% over last year's first quarter earnings, which were $0.42 after adjusting for stock option expense of $0.04.

From a quarterly earnings perspective, our earnings for the second half of the year will be reduced by higher levels of fall holiday marketing spending, particularly in the fourth quarter.

We are currently projecting the second half of our business year conservatively.

If the current trends in our business were to continue, we will exceed our second half earnings guidance.

And with that, we will turn it over to questions.

Michelle?

Thank you, sir, and at this time we will go to a question and answer session. [OPERATOR INSTRUCTIONS] And our first question comes from Jeff Klinefelter from Piper Jaffray.

Yes, congratulations, everyone.

Another great year.

Couple quick questions for you.

One would be with respect to your dress shirt business.

It's been a very strong business the last really six, eight quarters now, and I know it's accelerated from what had been a consistent trend for five to ten years before that.

Could you just put that in perspective again?

Recap for us what has happened in that dress shirt category for you.

How much of it was an increase in demand for that overall category itself and how much has been a market share gain for you and then any way also to quantify the contributions of the new launches, new brand launches in the overall growth of that category?

I'll take the question.

This is Allen Sirkin, thank you.

The dress shirt division has enjoyed outstanding performance over the last year.

The fundmental to that has been our ability to outperform the competition.

The category, according to NPD, grew approximately 9% last year.

Our fundmental business grew 16% last year.

So we have clearly garnered some increase in market share that has come across all of the brands and all of the channels which speaks to the strength of the category and the trend of dress-up continuing through all of last year and into this year.

Jeff, it's Mike Shaffer.

Just a couple of things.

In new launches, we're talking about equated to about a 30 to $35 million growth.

Also, keep in mind, we do consider the business a mature business.

We tend to plan this business in the 1, 2, 3% kind of growth range.

Anything that comes in after that, falls to the bottom line.

Okay.

Great, that's very helpful and a couple of other follow-ups.

One would be could you give us an update again, clarify the impact you anticipate the Federated May store closings having on your overall business and where you expect that to hit?

Mostly I think it was quantified at one time, I thought in $20, $25 million range, if that, still at this point is your best visibility?

And then specifically in Q1 guidance, it's obviously very strong Q1 guidance, could you talk a little bit more about specifically where you see the strength going into the spring season?

Is it continues to be across the board but where in particular are you seeing upside that maybe you didn't anticipate six months ago?

This is Allen.

I'll take the first part of the question.

We're consistent with our number of ahead of 20 to $25 million as a result of the May Company Federated merger.

That is clearly a result of door closures as a projection against the 85 doors that they've announced closing.

And go forward our assumption is that we will offset those hits by productivity, performance and new initiatives.

Our strategy is in line with their new direction.

We're positioned to be an important contributor to their strategy.

Fundmental to our belief in that statement is that all of our on brands have made the matrix as part of the go forward strategy.

There are some regional pluses and minuses, but we feel overall we're in a good position to go forward.

In addition to that, we have some very positive initiatives that are currently underway at the Federated May merger.

Our Calvin Klein sportswear business and dress shirt business continues to grow, especially our sportswear business, which is currently running season to date at a plus 59% comps to total to last year.

We are expanding doors and we are expanding square footage.

Our dress shirt business is running at a plus 16% comp to last year.

In addition to that, we have other initiatives that under the merged strategy will gain us more doors and more exposure.

Our Eagle brand, which was a May Company initiative, will grow from 120 doors last year to what is presented as almost 260 doors in the combined May Company Federated merger.

Trump, our launch for last year, will grow from 200 doors in the Macy's portion to 400 in the combined entity.

We have a new launch in dress shirts, For JOE by Joe Abboud, which will reach 180 Federated doors in fall and we were the recipient in dress shirts to do the private label John Ashford program which will be an all door program in the dress shirt category.

We believe that those issues, combined with the excellent performance in sportswear and Calvin Klein, the solid performance of IZOD, and the addition of Trump Sportswear as a Federated initiative will help us tremendously in offsetting the door closures.

Mike will take the other part of that question.

Jeff, for the first quarter, we're coming off of a great trajectory with our sportswear business and our Calvin Klein licensing business.

We expect that to continue for the first quarter fueling the growth for the first quarter.

The Licensing segment in the business we're expecting 7 to 8% kind of growth and on the Apparel and Related Product segment driven by sportswear, in particular Calvin Klein sportswear that we own and operate, we're expecting about 5 to 6%.

Okay, very helpful, thank you for that detail and then just lastly, you're back end loading some expenses for fall holiday marketing.

I believe I recall that this was a similar statement you made coming into this last year.

You had some marketing initiatives in the back half.

Is this sort of typical with respect to how you're launching new product categories, new initiatives, or is there something else about your marketing strategy that has changed and is even weighting it more so toward the back half of this year than last year?

Hi, Jeff.

It's Manny.

I'm trying to give my best answer.

In particular, the fourth quarter's really driven by holiday and Christmas is really driving the process so we're really heavying up in the fourth quarter.

We're planning for a $5 million advertising increase in the fourth quarter which will hopefully will drive some demand as well.

Okay.

All right, great.

Thank you very much.

Good luck, everyone.

Our next question comes from Bob Drbul with Lehman Brothers.

Hi.

It's actually Adam calling in for Bob.

I was wondering if you guys could give an update on the negotiations with Apex on Tommy First.

Yes.

Basically the process has stopped.

We were negotiating with Apex.

We couldn't reach economic terms that made sense to us.

Apex has decided to operate the business on their own for now, and so the Tommy discussions have halted.

Thank you, and then also could you quantify '06 store count for Calvin Klein on the men's better sportswear side?

We are projecting a very strong Calvin Klein growth in the men's sportswear.

Fundmental to that process is our gross square footage and productivity.

We plan to grow our square footage from 245,000 square feet to about 270,000 square feet and within that context, we believe that our productivity, which is trending very high, will take us from a $255 per square foot productivity to $311 per square foot for the year.

Our top 21 doors, which are really the core of our business, are currently yielding $641 and Harold Square, which I guess by any definition would be our flagship store, is yielding an incredible $2,056 per square foot, so a combination of fabulous product, expanded shops.

We are increasing our total door count to 329 in the new Macy's organization.

We've added 112 doors at Dillard's.

So in total, it's a combination of doors and productivity.

At the end of '06, we are looking to have about 560 doors.

Thank you so much.

Thank you. [OPERATOR INSTRUCTIONS] Our next question comes from Omar Saad with Credit Suisse.

Thanks, good morning.

A few quick questions.

I was hoping that you could elaborate a little bit on the SG&A leverage you achieved in the quarter.

What some of the key drivers behind the improvement were and how we should think about that in 2006?

Omar, we're structured and we run our business in such a way that when we add volume, we don't need much in additional staff.

When we add a license, we always talk about we might add some design, some legal.

But incrementally we drop significant amounts of our sales to our bottom line.

We do that in both the Apparel Related Product segment as well as the Licensing segment and what you see in there we hope to repeat in '06.

We are highly leveraged and we continue to be.

Okay.

Great.

And then in terms of -- wanted to ask you a bit about the large cash balance that you have and given the strong -- obvious strong cash flow that the business throws off, I know acquisitions have been historically a priority and I was wondering if you could revisit that and what your priorities are and whether you would consider share repurchase or other activities?

Omar, I'm going try to answer that with my voice.

We'll continue to look for acquisitions.

Strong brands will be a key for us as we go forward.

If nothing comes to light in the next 12 to 18 months, we'll clearly be looking at a potential share repurchase.

We're focusing on potentially our preferred stock or the common stock at that point in time but again our first priority would be acquisition.

Okay.

Great, appreciate that.

Thanks for the effort, Manny.

And on the retail side, I want to ask just two quick questions, one about the Calvin Klein retail strategy.

I know you've kind of been doing some of the outlet formats kind of a conservatively adding to that outlet format for Calvin Klein.

Would you consider a specialty format for the Calvin Klein brand, especially if you extend the brand through all of these licenses into new categories in terms of either mall-based, specialty format or some type, A type locations?

Omar, we'll continue to look at that as a potential future growth opportunity.

But right now, it's not on the drawing board.

We will continue.

We operate, through licensees, approximately 300 stores internationally.

And we'll be looking to grow that through our licensing partners.

In the United States, there's clearly an opportunity for specialty store type retail opportunity format like Calvin Klein and we'll look at that but it's probably not until 2007 or beyond.

Okay, great.

And then in terms of the rest of your retail business.

I mean the comp trends have been very strong there.

Can you talk about how much of it, based on your sense, is it the performance of your formats and your brands and your stores versus kind of an overall improvement in turf traffic to the outlet malls?

Omar, it's Mike.

Overall, the channel seems to be up about 3%.

We were up for the year closer to 6, 7%.

So clearly we're getting market share.

We're delivering product the customer wants.

Our promotions are on target.

I would say it's half and half. 3% is channel.

We're beating that by about 3%.

Okay, great.

Thanks a lot.

Congratulations.

Thank you, and we have a question from Melissa Otto with the Delaware Investment Research.

Hi, congratulations on a great quarter.

Nice year-end.

Just a couple of questions about the margin trends.

I think last year you had some really nice gross margin improvement and was just wondering how you see that going forward into 2006?

In terms of 2006, we're looking, basically, at having about operating margin -- we're looking at our gross margin improvement to continue.

We're looking at about 30 to 35 basis point improvement, driven in part by higher sell- throughs and in part by reduction in prices.

Okay.

And will that be weighted to any particular part of the year, to the second half or more in the first half or fairly evenly distributed?

For the most part, evenly.

And then I just wanted to follow up on the question asked about SG&A for the second half of the year.

In terms of how we should think about that as a percentage of revenue, and how that will trend.

Could you give a little bit more color around that?

As you look towards '06, there's apples to oranges comparisons. '05 did not include option expense of $0.15 per share and '06 will include the option expense.

So, you have to re-- you have to make those equal, of course, so we're looking at about a 40 basis point difference.

Okay, great.

With things being lower.

And then just switching gears for a moment.

I wanted to get a little bit more color around the Warnoco deal that was structured around the Europe and Asian Calvin Klein businesses.

It would be great to strategically get more color on that and then if there are any numbers that you can give us in terms of how we should think about the direction of that business, it would be very helpful.

Melissa, as you know, Warnoco's taken over the jeans business internationally from our partner, Fratini.

We think they're a much stronger partner to deal with the growth initiatives, particularly in Europe.

Warnoco's underwear business in Europe is very strong.

In northern Europe and in the U.K. where the jeans business is weaker in that geographic territory, so we think their distribution network will bring strength and enable that business to grow and mature more quickly in that part of the region so we think it's a very big positive for us long-term as we go forward.

We're looking for that jeans business in 2006 to grow somewhere between 7 and 9% overall.

Great, that's very helpful.

Hope your voice feels better, Manny.

It sounds worse than it feels.

Thank you very much.

Thank you, Ms. Otto, and our next question comes from Susan Sansbury with Miller Tabek.

Yes, thanks very much.

Another question about one of your licensees.

Is there anyway that you can comment about relaunch of CK Sportswear so far this spring?

I know the fall season is going to be the real litmus test but if you could bring us up-to-date on how you feel about Kellwood, in addition to your comments about Warnoco, that would be very helpful.

Sure, I think the real test is in the second half of the year.

Business is trending on plan for spring, but the spring plans have been taken down dramatically.

I think the I would call showroom talk, retailers acceptance of what they've seen in the showroom, has been very positive.

We've seen some really good discussions going on about expansions of doors beginning in spring 2007.

So we're very optimistic about the relaunch of fall 2006 but really the proof will be in the pudding.

We need to see the results and we'll start to see those the results beginning in August of 2006.

And we'll report those to you, particularly in our third quarter.

Okay.

Okay.

Going, Manny, just going back to use of cash, you mentioned acquisition and dealing maybe 8% convertible preferred which would be very accretive and you mentioned perhaps common stock repurchase.

Why not debt reduction?

Well, I think two things.

None of our debt is repayable before 2008.

On a relative basis, our interest rate on our debt is less than 7.75%, between 7.5 and 7.75%.

We think it's a reasonable level from a debt point of view and we think the best savings from a cash flow point of view and an accretion point of view would be to do something with the the preferred stock which pays an 8% dividend non-taxable.

So on an overall basis, the best use of our cash from a capital structure point of view would be reduction of the redeemable convertible preferred.

Agreed.

I know you can do this post-February, 2007.

You bought in some forced conversion this year in '05.

Anyway, you can comment about how you're thinking about that 8% preferred for '06?

Well, I think the -- it's really an Apex decision.

Their general feeling is they're very happy with the stock investment.

They've done very well with it and it will really be their decision if they look to take some portion as this did in 2005 off the table.

It wouldn't be an unrealistic assumption to assume but at this point we have no indication one way or another what they'll be doing but we would be willing to entertain a discussion with them.

Okay, wonderful.

Thanks ever so much.

Sorry that you're so speechless.

By the way, congratulations.

Thank you,.

All right.

Thank you, and we have a question at this time with Roy Olfer with Brownstone.

Hi.

I just had a question about the breakout on the CapEx, the 40 to 45 million projected CapEx for '06.

I'm sorry, I couldn't hear you.

I wanted to know if you would breakout your CapEx spend, what your anticipated budget is for CapEx for '06?

What do you plan to use it on?

About 40% will go towards rehabbing and opening our own retail stores.

Another portion will be for store openings with the Calvin Klein retail business and then about $15 million goes towards our logistics distribution sourcing from that perspective.

And we continue to invest in those areas.

So none of that is earmarked for tuck-in type acquisitions?

No, none at all.

The CapEx is totally for the businesses that we operate today.

Do you have a separate projection for potential acquisition budget?

No, our acquisition budget will come out of our free cash which is about $270 million and we would use that for any type of an acquisition we would have.

Thank you very much.

You feel better.

Thank you. [OPERATOR INSTRUCTIONS] We'll take our next question from David Glick with Buckingham Research.

Good morning, and congratulations, guys.

With regard to the second half, what are the opportunities that may not be baked into your guidance that you guys are pursuing to offset the Federated May volume hit?

Do you see any sportswear or dress shirt opportunities that you may be strategizing with JC Penney or some of your mid-tier partners and could this be an opportunity beyond your guidance for the second half?

This is Allen.

Hi, David.

How are you?

Good morning.

There are lots of opportunities.

I think our strategy of multi-brand, multi-channel plays well into this kind of environment.

We have some very strong initiatives across all retail segments.

Our business with JC Penney's is very strong.

Our business with Kohl's is enjoying enormous success.

Our business even with the reduced focus Mervyn's Group is performing very well.

The regional department stores are all energizing their moderate zones and we think that's a great opportunity for some of our moderate brand.

That in addition with some of the expansions within Federated should play well for us.

The rollout of Trump, the expansion of Eagle, the launch of Joe Abboud and dress shirts in the John Ashford program are all positives and in sportswear, the continued growth of Calvin works to our advantage.

Outside the box, we've actually looked, in dress shirts we are expanding our markets and our visions.

We have taken over the dress shirt business and retrieved all of our licenses in Canada and we're expecting to have a very successful year in that first initiative.

We're also, later in the year, we will run a similar initiative in Europe for CK Calvin Klein dress shirts and neckwear.

We've opened an office in our Milan headquarters, organized the staff and logistic infrastructure, and we'll begin marketing of the bridge dress shirts and neckwear throughout Europe.

So, there's plenty of new things happening, lots of ways to offset door closures, which are just a function of consolidating.

David, we also took a conservative stance on the Calvin Klein licensing business for the second half.

Okay.

Great, thanks a lot, appreciate it.

Thank you, Mr. Glick.

Our next question comes from Dennis Rosenberg with DSR Consulting.

Good morning, and congratulations again.

My questions have all been answered.

John just plays itself up for sale and I'm sure he [inaudible], and feel better, Manny.

Thank you, Mr. Rosenberg.

We have a question now from Ronald Clark with JP Morgan.

Morning, congratulations.

Just a few questions to follow up on the guidance that you have for 2006.

I guess first of all, what are you planning for the outlet business?

I know it was up strong 6 to 7% you said, but do you have a specific plan for this or are you growing it at a more mature rate?

We tend to plan our outlet business conservatively.

For next year, we're looking at overall growth of about 1 to 2%.

Okay and then I know we've talked a bit about this but in terms of the time line for your CK launches you had previously indicated that you intended to launch some apparel and accessories and obviously the fragrance this year, early in this year, have been doing pretty well.

Could you just talk a little bit about the incremental launches that you have for 2006?

Yes, the two big launches in 2006 focus on first, the CK bridge in Europe.

That will really launch the second half of '06.

The other launch is a fourth quarter launch with CK Cosmetics in the United States.

That's a big launch, both from a revenue opportunity point of view for '07 and beyond, but also from a marketing point of view.

A substantial amount of marketing funds are spent on the brand and that initiatives.

In addition, in '05 we had a number of second half of the year launches which were in very limited doors.

We launched, I think Allen spoke about it, we launched footwear in both men's and women's in the second half of the year this year.

We launched accessories in the second half of 2005 in this year and we launched outerwear, both men's and women's, in the second half of last year.

We also launched women's suits in the fourth quarter of 2005.

So all of those categories in 2006 will experience door expansion and we'll get the full year benefit of those categories as we go forward.

So that will represent about, those new initiatives plus the new licenses will represent about 35% of the growth that we're targeting for next year.

The balance will be coming out of our comp store growth.

Okay.

That's very encouraging.

I guess and then in terms of visibility into new dress shirt licenses.

Do you have any thoughts there?

I know it's not in your plan but maybe if you see something on the horizon that we should be looking at.

Our new initiatives with licensing and dress shirts are JOE by Joe Abboud.

It's a full launch.

As I said before, we're still rolling out doors on Trump and Eagle and we have acquired the Trump Sportswear license which will sit in the better golf departments.

It's a dress-up, casual golf presentation.

Those are our new licenses for the year.

But nothing in the pipeline at this point that you can share with us?

We continue to look and always discussing but nothing right now in the pipe.

Okay, fair enough.

I think that's it.

Congratulations, again and Manny, feel better.

Thank you, Mr. Clark.

Our final question comes from Jennifer Black with J. Black and Associates.

Hey, good morning, and let me add my congratulations.

I don't believe you've spoken about this and I wanted to know if there were any new retailers specifically for the Calvin Klein brand, i.e., Nordstrom, that you would be adding?

I guess with Calvin Klein I would like to know if you've been approached to do special makeup and if you could talk a little bit about that.

Jennifer, Dillard's was the large new launch in the fourth quarter of 2005.

We'll get the full year benefit of that going forward.

We continue to discuss the Calvin Klein opportunity with Nordstrom's both in the better area and the bridge area.

But at this point we have nothing concrete to talk about and we do very little in the way of special makeups with Calvin Klein and all licensees are all limited as a percentage basis the amount they can do so we try to keep that as limited as possible.

Special makeups either for the secondary channel or clubs so we do as little as possible.

Right.

I guess the reason I brought it up is because it seems as though that would be a way to get over the hump with them if you had something to differentiate yourself with the brand even if it was slight.

We will continue to have dialog with Nordstrom's and if they decide to go forward, obviously special make or special label that might make sense for them, we would consider.

Okay, all right, well good luck and congratulations to everyone.

Thank you.

Thank you, Ms. Black, and at this time there are no further questions.

I would like to turn it back to Mr. Mike Shaffer for any closing remarks.

We want to thank everybody for attending our call and we will see you at the end of the first quarter.

Thank you and this does conclude today's conference.

We would like to thank everyone for your participation and have a wonderful day.