Designer Holdings streamlines distribution to strengthen focus on department store segment.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY--(BUSINESS WIRE)--March 19, 1997--Designer Holdings Ltd. (NYSE NYSE See: New York Stock Exchange :DSH DSH Disproportionate Share Hospital DSH Domestic Short Hair (cat) DSH Deliberate Self-Harm DSH Desperately Seeking Help (USENET) DSH Dyschromatosis Symmetrica Hereditaria ) today announced that it has made a strategic decision to tighten the Company's product distribution in order to reinforce the exclusivity of the Calvin Klein Noun 1. Calvin Klein - United States fashion designer noted for understated fashions (born in 1942) Calvin Richard Klein, Klein Jeanswear brand and to position its business for increased long-term profitability. Specifically, the Company will curtail distribution through certain specialty store Noun 1. specialty store - a store that sells only one kind of merchandise shop, store - a mercantile establishment for the retail sale of goods or services; "he bought it at a shop on Cape Cod" chains and Latin American sales channels, while increasing the focus on its higher margin department store customers, as well as selected licensees. The Company expects these actions to increase sales through the department store channel and enhance the gross margin in fiscal 1997, although total sales for the year will be below prior expectations due to the discontinuation dis·con·tin·u·a·tion n. A cessation; a discontinuance. Noun 1. discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) discontinuance of the Latin American and specialty store distribution channels. Total fiscal 1997 sales for Designer Holdings under the new distribution strategy are expected to be approximately $495-$510 million, compared with $480.4 million in fiscal 1996. Of this amount, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight to department stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. of the Company's Calvin Klein Sportswear lines are expected to increase 18%-20% over the prior year. Sales in 1997 will include approximately $50 million in anticipated sales from the Company's CK Outlet Stores, which were purchased in November 1996. In order to achieve stronger control over the distribution of product in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , the Company has established agreements with licensees in that region for the manufacture and distribution of Calvin Klein products, which will result in a shift from direct sales to royalty income for Designer Holdings. As a result of the change in distribution strategy, the Company currently expects to report fiscal 1997 net income of approximately $0.90-$0.95 per share. Arnold Simon, Chief Executive Officer and President, stated, "As part of our continual evaluation of our business, we determined to adopt a revised distribution strategy focusing on the department store channel, which we believe has excellent prospects for sustained double-digit sales growth. This strategy calls for supporting our valued department store customers by maintaining greater exclusivity, and eliminating certain distribution channels that permitted our products to be diverted to lesser quality retailers. We also are making a strong commitment to expanding our shop-in-shops in leading department stores. Our current plans call for an additional 200-250 shops in 1997 for a total of 350-400 shops by year end. We are also actively pursuing opportunities to acquire additional brands and licenses that would complement our business and enhance our long-term growth." Mr. Simon added that the shift in distribution strategy is expected to increase profitability over the long term by generating a greater proportion of Designer Holdings' sales at higher gross margins, reducing inventory requirements and increasing inventory turns, and strengthening demand for its products at department stores. Certain statements contained herein are forward-looking statements that are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause the Company's actual results in future periods or plans for future periods to differ materially from what is currently anticipated. Those risks include, among others, general competitive factors and a softening of retailer or consumer acceptance of the Company's products. Designer Holdings Ltd. currently develops, sources and markets designer sportswear collections under the Calvin Klein Jeans, CK/Calvin Klein Jeans, and CK/Calvin Klein Khakis labels. Products for men, juniors, women and petites are distributed through a broad range of department stores. CONTACT: Maurice Dickson Designer Holdings Ltd. 212/556-9600 or Investor Contact: Christine DiSanto/Caroline Babbitt/Jim Cappuccio Morgen-Walke Associates 212/850-5600 or Media Contact: Stacy Berns/Jeff Siegel Morgen-Walke Associates 212/850-5600 |
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