Dear Fellow Stockholders,

One of our goals as a company has been to develop and employ a business model that is diverse enough to allow us to continue to perform in the midst of shifting economic conditions. Throughout 2007, we demonstrated our company's ability to fulfill that objective.

Consider the circumstances in 2007. Rising gas prices, the sub-prime mortgage crisis, and inflation all converged to diminish consumers' disposable income, weaken consumer confidence, and cause retrenchment in consumer spending patterns, including fewer trips to the mall. We saw the effect of this particularly in our heritage outlet retail and heritage wholesale sportswear businesses, and have seen little change as we enter 2008. Accordingly, we expect that our company's biggest challenge throughout the remainder of 2008will remain external macroeconomic factors. Yet we remain optimistic that we can continue to find and take advantage of opportunities within this environment.

Certainly, in 2007, our business model functioned as intended, as our commitment to marketing strong global brands across multiple channels of distribution allowed us to continue on our growth track, despite a slowdown in some segments of our business. We exceeded our financial projections in each quarter. For the year, earnings per share were up 22%over 2006, to $3.21. Annual revenues increased 16% from the previous year's total, to more than $2.4billion, and operating income* grew 18%to $312million.

In addition to achieving these financial results, we continued to take advantage of strategic investment opportunities to strengthen and position ourselves for the future. During the year, we:

• integrated the newly acquired Superba neckwear business into our organization, while significantly exceeding our earnings projection for this business;
• launched IZODwomen's sportswear, a business we believe could grow to $200million in sales within five years and serve as the platform for the development of our in-house expertise in the women's wholesale sportswear arena;
• assembled a complete Timberlandmen's sportswear organization based on the licensing agreement we signed last year, positioning us to deliver the new product line to key retail accounts for Fall 2008and commence a business that we believe could generate $150million in wholesale sales by 2013; and
• opened five full-priced Calvin Kleinspecialty retail stores in some of the most prestigious malls across the country, an important step that will provide us with a showcase for the full breadth of the Calvin Kleinbetter product, serving as a marketing halo for the brand, as well as giving us direct access to the U.S. consumer.

The opportunities represented by these new initiatives were matched by the achievements of our Calvin Klein businesses and our heritage branded businesses.

“...in 2007, our business model
    functioned as intended...”

The Calvin Klein brand continues to be recognized as one of the most powerful fashion brands worldwide, with a broad range of products under its designer collection, bridge, and better brands. In each of the past three years, the Calvin Klein businesses have consistently exceeded their financial goals and 2007 was no exception. Top line Calvin Klein Licensing segment revenues grew by 27% while operating income increased 38% on a non-GAAP basis*. Strategic expansion into new product categories and important markets, such as China, India, and Russia, allowed further development and intensification across an ever-expanding portfolio of products. Indeed, global retail sales of Calvin Klein products reached $5.4 billion in 2007, up 93% from $2.8 billion in 2003, the year we acquired Calvin Klein. More than ever, we are convinced of the extraordinary power of the Calvin Klein brand and its ability to serve as a growth engine for our company for many years to come.

At the same time, the financial performance of our heritage brands - Van Heusen, IZOD, ARROW, and Bass - even in the face of the difficult macroeconomic environment, reflects their recognition and acceptance by the consumer, the appropriateness of the channels of distribution in which they operate, as well as the strength and depth of the management teams who oversee them. In 2007, despite pressure on our heritage wholesale sportswear and heritage outlet retail businesses, aggregate revenues from our wholesale and retail businesses grew by 15% and their collective operating income grew by 18%.

To preserve brand identity and to be more responsive to our customers, the three heritage business groups - Dress Furnishings, Sportswear, and Retail - maintain separate and distinct brand design and sales teams. However, each business group's portfolio of owned and licensed brands benefits from leveraging PVH's strong infrastructure.

“We benefit from what we believe is one of the strongest management teams in the industry, a portfolio of world class brands, and an infrastructure that enables us to execute at consistently high levels across all facets of our business.”

We continue to invest in all of our brands, looking for cost-effective marketing opportunities that reflect and amplify brand values and bring positive attention and exposure. For our sportswear brand IZOD, for example, we took advantage of a naming opportunity at a major sports and entertainment facility. Exposure from what is now known as the IZOD Center, home of the National Basketball Association's New Jersey Nets team, has underscored and solidified that brand's position as a leading name in men's and women's sportswear and performance apparel. For our apparel brand ARROW, we leveraged our company's financial support for the Save Ellis Island restoration project. We associated the long history and traditional "American style" of ARROW clothing with a corporate commitment to preserving a unique and important part of American history. The ARROW brand is prominent throughout a multi-media campaign that is broadening the public's awareness of, and involvement in, the effort to enhance the future of Ellis Island.

Our financial position remained strong in 2007. We sought ways to return to our stockholders some of the value generated in recent years by our performance. Our earnings and cash flow growth allowed us to undertake and complete a $200 million stock repurchase program, which was fully funded by a portion of our cash on hand. We ended the year with $270 million in cash and a strong balance sheet with significant credit availability after taking into account this repurchase program. An upgrade of our credit rating by Standard & Poor's last year should further enhance our ability to finance our ongoing activities, as well as potential new initiatives.

Phillips-Van Heusen today is a company with many facets. With the acquisition of the Superba neckwear business, we have moved beyond being the largest shirt company in the world to become the largest marketer of men's dress furnishings. With the continued expansion of the geographic reach and product scope of the Calvin Klein brands, our global presence in the designer sector is rapidly expanding. We are asserting our presence in international markets with our heritage brands as well, adding strong licensees as partners, and bringing in-house the responsibility for designing, marketing, and distributing some of our own branded products in Canada and Europe. Our stature as a global enterprise is growing at the speed with which revenues from outside the U.S. are increasing. Furthermore, with the expanding visibility and reach of our brands, our core competency and investment in marketing is becoming a defining corporate attribute.

As we move forward on many fronts, we are committed to maintaining our corporate values. In 2007, Institutional Investor magazine praised us for our investor-friendly approach, a tribute to the governance and reporting practices we follow. We continue to strive to be a good corporate citizen wherever we operate, committed to the well-being and fair treatment of the people and places involved in producing our products. As always, the charitable work of our associates and their involvement with their communities are sources of great pride.

We are grateful to our stockholders and thank them for their support and confidence. We also appreciate the guidance and help that our Board of Directors provides us as we chart our course for the future and work to maximize the results of our day-to-day operations.

We benefit from what we believe is one of the strongest management teams in the industry, a portfolio of world class brands, and an infrastructure that enables us to execute at consistently high levels across all facets of our business. Alongside this model for achieving organic growth, we are maintaining a strong financial position, allowing us in these challenging times to consider strategic opportunities that would complement our business and provide additional means of growth, both domestically and internationally.

As we anticipate the coming months, we acknowledge that circumstances may well be difficult for our industry. To our stockholders, associates, business partners, and consumers, we can express confidence that we will continue to work to deliver the best results possible in 2008 as we also pursue every prudent strategy for the long term to improve our position of leadership and achieve growth in our industry.

 Emanuel Chirico
 Chairman and Chief Executive Officer