Liz Claiborne 3Q Loss Widens, Missing Analysts' Views
DOW JONES NEWSWIRES
Liz Claiborne Inc.'s (LIZ) third-quarter loss widened on a drop in revenue as
the apparel maker's eighth consecutive quarter of red ink was much wider than
analysts expected.
The company has been trying with little success to rebuild its brands, some of
which were struggling before the recession hit consumer spending and mall
traffic. Liz Claiborne has been focusing on developing "direct" brands like Kate
Spade and Juicy Couture and will license its namesake brand to J.C. Penney Co.
Inc. (JCP), while it unveiled sweeping restructuring strokes last summer to save
$100 million, on top of previous job cuts and efforts to streamline.
Liz Claiborne posted a loss of $90.5 million, or 96 cents a share, from a
year-earlier loss of $68.7 million, or 73 cents a share. Excluding write-downs
and other items, continuing operations swung to a loss of 43 cents from year-
earlier income of 39 cents.
Sales dropped 24% to $769.6 million.
A survey of analysts by Thomson Reuters expected a 20-cent loss on $799
million in revenue.
Gross margin fell four percentage points to 45.3%.
At the company's "direct" brands, same-store sales were down 13% at Juicy
Couture, 16% at Lucky Brand, 3% at Kate Spade and 13% at the Mexx international
business. The company has been developing the direct brands while it revitalizes
its namesake Liz line, which was hot in the 1980s but languished since.
Looking ahead, the company projected same-store sales to be roughly flat
overall in the Juicy Couture, Lucky Brand and Kate Spade brands and down about
10% in Mexx.
In July, Claiborne renewed the three-year employment contract of its chief
executive, William L. McComb, underscoring the board's commitment to him despite
the company's poor performance.
Liz Claiborne shares closed Tuesday at $5.48 and weren't active premarket. The
stock has doubled so far this year and more than tripled from an all-time low
late last November.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@
dowjones.com
(END) Dow Jones Newswires
11-04-090823ET
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