UPDATE: Liz Claiborne 3Q Loss Rises, But Outlook Encourages
(Updates throughout with added information on results)
By Karen Talley
OF DOW JONES NEWSWIRES
Liz Claiborne Inc.'s (LIZ) posted a much wider-than-expected third-quarter
loss, but did offer some glimmers of hope that its lengthy efforts to turn
around operations may be gaining traction.
The apparel company, which sells through its own stores and at other
retailers, strongly emphasized that new plans for its namesake line should
return this part of the business to profitability in 2010, which could help the
company itself mark earnings growth.
Recent trends show progress, with "significantly improved" same-store sales
since the company's fourth quarter began at the beginning of October, said Liz
Claiborne Chief Executive William McComb in the earnings release.
As a result, comparable sales for the company's Juicy Couture, Lucky Brand and
Kate Spade brands, are not expected to fall in the fourth quarter from a year
ago, McComb said. Liz's Mexx line, which has been especially struggling, is
expected to see a 10% decline.
The comments came after McComb indicated that the brands had largely fared
better than the company expected in its most recent full quarter.
Liz Claiborne during the third quarter was also able to continue paring its
debt and again amend its credit agreement.
The developments appear to be lifting shares despite many negatives in Liz
Claiborne's third-quarter report. The stock was recently up 3.1% at $5.65.
Liz Claiborne posted a third-quarter loss that was more than twice analysts'
expectations as sales fell sharply.
Gross margin dropped by four percentage points, contributing to the loss and
suggesting that department stores like Macy's Inc. (M), which still carry the
namesake Liz line, may be significantly marking the merchandise down as their
relationships with Liz are ending.
Liz Claiborne announced last month that it will license its namesake brand to
J.C. Penney Co. (JCP) as its exclusive department store carrier in the U.S. - a
move that Liz Claiborne feels will better represent the brand.
Liz Claiborne's third-quarter loss was $90.5 million, or 96 cents a share,
compared with 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%.
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.
-By Joan E. Solsman contributed to this article
-Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com
(END) Dow Jones Newswires
11-04-091011ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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