2nd UPDATE:Liz Claiborne 3Q Loss Rises, But Outlook Encourages
(Adds information from conference call)
By Karen Talley
OF DOW JONES NEWSWIRES
Liz Claiborne Inc. (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, is feeling more comfortable about the Christmas season, with same-
store sales having improved "significantly" since the company's fourth quarter
began in early October, said Liz Claiborne Chief Executive William McComb in a
call with analysts. "I definitely feel a little less melancholy about what the
fourth quarter could have brought."
Liz Claiborne is now seeing positive comparable-store sales for its Juicy
Couture, Lucky and Kate Spade brands, although because of lagging business in
its Mexx overseas division and poor sales of its namesake lines, overall fourth-
quarter sales are expected to drop 10% to 15%.
While stopping short of saying the company could return to profitability next
year, McComb did indicate that new plans for the Liz namesake line, in which
J.C. Penney Co. (JCP) will be the only U.S. department store to carry and expand
the brand, should allow that part of the business to show earnings in 2010.
Liz's own outlet stores could show a profit by late next year or soon after as
they sell more of the new Isaac Mizrahi-designed Liz line after clearing out old
product.
The challenges still facing Liz Claiborne revolve around continued high
unemployment crimping consumer spending and the company continuing to maintain
momentum for its turnaround.
Liz Claiborne showed progress on its capital structure during the quarter,
continuing to pare debt and again amend its credit agreement. Inventory fell 25%
from a year ago.
The developments appear to be lifting shares despite many negatives in Liz
Claiborne's third-quarter report. The stock was recently up 4.6% at $5.72.
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%.
(Joan E. Solsman contributed to this article.)
-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com
(END) Dow Jones Newswires
11-04-091338ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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