Liz Claiborne Inc. predicted Wednesday that it will keep losing money in the first half of the year as it confronts a severe pullback in consumer spending. The downbeat outlook sent shares down more than 11 percent, even though its fourth-quarter adjusted losses were smaller than analysts expected.
Like many of its rivals, including Jones Apparel Group Inc. and VF Corp., Claiborne has suffered as major stores have cut inventory and slashed retail prices as shoppers shun more discretionary items like clothing. Claiborne told investors it will keep cutting costs and will offer more fashions at lower prices starting this fall.
One silver lining was strong initial sales for its relaunched namesake brand under the new design direction of Isaac Mizrahi, whose first collection is hitting stores now, the company said.
"These are highly volatile times," Chief Executive William L. McComb told investors during a conference call Wednesday. "There is a tremendous amount of uncertainty."
The New York-based company, whose labels also include Lucky Brand and Juicy Couture, reported a loss of $828.9 million, or $8.85 per share, for the three months ended Jan. 3. That compares with a loss of $435.7 million, or $4.55 per share, during the same period a year before.
The latest quarter's results include noncash charges of $683 million related to a decrease in the company's market capitalization below the company's book value. Excluding nonrecurring items, the company posted an adjusted loss from continuing operations of 4 cents per share. Direct brands include Juicy Couture, Kate Spade and Lucky Brand.
Analysts polled by Thomson Reuters estimated a loss of 5 cents per share. Analyst projections typically exclude one-time items.
Revenue declined 22 percent to $911.2 million from $1.17 billion a year earlier because of a sharp decline in consumer demand. Analysts had forecast revenue of $994.9 million.
Liz Claiborne said Wednesday that its comparable-store sales for Juicy Couture, Lucky Brand and Kate Spade all fell by percentages in the mid teens in the fourth quarter. Same-store sales for its Mexx brand declined 12 percent.
Same-store sales, or sales at stores open at least a year, are an important retail performance indicator because.
Claiborne announced a major restructuring in 2007 to focus on fewer but more powerful brands like Juicy Couture and Lucky. But since the economy tanked in September, it accelerated cost-cutting, including job cuts. Last month, it announced an exclusive, long-term deal with Hong Kong-based consumer goods exporter Li & Fung Ltd. Li & Fung, which will handle sourcing for the brand's apparel and accessories collections except jewelry.
The company's relaunched namesake brand is receiving reorders of regular-price apparel for the first time in five years with Mizrahi's collection, McComb said. The company also plans to offer more items at lower prices across all its brands. At Lucky Brand, for example, the company will be offering more $25 T-shirts and $99 basic jeans.
The company, which operates stores under several of its brands, said its 2009 plan assumes a retail environment similar to the fourth quarter's. That could mean same-store sales declining between 15 percent and 25 percent for all brands through the third quarter of 2009. The company said that it expects same-store sales comparisons to stop falling in the fourth quarter of 2009 because that period will be compared with the sharp downturn that started in September 2008.
The company forecast a loss in the first half, adding it will have a "meaningful" loss in the first quarter, with improvement in each successive quarter as cost cuts instituted in February take hold.
Shares of Liz Claiborne fell 32 cents, or 11.4 percent, to close at $2.50 Wednesday. The stock has traded between $1.46 and $20.33 over the past year.
___
AP Business Writer Deborah Lee in New York contributed to this report.
Terms & Conditions
RSS Headlines
Fool UK