Weak demand for apparel and a large writedown pushed Liz Claiborne Inc. further into the red in its fourth quarter, the company reported Wednesday.
The company's prediction that it will keep losing money in the first half of this year sent shares down as much as 15 percent in midday trading, even though the company's adjusted fourth-quarter income beat Wall Street forecasts.
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 amid the severe pullback in consumer spending.
The New York-based company, whose labels include Lucky Jeans and Juicy Couture as well as its namesake brand, 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.
"The operating environment in the fourth quarter was extraordinarily difficult as consumer spending was further impacted by deteriorating economic conditions," said William L. McComb, chief executive in a statement.
Claiborne announced a major restructuring in 2007 to focus on fewer but more powerful brands like Juicy Couture and Lucky, and it hopes to revive its iconic but aging namesake brand under fashion designer Isaac Mizrahi as creative director.
Company officials said during a conference call with investors Wednesday that early sales of Mizrahi's first collection for the brand have been strong.
Claiborne also has announced cost cuts and 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.
Claiborne in January announced it had gained some stability by renegotiating some terms of its credit facility.
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 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 28 cents, or almost 10 percent to $2.54 in midday trading. The stock has traded between $1.46 and $20.33 over the past year.
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AP Business Writer Deborah Lee in New York contributed to this report.
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