The company, formerly known as Liz Claiborne Inc., now projects full-year adjusted earnings before interest, taxes, depreciation and amortization of $100 million to $110 million, down from its previous forecast for $125 million to $140 million. The new estimate takes into account a continued strong performance at its kate spade new york brand and a slightly improved results at Lucky Brand.
“While two of the brands continue to perform well, as we now have visibility as to comparable sales and margins for the third quarter at Juicy Couture, we are not seeing the improved results we were forecasting for Juicy and are not expecting Juicy to achieve its forecasted results in the fourth quarter,” said William L. McComb, chief executive.
In its preliminary third quarter results, Fifth & Pacific projected earnings in the range of $17 million to $20 million. The company said preliminary direct-to-consumer comparable sales, which include e-commerce sales, rose 21% for kate spade and rose 4% for Lucky Brand, while Juicy Couture saw a 1% decline.
‘Juicy Taking a Step Backwards’
While Fifth & Pacific raised its profit estimates for kate spade and Lucky Brand, Juicy Couture is now expected to earn only $28 million to $38 million this year, compared with a previous forecast of $70 million to $73 million.
“Juicy is taking a step backwards,” McComb told analysts on a conference call on Monday afternoon, noting that “significant shortfalls in full-price” selling at Juicy Couture would likely continue into fourth quarter.
“Clearly we’ve hit price resistance,” he added.
McComb announced some initiatives to help bolster the brand, such as modifying allocation process to deliver more product to higher performing doors, move excess inventory to outlet channel sooner to improve sell-through, new merchandising and price strategies in retail stores, including “enhanced regionalization of merchandise.”
“Despite this obviously disappointing reduction in the current outlook for the Juicy brand, we expect that we will be able to achieve our long term targets for the brand as we believe we have an appropriate plan to correct these merchandising-related issues,” McComb said.
Besides its three global lifestyle brands–Juicy Couture, Lucky Brand and kate spade, Fifth & Pacific operates its partnered brands through its Adelington Design Group, a private brand jewelry design and development group, that markets brands through department stores as well as serves JCPenney via exclusive supplier agreements for the Liz Claiborne and Monet jewelry lines and Kohl’s via an exclusive supplier agreement for Dana Buchman jewelry.
The company also has licenses for the Liz Claiborne New York brand, available at QVC and Lizwear, which is distributed through the club store channel. Fifth & Pacific maintains an 18.75% stake in Mexx, a European and Canadian apparel and accessories retail-based brand.