Liz Claiborne Narrows Q1 Loss on Margin Increases, Kate Spade Sales

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Spring/Summer 2012 at kate spade new york, a star performer for Liz Claiborne Inc.

New York—Liz Claiborne Inc. reported a narrower first quarter loss today helped by higher margins and strong sales at its kate spade new york brand.

For the quarter ended March 31, Liz Claiborne Inc. posted a net loss of $60.6 million, or 60 cents a share, compared with a loss of $96.3 million, or $1.02 a share, a year ago. Including only continuing operations, Claiborne had a loss of 22 cents a share, but still more than analysts’ average estimate for a loss 14 cents.

Net sales declined 4.1% to $317.15 million. But a 45.9% increase at kate spade new york and a 20.3% sales increase at Lucky Brand offset decreases at other divisions, resulting in net sales higher than the $307.34 million that analysts’ had anticipated. Gross margin rose to 56.5% from 53.3%, thanks to sell throughs at kate spade and more direct-to-consumer sales.

That along with the company reaffirming its fiscal 2012 forecast for earnings in the range of $125 million to $140 million helped send shares of the company’s stock up in pre-market trading.

“We are encouraged by the prospects for [Juicy Couture, Lucky Brand and kate spade new york] these three brands as they execute their growth strategies. kate spade continued its very strong trend, with the brand posting comps of 19% in February and 73% in March,” said William McComb, ceo. “The same holds true at Lucky Brand, where strong performance in denim and a compelling fashion offer are driving solid direct-to-consumer sales trends, as evidenced by comps of 20% in February and 18% in March.”

Only Profitable Brand: kate spade new york

However, sales at Juicy Couture were down 4.4% to $110 million despite increases in the brand’s e-commerce, licensing, outlet and wholesale apparel operations. Comparable store sales were down 4%. But McComb said the company was encouraged by spring and early summer merchandise that was performing ahead of the same period last year and with lower inventory levels.

Meanwhile, McComb told analysts in a conference call today that David Bussuk, co-president and ceo at Juicy Couture, would be leaving the post after only two months. Bassuk is returning to his previous employer, AlixPartners.

McComb said Bassuk, who had consulted with Liz Claiborne before joining the company, would return to being a consultant. “While this is a bit unusual, it’s a highly pragmatic move for Dave, AlixPartners and Juicy,” McComb said.

The company’s only profitable brand, kate spade new york posted $86 million in sales, driven by increases in e-commerce, specialty retail, outlet, wholesale non-apparel and wholesale apparel. Moreover, the brand had an operating profit double that of a year ago.

Kate spade new york stores generate sales of nearly $1,000 per square foot, about 50% more than at Juicy Couture. Comparable store sales, excluding e-commerce, increased 38%. For the year, Claiborne expects kate spade’s comparable sales to rise by a “high teens” percentage.

Takeover Speculation

Net first quarter sales at Lucky Brand were $100 million, driven by increases in wholesale apparel, specialty retail, outlet and e-commerce, partially offset by a decrease in wholesale non-apparel. Comparable store sales, including e-commerce, increased 21%. Operating loss at Lucky narrowed slightly from a year ago.

At the company’s Adelington Design Group, its private brand jewelry design and development division, sales were down $53 million, or 72.4%, to $20 million, due mostly to the impact of sold off business. Adelington now works on Liz Claiborne and Monet brand jewelry lines for JCPenney and on Dana Buchman jewelry for Kohl’s.

Liz Claiborne Inc., which will officially change its name to Fifth & Pacific Companies on May 15, is being closely watched by retail analysts following rumors that the company may be a target of a takeover or see some of its brand divisions spin off individually.





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