Interviews
News Flash
'We expect to see sequential improvement in H2 results' – Liz CEO
13 Aug '09
5 min read
William L. McComb, Chief Executive Officer of Liz Claiborne Inc., said: "Our financial results in the second quarter reflect the continuing challenges of turning around under performing businesses in the current recessionary environment as consumer spending and mall traffic, although not deteriorating further, remained at depressed levels compared to last year. Consistent with the outlook we provided on our May call, we posted comparable store sales decreases of 17% at Juicy Couture, 23% at Lucky Brand, 15% at Kate Spade and 12% at Mexx. Although overall adjusted gross margin was down compared to last year, we are encouraged by the improvement in this metric in all three segments compared to first quarter levels."
Mr. McComb continued, "During the quarter, we continued to strengthen our balance sheet which reflects total debt of $718 million, a $180 million decrease compared to the second quarter of 2008, inclusive of a $60 million decrease due to changes in foreign currency exchange rates. We generated a 22% reduction in inventory compared to last year, including the impact of brands sold, discontinued, or licensed. We issued $90 million in convertible bonds in June and used the proceeds to further reduce our bank debt, increasing availability and enhancing liquidity. This transaction extends the weighted average maturity of our debt and demonstrates our ability to access the capital markets. Cash flow from continuing operating activities was strong once again at $381 million for the last twelve months, including the receipt of $137 million in net income tax refunds and $75 million associated with our sourcing agreement with Li & Fung, resulting in availability of $215 million in our bank credit facility at the end of the quarter."
Mr. McComb concluded, "For the third quarter, we expect comp store sales declines in the 15-25% range in our Juicy Couture, Lucky Brand and Kate Spade brands. We expect fourth quarter comps to improve as we anniversary the economic downturn that began in September of last year. We are planning for the retail environment to remain fundamentally promotional and expect to see sequential improvement in our second half results."
"These results will be driven primarily by the cost reductions announced earlier in the year and modest margin expansion resulting from reduced inventories, more responsive merchandising which will reflect a broadening of opening price point items in our product offerings and lower sourcing costs beginning in the fourth quarter, resulting from our sourcing arrangement with Li & Fung. We also look forward to Thomas Grote taking over as the new CEO for Mexx in October and are optimistic that Thomas and his new management team will successfully execute Mexx's turnaround."
Click here to read more details:
Mr. McComb continued, "During the quarter, we continued to strengthen our balance sheet which reflects total debt of $718 million, a $180 million decrease compared to the second quarter of 2008, inclusive of a $60 million decrease due to changes in foreign currency exchange rates. We generated a 22% reduction in inventory compared to last year, including the impact of brands sold, discontinued, or licensed. We issued $90 million in convertible bonds in June and used the proceeds to further reduce our bank debt, increasing availability and enhancing liquidity. This transaction extends the weighted average maturity of our debt and demonstrates our ability to access the capital markets. Cash flow from continuing operating activities was strong once again at $381 million for the last twelve months, including the receipt of $137 million in net income tax refunds and $75 million associated with our sourcing agreement with Li & Fung, resulting in availability of $215 million in our bank credit facility at the end of the quarter."
Mr. McComb concluded, "For the third quarter, we expect comp store sales declines in the 15-25% range in our Juicy Couture, Lucky Brand and Kate Spade brands. We expect fourth quarter comps to improve as we anniversary the economic downturn that began in September of last year. We are planning for the retail environment to remain fundamentally promotional and expect to see sequential improvement in our second half results."
"These results will be driven primarily by the cost reductions announced earlier in the year and modest margin expansion resulting from reduced inventories, more responsive merchandising which will reflect a broadening of opening price point items in our product offerings and lower sourcing costs beginning in the fourth quarter, resulting from our sourcing arrangement with Li & Fung. We also look forward to Thomas Grote taking over as the new CEO for Mexx in October and are optimistic that Thomas and his new management team will successfully execute Mexx's turnaround."
Click here to read more details:
Liz Claiborne Inc
Popular News
Leave your Comments
Folker Stachetzki
Brother Internationale Industriemaschinen GmbH
Siddhaarth Oberoi
Siddhaarth Oberoi Shirts (SOS)
Esteemed Clients
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
