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Liz Claiborne reports Q2 & first nine months results
05 Nov '09
5 min read
Mr. McComb continued, "During the quarter, we continued to strengthen our balance sheet which reflects total debt of $829 million, a $145 million decrease compared to the third quarter of 2008, inclusive of a $27 million increase due to changes in foreign currency exchange rates. Our inventories are in good shape as we achieved a 25% reduction in the quarter compared to last year.We also continue to make great progress in our cost reduction initiatives, as we recorded adjusted SG&A expense of $382 million, a $63 million decrease compared to last year.
As a result of these improved cost trends, we have revised our full year adjusted SG&A targets to approximately $1.550 billion for 2009 and $1.450 billion for 2010. Cash flow from continuing operating activities was strong once again at $336 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 $203 million in our bank credit facility at the end of the quarter."
Mr. McComb concluded, "Fourth quarter to date, we are posting significantly improved comparable store sales results compared to the year to date trend as we have seen solid execution overall on the merchandising initiatives we outlined on our August call. Although we expect the retail environment to demonstrate sustained volatility throughout the fourth quarter, we expect comparable store sales to be roughly flat overall in our Juicy Couture, Lucky Brand and Kate Spade brands and down approximately 10% in our Mexx brand. In our Partnered Brands segment, we expect that after factoring in the impact of transition costs in the fourth quarter, our recently announced licensing agreements with JC Penney and QVC will result in a dramatic shift in profitability for the Liz Claiborne brand wholesale business from a meaningful loss in 2009 to a profit in 2010. At Mexx, we are very excited that Thomas Grote has taken over as the new CEO as of October 1st. Although operating results at Mexx remain challenging, we are optimistic that Thomas and his new management team will successfully execute Mexx's turnaround. We look forward to giving Thomas the opportunity to publicly communicate this strategy on our year end 2009 earnings call in February 2010."
Amendment to Revolving Credit Agreement
On November 2, 2009, we completed an amendment to our revolving credit facility, which among other things, provides that, through the maturity of the agreement in May 2011, the fixed charge coverage covenant will be in effect only when availability under the credit agreement fails to exceed certain agreed upon levels; and (ii) provides the necessary consents related to the recently announced licensing agreement with JC Penney. Based upon our current forecast, we anticipate having sufficient availability to avoid springing the fixed charge coverage covenant.
Ckick here for more details.
As a result of these improved cost trends, we have revised our full year adjusted SG&A targets to approximately $1.550 billion for 2009 and $1.450 billion for 2010. Cash flow from continuing operating activities was strong once again at $336 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 $203 million in our bank credit facility at the end of the quarter."
Mr. McComb concluded, "Fourth quarter to date, we are posting significantly improved comparable store sales results compared to the year to date trend as we have seen solid execution overall on the merchandising initiatives we outlined on our August call. Although we expect the retail environment to demonstrate sustained volatility throughout the fourth quarter, we expect comparable store sales to be roughly flat overall in our Juicy Couture, Lucky Brand and Kate Spade brands and down approximately 10% in our Mexx brand. In our Partnered Brands segment, we expect that after factoring in the impact of transition costs in the fourth quarter, our recently announced licensing agreements with JC Penney and QVC will result in a dramatic shift in profitability for the Liz Claiborne brand wholesale business from a meaningful loss in 2009 to a profit in 2010. At Mexx, we are very excited that Thomas Grote has taken over as the new CEO as of October 1st. Although operating results at Mexx remain challenging, we are optimistic that Thomas and his new management team will successfully execute Mexx's turnaround. We look forward to giving Thomas the opportunity to publicly communicate this strategy on our year end 2009 earnings call in February 2010."
Amendment to Revolving Credit Agreement
On November 2, 2009, we completed an amendment to our revolving credit facility, which among other things, provides that, through the maturity of the agreement in May 2011, the fixed charge coverage covenant will be in effect only when availability under the credit agreement fails to exceed certain agreed upon levels; and (ii) provides the necessary consents related to the recently announced licensing agreement with JC Penney. Based upon our current forecast, we anticipate having sufficient availability to avoid springing the fixed charge coverage covenant.
Ckick here for more details.
Liz Claiborne Inc
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