Q1 financial results in-line with the guidance, Liz CEO
Liz Claiborne Inc. announced earnings for the first quarter 2010. Unless otherwise noted, references to loss from continuing operations, net loss and adjusted loss or income from continuing operations and associated per share amounts refer to such amounts attributable to Liz Claiborne Inc. For the first quarter of 2010 and on a GAAP basis, the loss per share from continuing operations was ($0.67) compared to a loss per share from continuing operations of ($0.91) for the first quarter of 2009. Adjusted loss per share from continuing operations for the first quarter was ($0.38) compared to an adjusted loss per share from continuing operations of ($0.36) for the first quarter of 2009. Net sales for the first quarter were $608 million, a decrease of $167 million, or 21.5%, from the comparable 2009 period. Excluding the impact of a $52 million decrease in net sales of the Liz Claiborne family of brands resulting from the transition to the licensing models under the JCPenney and QVC arrangements, net sales decreased $115 million, or 14.8%.
The adjusted results for the first quarter 2010 and 2009 exclude the impact of expenses incurred in connection with the Company's streamlining initiatives and brand-exiting activities and non-cash goodwill impairment charges. The Company believes that the adjusted results for the first quarter 2010 and 2009 represent a more meaningful presentation of its historical operations and financial performance since these results provide period to period comparisons that are consistent and more easily understood. The attached tables, captioned "Reconciliation of Non-GAAP Financial Information", provide a full reconciliation of actual results to the adjusted results.
William L. McComb, Chief Executive Officer of Liz Claiborne Inc., said: "Our financial results in the first quarter were generally in-line with the guidance we provided in February. We saw improved comp store sales and gross margins at Juicy Couture and kate spade in the quarter. In contrast, Lucky Brand is undergoing a significant merchandising and operational recalibration which negatively impacted first quarter results. CEO Dave DeMattei and his new management team have hit the ground running and have been rapidly implementing changes at Lucky in inventory management, product assortments, and visual merchandising. On call, we are pleased to introduce Dave to you to share the work he's done in his first 100 days and his initial thoughts on a go-forward strategy for Lucky. As expected, the Mexx business in Europe posted a significant loss during the quarter but the new management team continues to make progress in the execution of the turnaround strategy that Mexx CEO Thomas Grote outlined on our February call."
Mr. McComb continued, "During the quarter, we continued to strengthen our balance sheet which reflects total debt of $591 million, a $163 million decrease compared to the first quarter of 2009. Our inventories are in excellent shape as we achieved a 28% reduction in the quarter compared to last year. We also continue our focus on expense management as we achieved expense levels well below expectations. Cash flow from continuing operating activities was $216 million for the latest twelve months, including the receipt of $165 million in net income tax refunds, resulting in availability of $248 million under our revolving credit facility at the end of the quarter. Importantly, the $350 million amended and restated revolving credit facility announced is a 4 1/4 year deal, contains improved terms and pricing and replaces the springing fixed charge coverage covenant in the prior facility with a minimum availability covenant of $45 million. This new facility further enhances our liquidity and extends the average maturity of our debt."