Liz Claiborne Inc announced preliminary fourth quarter 2010 direct-to-consumer comparable sales (inclusive of e-commerce net sales) as follows:
William L. McComb, Chief Executive Officer of Liz Claiborne Inc., said: "Direct-to-consumer comparable sales in October and November were close to plan overall; however, reduced traffic - impacted in part by weather-related issues, especially in Europe - fashion misses in certain product categories and a highly competitive promotional environment, resulted in comparable sales and gross profit in December at Juicy Couture, Lucky Brand and Mexx Europe that were clearly disappointing.
“With these sales and associated gross profit shortfalls, we have revised our expectation for fourth quarter and second half adjusted operating income. We are providing an update to our previous outlook which called for an $80 million increase in adjusted operating income in the second half of 2010 compared to 2009: we now expect adjusted operating loss for the fourth quarter to improve by $0 to $10 million versus a year ago, and as a result, a second half increase in adjusted operating income in the range of $40 to $50 million."
Mr. McComb added, "Despite the challenging results of the fourth quarter, our balance sheet and cash flow positions remain quite strong at year end. During the quarter, we continued to generate significant year over year decreases in debt as we ended the year with total debt of $578 million, an $80 million decrease compared to the fourth quarter of 2009. We drove continued cost reductions, with adjusted SG&A for the quarter expected to be approximately $355 million, compared to $395 million in 2009.
“Cash flow was quite strong in the fourth quarter, resulting in bank debt of $23 million at year-end, and availability well in excess of $200 million under our bank credit facility. Capital expenditures for fiscal 2010 were approximately $80 million, below our plan of $90 million. Lastly, inventories for Domestic-Based Direct Brands will be higher at year-end versus prior year to support e-commerce and retail expansion, although excess inventories identified on the third quarter 2010 call were reduced."
Mr. McComb concluded, "2010 was a year of substantial change in our business. We finished the year with an improved second half adjusted operating income and improved adjusted gross profit margin but a very tough month in December depressed our ability to hit our goals for Juicy Couture, Lucky Brand, and Mexx Europe. We will return with a full report on the quarter and year end overview on the scheduled February 17th conference call; at that time we will provide a view of our performance targets for 2011 and how our story will unfold through 2012."
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