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Liz Claiborne generates decrease in inventory of 17%
18
May '09
Liz Claiborne Inc announced earnings for the first quarter. For the first quarter of 2009 and on a GAAP basis, the loss per share from continuing operations was ($0.93) compared to a loss per share from continuing operations of ($0.08) for the first quarter of 2008. Adjusted loss per share from continuing operations for the first quarter of 2009 was ($0.37) compared to adjusted diluted earnings per share ("EPS") from continuing operations of $0.33 for the first quarter of 2008.

Net sales from continuing operations for the first quarter of 2009 were approximately $780 million, a decrease of $316 million, or 28.8%, from the comparable 2008 period (which had an extra week compared to the current year). Excluding the impact of an $88 million decrease associated with brands or certain brand activities that have been licensed, closed or exited and have not been presented as part of discontinued operations and fluctuations in foreign currency exchange rates, which reduced net sales by $41 million, net sales decreased $187 million, or 17.1%.

The adjusted results for the first quarter of 2009 and 2008 exclude the impact of expenses incurred in connection with the Company's streamlining initiatives and brand-exiting activities and a goodwill impairment charge in 2009. The Company believes that the adjusted results for the first quarter of 2009 and 2008 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: "As indicated on the March earnings call, our operating performance in the first quarter which represents the seasonal low point of the year was further challenged as consumer spending and mall traffic remained at depressed levels. These factors, coupled with a highly promotional retail environment, resulted in comparable store sales decreases of 22% at Juicy Couture, 18% at Lucky Brand, 27% at Kate Spade and 7% at Mexx, while negatively impacting margins in both our retail and wholesale businesses.

Despite these operating challenges, we continued our exceptional expense, balance sheet and cash flow management in the quarter as we recorded total debt of $754 million, a $235 million decrease compared to the first quarter of 2008, inclusive of an $81 million decrease due to changes in foreign currency exchange rates. We generated a 17% reduction in inventory compared to last year, including the impact of brands sold, discontinued, or licensed.

Cash flow from operating activities was very strong at $401 million for the last twelve months, including the receipt of $126 million in net income tax refunds and $75 million associated with our sourcingagreement with Li & Fung, resulting in availability of $166 million in our bank credit facility at the end of the quarter."


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