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Liz Claiborne posts $52mn loss in Q1

27
Apr '12
Liz Claiborne Inc. announced earnings for the first quarter of 2012. For the first quarter of 2012 on a GAAP basis, loss from continuing operations was ($52) million, or ($0.51) per share, compared to a loss from continuing operations of ($53) million, or ($0.56) per share, for the first quarter of 2011.

Net sales from continuing operations for the first quarter of 2012 were $317 million, a decrease of $14 million, or 4.1% from the first quarter of 2011, reflecting (i) an increase in sales in our kate spade and Lucky Brand segments; and (ii) a decline in sales in our Juicy Couture and Adelington Design Group & Other segments, including a $50 million decrease in sales associated with brands that have been sold or exited but not accounted for as discontinued operations.

Gross profit as a percentage of net sales was 56.5% in the first quarter of 2012, compared to 53.3% in the comparable 2011 period, primarily reflecting improved full price sell through of our brands overall and a higher percentage of direct-to-consumer sales which run at a higher gross profit rate than the Company average, partially offset by the impact of higher raw material costs in the first quarter of 2012 compared to 2011.

Selling, general & administrative expenses ("SG&A") were $212 million, or 66.9% of net sales in the first quarter of 2012, compared to $197 million, or 59.6% of net sales in the first quarter of 2011.

The $15 million increase in SG&A compared to the first quarter of 2011 primarily reflected a $25 million increase in expenses related to growth initiatives (new retail stores, e-commerce and marketing), and a $6 million increase in streamlining expenses (the majority of which was related to the planned closure of our Ohio distribution center), partially offset by a $13 million decrease in expenses primarily associated with our Adelington Design Group & Other Segment.

In the first quarter of 2011, we incurred $3 million of SG&A in our former International-Based Direct Brands segment related to allocated SG&A that could not be reported as discontinued operations.

Operating loss was ($33) million ((10.4%) of net sales) in the first quarter of 2012 compared to an operating loss of ($21) million ((6.2%) of net sales) in the first quarter of 2011. Adjusted operating loss in the first quarter of 2012 was ($22) million ((6.9%) of adjusted net sales) compared to adjusted operating loss of ($16) million ((4.9%) of net sales) in 2011.

William L. McComb, Chief Executive Officer of Liz Claiborne Inc., said: "Adjusted EBITDA, excluding foreign currency transaction losses, of ($1) million in the first quarter was in line with our recently-provided outlook. We continue to improve our balance sheet as we ended the quarter with net debt of $317 million, a decrease of $381 million compared to the first quarter of 2011.

“We further strengthened our capital structure with the exchange in early April of $23 million of our 6% Convertible Notes for 6.5 million shares of stock. For fiscal 2012, we continue to forecast adjusted EBITDA, excluding foreign currency transaction gains or losses, in the range of $125 to $140 million."

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Liz Claiborne Inc


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