For the third quarter of 2005, they are providing our initial guidance, forecasting a sales increase of 4 - 5 percent and EPS in the range of $1.06 - $1.09, including the impact, which they estimate will be approximately $0.05, resulting from the early adoption of FASB 123R and the shift in the composition of the Company's 2005 equity-based management compensation discussed above. All of these forward looking statements exclude the impact of any future acquisitions or additional stock repurchases."
SECOND QUARTER RESULTS
Net Sales
Net sales for the second quarter of 2005 were a record $1.1 billion, an increase of $73 million, or 7.1 percent, compared to the second quarter of 2004. The impact of foreign currency exchange rates, primarily as a result of the strengthening of the euro, in our international businesses added approximately $14 million in sales during the quarter.
Gross Profit
Gross profit increased $40 million, or 8.2 percent, to $529 million in the second quarter of 2005 over the second quarter of 2004. Approximately $8 million of the increase in the quarter was due to the impact of foreign currency exchange rates, primarily as a result of the strengthening of the euro, in our international businesses. Gross profit as a percent of net sales increased to 48.2 percent in 2005 from 47.7 percent in 2004.
The increased gross profit rate reflected the positive impact of lower sourcing costs and a changing mix within our portfolio, primarily reflecting an increased proportion of sales from our Mexx Europe and domestic specialty retail businesses, which run at higher gross profit rates than the Company average, as well as a decreased proportion of sales from our domestic Liz Claiborne apparel business, which runs at a lower gross profit rate than the Company average, partially offset by the additional liquidation of excess inventory.