Wednesday, contemporary apparel and accessories retailer Liz Claiborne, Inc. (LIZ) reported a wider loss for the first quarter, primarily on lower revenues as consumer spending and mall traffic remained "at depressed levels". The result also reflects a restructuring charge recorded in the latest quarter, and an additional week of sales in the prior year.
Commenting on the results, Liz Claiborne Chief Executive Officer William McComb added that the highly promotional retail environment led to comparable store sales decreases of 22% at Juicy Couture, 18% at Lucky Brand, 27% at Kate Spade and 7% at Mexx and negatively impacted margins in both retail and wholesale businesses.
The New York-based company's net loss attributable to Liz Claiborne was $91.38 million, or $0.97 per share, compared with a loss of $31.02 million, or $0.33 per share, in the year-ago quarter.
Loss from continuing operations for the quarter was $87.33 million, or $0.93 per share, compared to a loss from continuing operations of $7.66 million, or $0.08 per share, last year.
On an adjusted basis, loss from continuing operations was $34.95 million, or $0.37 per share, compared with a profit from continuing operations of $30.97 million, or $0.33 per share, in the prior-year quarter.
Liz Claiborne noted that adjusted results for the first quarter of 2009 and 2008 exclude the impact of expenses incurred from streamlining initiatives and brand-exiting activities as well a goodwill impairment charge in 2009.
On average, seven analysts polled by Thomson Reuters expected the company to report a loss of $0.23 per share. Analysts' estimates typically exclude special items.
Quarterly net sales dropped 28.8% to $779.67 million from $1.1 billion a year earlier. Analysts expected the company to report revenues of $884.33 million. The company noted that the prior-year quarter had an extra week compared with the first quarter in the current year.
Liz Claiborne said that brands or certain brand activities that have been licensed, closed or exited have not been presented as part of discontinued operations. Consequently the sales for the quarter had an impact of $88 million. Further, fluctuations in foreign currency exchange rates reduced net sales by $41 million. Excluding the impact of discontinued brands and Forex variations, net sales fell 17.1%.
Domestic-based Direct Brands sales for the quarter fell to $259.54 million from $277.92 million last year. For International-based Direct Brands sales were $208.54 million, down from $342.23 million in the year-ago quarter. Partnered Brands sales decreased to $311.59 million from $475.22 million a year earlier.
Looking forward, the company expects GAAP loss for the second quarter to be smaller than that of the first quarter, attributed to declining restructuring costs. Sales and adjusted operating loss for the second quarter is anticipated to be similar to that reported for the first quarter.
Further McComb said, "Our outlook for the balance of the year remains unchanged." In addition, the company sees a 15% to 25% comparable store sales decline in its Juicy Couture, Lucky Brand and Kate Spade brands and a high single digit comp store sales decline in Mexx brand through the third quarter, with fourth quarter comps flattening.
LIZ ended Tuesday's trading at $5.77 on the NYSE.
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