Shares of Liz Claiborne Inc. dropped more than 18 percent in after-hours trading Thursday after the firm cut fourth-quarter estimates following a weak December marked by declines in comparable-store sales.
The apparel firm now expects adjusted operating losses for the fourth quarter to fall between $5 million and $15 million, from a $15 million deficit in the 2009 quarter. That will translate into an improvement in second-half operating income of between $40 million and $50 million, versus prior guidance for an $80 million improvement.
The guidance revision came after the markets closed. Earlier in the day, shares closed at $6.90, down 2.3 percent, but retreated 18.8 percent, to $5.60, in the first two hours of after-hours trading.
The company said comps at Juicy Couture were down 5 percent in December after increases of 3 percent and 9 percent in October and November, respectively, translating into a 1 percent increase for the quarter. Comps at Lucky Brand dropped 13 percent in December following dips of 4 percent and 8 percent in October and November, translating into a 10 percent quarterly decline. Mexx Europe was down 7 percent in the quarter after a 16 percent drop in December, and Mexx Canada finished ahead 4 percent for the quarter with a 2 percent December advance.
The bright spot was Kate Spade, which posted positive comps in all three months — 60 percent in October, 24 percent in November and 51 percent in December — for a 44 percent quarterly gain.
William McComb, chief executive officer, said during a conference call that 2010 was characterized by “periods of strong consumption followed by periods of softness,” echoed by a “solid” November followed by a December marked by “competitive promotions, large discounting in the malls, weather in California and across the European Continent.”
Fashion misses also contributed, particularly at Lucky Brand. Sales in general were “down precipitously right after Black Friday.” According to McComb, Juicy lacked a holiday accessories assortment, as well as sufficient freshness and newness in the line, issues that new president LeAnn Nealz is addressing.
At Kate Spade, the business saw strength, gross margin expansion and outstanding comps. “The three years of hard work by a very smart and dedicated team are now clearly paying off,” McComb said.
Lucky Brand men’s improved steadily throughout the year, but the label was hindered by its women’s collection. “It failed to excite the consumer and didn’t sell at full price.…Our focus is on getting the women’s business right,” McComb said.
Mexx Europe’s outerwear and heavy knits sold out, leaving the stores without cold-weather apparel when temperatures turned frigid on the Continent, McComb explained.
He called the company’s fourth-quarter e-commerce results “very strong.” Consumers, he noted, are becoming “very, very good at playing stores off of Web sites to find great prices for great items that they love.”
One lesson learned coming off of December is “we will be very careful in terms of inventory,” erring on the side of being “gun shy,” McComb said.
He emphasized, “With the right fashion, we’re looking for good quality sales in 2011.”
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