Claiborne Stock Slips 18.4%

Liz Claiborne Inc.'s stock fell 18.4 percent, or $4.12, to close at $18.31 Thursday after the vendor warned that its fourth-quarter and year-end earnings...

NEW YORK — Liz Claiborne Inc.’s stock fell 18.4 percent, or $4.12, to close at $18.31 Thursday after the vendor warned that its fourth-quarter and year-end earnings would miss guidance and expectations.

This story first appeared in the February 15, 2008 issue of WWD.  Subscribe Today.

When it reports its audited earnings on Feb. 27, Claiborne said it expects to post a fourth-quarter loss of 90 cents to $1 a share, compared with profits of 71 cents a year earlier. Sales for the three months came in at roughly $1.21 billion, down 3 percent from a year ago.

For the full year, the company is now expecting adjusted profits of $1.25 to $1.35 a share, down from previous guidance of $1.70 to $1.80. Sales in the fiscal year are expected to be $4.58 billion, from $4.99 billion.

Next year, adjusted profits are slated for $1.50 to $1.70 a share.

Calling the fourth-quarter results “a huge miss,” Brad Stephens, a retail analyst for Morgan Keegan & Co. Inc., said he is wary of the company’s 2008 guidance.

“We have to get realistic here — I don’t think their guidance for next year is achievable,” Stephens said. “Their relationship with their retail partners is getting worse on all channels. Their partnered brands are very average brands competing in very competitive segments in channels that aren’t performing well.”

Of the direct brands, only Juicy’s performance impressed Stephens, who added that “Lucky has been decelerating for years and Kate Spade doesn’t move the needle.” On the partnered brands side, he said that the one bright spot in the steadily declining Liz Claiborne family of brands, Liz & Co., could be threatened at J.C. Penney by the introduction of American Living.

Analyst Jennifer Black, of the firm that bears her name, was more surprised by the company continuing to buy back stock while its numbers are in decline.

“I haven’t seen a retail environment like this in all my years, and the environment has exacerbated an already difficult path for Claiborne, which was all about execution, and the execution is very tough with everything going on,” Black said.