NEW YORK — Kellwood Co.’s stock dropped 8.9 percent Friday after the company warned the previous day that fashion miscues and increased markdowns caused by a lackluster consumer would reduce its third-quarter results.
The shares ended the day at $31.97 after sliding $3.11 on the New York Stock Exchange.
Hal Upbin, chairman and chief executive officer, on a conference call Friday with analysts and investors blamed most of the falloff on factors such as consumers constrained by high gas prices and the volatile early fall weather.
Profits for the third quarter ended Oct. 30 are now pegged at $28.5 million, or $1 a diluted share, 7.8 percent below year-ago earnings. The firm had previously called for income of $32.5 million, or $1.15 a share.
The fashion mistakes, while considered secondary in the shortfall by the company, will take some time to correct.
“In some instances, we were missing the mark in terms of fashion for some of our core moderately priced brands,” Upbin said. “The stores and the consumer want more modern looks. We expect to be fashion-right for fall 2005.”
Orders for that season begin shipping in July.
“We’re not facing a 180 degree turnaround,” he said. “We’re talking about a 15- to 20-degree correction in some of our brands.”
Some stores are moving from traditional to more modern lines more quickly than the firm had expected, he said. Dresses and intimate apparel also have turned in soft performances.
Upbin stressed the flow of product through its supply chain has been adjusted to match the somewhat lower volume to avoid a more costly inventory backup later on.
Kellwood has taken on a number of new licensed sportswear businesses recently, including Izod and O Oscar in moderate, Calvin Klein in better and XOXO in juniors’. Analysts continue to question whether Kellwood has too much on its plate.
“I keep trying to put this to bed,” said Upbin in response to an analyst’s question on the topic during the call. “The criticism as to overloading our abilities and our staffing to do some of these things is just invalid.”
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