Liz Claiborne Inc.’s losses narrowed in the fourth quarter and the Juicy Couture, Lucky Brand and Kate Spade businesses collectively managed an operating profit, but the company still faces an uphill climb this year.
Net losses attributable to the company narrowed to $41.7 million, or 45 cents a share, from $828.9 million, or $8.85, a year earlier, when charges to write down the value of acquired trademarks hurt the bottom line. Adjusted losses from continuing operations tallied 18 cents a share, on target with Wall Street expectations. The stock fell 3 cents, or 0.5 percent, to $6.37.
Revenues for the quarter ended Jan. 2 fell 14.5 percent to $778.8 million from $911.2 million.
William L. McComb, chief executive officer, told analysts on a conference call the firm had taken some “radical steps to right the ship.” Profitability remains elusive, however, as the company works to turn around the Mexx business, transition the Liz Claiborne brand to J.C. Penney and QVC and tweak operations at Juicy and Lucky, where the brands’ founders are moving away from direct involvement.
McComb declined to give specific bottom-line guidance for this year, but said, “We will see significant improvement in the company’s annual earnings profile by the end of 2010.”
The Juicy wholesale business waned in what McComb described as a “strategic shift” last year. Juicy’s sales fell 5 percent in the fourth quarter to $164 million.
“We are not shrinking it any more,” McComb said of Juicy’s wholesale component, which is still important to the brand. “We took some big steps with our partners in the second and third quarters of last year…”
The U.S. direct business, which includes the Juicy, Lucky and Kate Spade brands, posted an operating profit of $12.2 million for the quarter, the only division to inch into the black.
For the full year, Claiborne’s losses narrowed to $305.7 million, or $3.26 a share, from $951.8 million, or $10.17, in 2008. Revenues fell 24.4 percent to $3.01 billion from $3.98 billion.
Also on Tuesday, fellow brand owner Iconix Brand Group Inc. credited direct-to-retail deals for top-line growth in the fourth quarter, though profits fell short of Wall Street expectations.
In the three months ended Dec. 31, the brand management firm’s net income grew 28.6 percent to $19.7 million, or 27 cents a share. A year ago, fourth-quarter net income was $15.3 million, or 25 cents a share.
Iconix’s adjusted earnings per share totaled 30 cents, short of the 32 cents analysts had expected, on average.
Revenues in the three months gained 21.2 percent to $65.8 million from $54.3 million in the comparable period.
The company said the direct-to-retail business accounted for approximately 48 percent of revenues in 2009 compared with 25 percent in 2008.
For the whole of fiscal 2009, the firm’s profits grew 19.4 percent to $75.1 million, or $1.10 a share, from $62.9 million or $1.03 a share, in 2008. Revenues in the 12 months increased 7.1 percent to $232.1 million from $216.8 million.
Looking ahead, the company expects fiscal 2010 EPS of between $1.13 and $1.18 on revenues between $260 million and $270 million.
Despite the positive outlook, shares of Iconix fell 53 cents, or 3.8 percent, in trading Tuesday to close at $13.24.
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