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Asset Sales Boost Liz Claiborne Net

Sale of namesake brand boosted the firm's fourth-quarter bottom line and now the focus is on Juicy Couture's turnaround efforts.

The picture at Liz Claiborne Inc. is coming into focus.

The namesake brand is now off the books, sold along with Monet to J.C. Penney Co. Inc., and Dana Buchman was shifted to Kohl’s Corp. All together, the asset sales added $271 million to the firm’s fourth-quarter bottom line, pushing it into the black.

Fourth-quarter net income attributable to Claiborne totaled $229.2 million, or $1.91 a diluted share, and compared with losses of $30.1 million, or 28 cents, a year earlier. Sales for the quarter ended Dec. 31 slipped 2.6 percent to $447.1 million from $458.9 million.

The company — which will change its name to Fifth & Pacific Cos. in May — posted adjusted earnings from continuing operations of 10 cents a share, down from 14 cents a year earlier, and in line with Wall Street estimates. Still, investors took a cautious approach and traded the stock down 5.9 percent to $9.78.

The focus now is on the turnaround of the company’s largest business, Juicy Couture. The brand was a drag on results last quarter but began rolling out new product in January and this week officially installed former consultant David Bassuk as co-president and chief operating officer.

Adjusted operating income at Juicy fell 58 percent to $11 million in the quarter ended Dec. 31 as sales slipped 15.4 percent to $161 million.

William L. McComb, chief executive officer, said the brand’s trend line started to improve as updated fashions from co-president and chief creative officer LeAnn Nealz began to hit the floor this year.

Juicy’s comparable sales fell 8 percent in January and were down 2 percent for the first three-and-a-half weeks of February, to Feb. 25. But sales of the new spring merchandise designed by Nealz were 18 percent higher in that period than the same shipment a year earlier.

“For the new Juicy Couture team’s first season, we erred on the side of caution and bought spring [inventory] very lightly,” McComb said on a conference call with analysts. “In fact, it appears that we bought it too lightly.…We placed a deeper buy for the summer line, which delivers in mid-April, but we won’t be at a more demand-appropriate inventory level until the fall line.”

Mary Ross Gilbert, an analyst at Imperial Capital, said the new Juicy offering resonated with customers during her visits to the stores.

“The trajectory for the brand looks very positive going forward,” she said.

Gilbert, who has an outperform rating on the stock, said its fair market value was closer to $18, or nearly twice its current level. “At these levels, it’s probably vulnerable to takeover, especially because the company has cleaned up their balance sheet, for the most part,” she said.

As Juicy retrenched, the company’s Kate Spade brand continued to grow quickly. Kate Spade’s fourth-quarter adjusted operating income gained 86 percent to $13 million as sales rose 73 percent to $110 million. The brand has 50 stores and 29 outlets, and plans to add 25 Kate Spade and Jack Spade stores this year and another 35 to 40 next year.

Lucky Brand’s adjusted operating income tallied $10 million for the quarter, versus a loss of $9 million, and sales rose 23.2 percent to $137 million.

For the year, net losses attributable to Claiborne narrowed to $171.7 million from $251.5 million as sales declined 6.4 percent to $1.52 billion.