CLAIBORNE’S NET DROPS, SALES RISE

Byline: Vicki M. Young

NEW YORK — Liz Claiborne Inc. on Thursday posted first-quarter results in which income dropped 2.1 percent while sales rose by the same percentage.
For the quarter ended March 31, income dropped to $45.5 million, or 87 cents a diluted share, from $46.5 million, or 84 cents, in the comparable year-ago period. The results include a special investment gain in 2000. Earnings per share, however, rose 3.6 percent, reflecting the 5.5 percent reduction in outstanding shares to 52.2 million because of the company’s aggressive share repurchase program in 2000. The company did not repurchase any shares during the quarter.
Sales were up 2.1 percent to $826.7 million from $809.5 million, representing Liz Claiborne’s 21st consecutive quarter of sales growth. While the costs of goods sold dipped 0.6 percent to $503.8 million, the company said that selling, general & administrative expenses were up 7.3 percent to $245.2 million.
Paul R. Charron, chairman and chief executive officer, told Wall Street analysts in a conference call early Thursday that he was “pleased with the results” the company was generating considering current economic conditions.
“This has been a difficult environment in which to operate. The macroeconomic context in which retail selling has taken place has been generally inhospitable,” the ceo said. He added that the rate of sales growth was slightly lower than the company had expected. “Modest declines in our core businesses [were] offset by above-plan performances in businesses like cosmetics, men’s, DKNY women’s, international and Monet and progress in handbags where we were challenged last year,” Charron explained.
The company’s broad array of brands target different consumers at difference price points. While each brand on the outside “looks and feels different” to consumers, Charron said, internally the company is focused on synergies and similarities in sourcing and design.
In recent weeks, there’s been market speculation about which firms might be candidates for an acquisition by Liz Claiborne. Charron told Wall Street that they can expect that the Liz Claiborne will continue to be choosy in its criteria about which firms might merit further review.
“We acknowledge that acquisitions are important to achieving our long-term growth rates. The current environment should provide many opportunities for a company with our resources, balance sheet and otherwise,” the ceo said.
The company affirmed its previous guidance for fiscal 2001, which projected sales increases of 5 percent to 7 percent and, excluding last year’s restructuring charges and special investment gain or any future stock repurchases, growth in earnings per share of 11 percent to 13 percent.
He predicted second-quarter sales increases in the low-to-mid-single digits and EPS increases in the upper single digits, again excluding last year’s restructuring charges, the investment gain or future stock repurchases.
Projections for the second half of 2001 are for sales increases in the mid-to-upper-single digits and EPS increases in the low-to-mid-teens.

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