mobanmarketFashion retail giant Liz Claiborne saw its profits for the first quarter plummet 34.3 percent on a 3.4 percent drop in sales. Chairman and chief executive Liz Claiborne Paul Charron awarded the $4.8 billion (£2.62 billion) company “a B-plus, maybe a C-plus” for its performance and said, “The shareholders expect more than we’re delivering, and we expect to deliver more in the out quarters.”
For the quarter ended 1 April, net income reached $46.9 million, down from $71.4 million last year. Sales dropped from $1.21 billion to $1.17 billion. Wholesale apparel sales fell 6.4 percent to $757.5 million, while non-apparel wholesale sales slipped 1.2 percent to $138.2 million. Meanwhile, retail sales rose 3.4 percent to $264.2 million, while same-store sales dipped 3.7 percent. Licensing revenues remained flat at $11 million. According to Charron, the decline was caused by consolidation in the department store division after the acquisition of Federated for $17 billion. Also to blame were the weather in February and March, a late Easter and the many layoffs at Liz Claiborne. He added that he expects the results to pick up in the second half of the year.
Charron said that the company has had to let 500 employees go as part of its strategic realignment, “with a disproportionate number of these at the director level and above”. The company’s president and chief merchandising officer for better and moderate department store brands, Denise Johnston, left the company last week to join Gap Inc. The group is now considering her replacement.
Furthermore, Charron said the group is concentrating more on investments that make the most out of “compelling growth opportunities” among its more than 40 brands. It is also improving its delivery of faster turns, shorter cycle times, smaller up-front buys and faster fill-ins of popular products to meet the needs of department stores. He said that retail represented 25 percent of group revenues “over the past 12 months” and said that its goal is to increase that number to around 35 to 40 percent of sales, with international sales increasing from 27 percent to 35 percent.
Charron added that the group is looking at “multiple M&A opportunities”, looking for brands in a unique niche market with high quality reputations and attractive financial situations. With $477 million in cash flow from last year’s operations, he said the group was in a position to take “advantage of opportunities where the strategy is compelling and the prices appropriate.”
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