Liz Claiborne forecasts wider loss in an uncertain environment
Filed under: Company News
When a company decides to warn investors about earnings, let's just say there's never really a good time for it, but some days seem just worse than others. A day after Eddie Bauer Holdings Inc. (EBHI) filed for Chapter 11 bankruptcy protection and Abercrombie & Fitch (ANF) announced plans to shutter its struggling 29-store Ruehl chain, Liz Claiborne Inc. (LIZ) projected a wider second-quarter loss than analysts forecast. LIZ shares plunged on the news.
The women's apparel manufacturer and retailer troubles didn't start with the recession. Liz Claiborne has been in restructuring since 2006, which even included a management shuffling at the top that brought CEO William McComb to the head job. In 2006 and 2007 it sold many of its brands and increased cost cutting measures, planning to expand with its core brands by moving away from department store sales and establishing a stronger retail presence with higher margins.
In 2008, Liz put its hopes with Isaac Mizrahi as its flagship brand and continued to sell non-core brands, but no matter what it did, barring a few surprises, sales generally continued to decline and the stock to plunge (it's been on a steady decline since the beginning of 2007, dropping over 90 percent) as the recession also hit with full force, hampering many of its plans.
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When Liz last reported earnings in May, it disappointed investors with a wider-than-expected loss. The struggling clothier also said that its second-quarter loss will be narrower on a sequential basis.
Today, Liz said it is predicting its second quarter loss to be wider than the first quarter one, but because of lower restructuring costs the GAAP loss will be narrower than the first quarter. No reason was given for the wider loss though, and one can only assume performance.
LIZ shares have actually performed well along with the market since March lows, mostly due to a Goldman Sachs upgrade in early May that sent the shares up 30 percent. Year-to-date, LIZ has actually outperformed most of its peers and the S&P 500 with a 27 percent climb, but underperformed over the past year with a near 80 percent drop.
It's hard to turn a company around, and doubly hard doing it during a recession, nearly impossible without an economic recovery to accompany it. Sure, cutting costs, selling under performing brands and getting a new, hip, young brand to revive a mature fashion business are certainly important steps to take, but when most predict retail will not fully recover to 2007 levels before 2012, the future of Liz is clouded.



























Reader Comments (Page 1 of 1)
6-21-2009 @ 7:14AM
m. pukowsky said...
Now that you can find American made, European graced designs on line, for instence, Mel en Stel, People may not be so apt to patronize the conservative, passionless, money grubbing, advirtise driven dinosaurs of design that deem themselves inside the castle walls and too big to fail. Despite the sizzle of their glossy ads, what you probly get is third world construction and material and a durability modeled after the auto industry.
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6-20-2009 @ 5:44PM
Carole said...
None of the designers are designing and making quality clothing for women over 50 (and heaven forbid 60 and up). Since a larger population is this age they probably aren't selling their lines which are more appropriate for the under 30 group. My frustration is huge when I go shopping and all I can find are sleeveless tops, sun dresses, tank tops and mini skirts. No classy clothing such as dresses (that cover arms), suits etc. No surprise to me that these people are going out of business or barely hanging on.
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6-20-2009 @ 6:06PM
Judy said...
You might want to check out Chico's fashion. They have very comfortable clothing and great looking clothing for our age group.
6-20-2009 @ 5:37PM
Sonja said...
Maybe if more fashion companies had women at the top of their management teams they would do better. Whenever CEO's, etc. are named they are always men. Read an article about Coach in Business Week and it was all men mentioned. Doesn't make sense in businesses that cater to women should be run by men!!
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6-20-2009 @ 6:12PM
patternmaker said...
In the early 90's I worked for a women's sportswear company as a pattern maker . They manufactured clothing very similar in fabrics, style and fit as Liz Claiborne. The big difference was that the company I worked for actually manufactured all their garments here in the U.S.A., while Liz was overseas. Our garments were of much better quality right down to the number of stitches per garment. Our target customer was the same as the Liz customer, mostly women in their 60's or older and they sold TONS of clothing. That was in the early 90's. I am now in my 40's and I will NEVER, EVER succumb to wearing those styles of slacks and shirts. EVER. I think the percentage of Liz women is diminishing greatly while a lot of women my age are not going to want to wear those "old lady" styles. But then again, I am not a typical middle aged woman who wears elastic waste slacks. I am a size 2 and want really nice fitting clothing that is hip for a mature woman. I DO NOT want to have to wear Junior clothing, but sometimes that is all that fits me. Even petite sizes do not fit right or are just too matronly. But I also see just as many plus sized women and women much older than I wearing hipper, more flattering styles these days. And clothing that is less expensive than Liz Claiborne's. I seriously will never understand WHY her clothing was SO much more expensive either having been made in the orient. It was all about the brand, not because it was great fitting or unique.
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6-20-2009 @ 6:22PM
patternmaker said...
One more thing - I think a LOT of 60 and 70 year olds these days are opting to buy their elastic waste pants and banded bottom blouses from Walmart since they are much cheaper and more affordable for women who might be on a limited income. It's unfortunate, but that is the way it is. I don't think there are enough women in that age range with enough income to keep buying Liz. And I do not know any 30 or 40 year olds in in my circle of friends who wear Liz. The majority of my wardrobe comes from the Gap, Old Navy and Target. Same goes for most of the women I know and they are of various sizes.
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6-20-2009 @ 6:31PM
Georgia said...
Gap tried to capture the "mature women" segment with a brand called Fourth And Town (FAT)...seriously...what were they thinking? They launched a few stores in some test markets and bombed. I was told the clothes were similiar to Talbot's and Ann Taylor but they were pricey. Many moons ago, Gap used to have some decent basic stuff for us "over 40" women...not anymore! :(
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6-20-2009 @ 6:57PM
Lorraine said...
Any brand that caters to a very small portion of the population has to expect problems. Liz brands are very overpriced, not available to middle Americans. What hasn't been mentioned here is us plus-size ladies. I'm not a disgusting blob, I'm just large. I also happen to be over 60. Being older doesn't mean having to dress like a frump. I'm over 60, work at home, and get up every day, dress, including jewelry and makeup, even if I'm not leaving the house. I just want regular-looking clothes but larger. Try finding a cute sundress for a plus-sizer. Thousands in regular sizes, just not for plus sizes. Maybe the new TV show, More To Love, will bring out some better designers.
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6-21-2009 @ 4:59PM
Val said...
We have Liz Clairborne in the PX on our Army Post, and her line is EXPENSIVE. Most of the items are not current. They look like 70's styles. I'm not too into trends, but I won't purchase something that looks dated, either.
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6-20-2009 @ 7:37PM
Barbara said...
A size 2 can buy inexpensive clothes ANYWHERE regardless of age. I am 48 years old and while I do NOT want to look like an old matron, I certainly do not want to shop with the kids at THE GAP or buy the crap that Old Navy produces for a teenage target buyer. While not a size 2 I am a size 6/8 petite (5ft 4), and do most of my shopping at department stores like MACY'S, LORD & TAYLOR, etc. When they have one day sales with coupons I can get extremely well made, name brand clothing in a large variety of styles and sizes. I am curvy with 36C bust line and need clothes that are well made, well fitted to my build and will not tug or gap where I have curves. Where money is concerned I would much rather wait until sale day at Macy's where I know I will get a high quality garment at a decent price that will launder well and last FOR YEARS than purchase an item from Target with loose buttons and not very well finished seams. I am a single parent with a teenage daughter who also shops the department stores. We hit Macy's today, newspaper supplied coupons in hand and CLEANED UP on summer and vacation wear. I am a teacher and will never make a fortune, but need professional wear. You cannot beat the department stores for suits and high end shoes on sale.
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6-20-2009 @ 8:08PM
fedupsencit said...
Having dealt with the organization, for several years, I profess that less than stellar middle and upper management contributed heavily to the demise of Liz.
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