AnnTaylor (NYSE: ANN), whose colleagues include Liz Claiborne (NYSE: LIZ) and Talbots (NYSE: TLB), reported Q2 earnings stats that beat the views of Wall Street. The retailer said it made $0.54 per share in the second quarter versus $0.51 per share earned in the similar period a year ago. These bottom-line results are on an adjusted basis. According to Reuters, analysts were looking for about $0.49 per share. So that's a nice $0.05 beat.
The bottom line may have surprised analysts, but other parts of the story didn't excite me. The top line decreased by almost 4%. Same-store sales took a big dive, declining pretty near 11%. Comps are an important metric for retailers, and a significant decrease like this one always makes investors cautious. Management cited low traffic levels as a driver of the dismal comps. Seems to me like someone at the chain needs to rethink the current marketing campaigns. The gross margin did improve, though, so at least there's that.
After reading through the earnings release, it became quite apparent to me that management is clearly worried about the economy going forward. They're right, I think the rest of the year may indeed be rough on the consumer. With such weak stats, I think it would be hard to make a case for buying AnnTaylor's stock. If you're a contrarian and think the company will consistently beat earnings from this point on, and you turn out to be right, then buying the stock now might make for a good trade. But I'd have to hear good reasons for such a bullish case. I think it's entirely possible that AnnTaylor's shares trend lower from here. No matter what, I won't be putting this retailer on my personal watch list. My advice to the company: get traffic through the door with more innovative promotional schemes.
Disclosure: I don't own any company mentioned; positions can change at any time.
I've been expressing my long-term bullishness on Liz Claiborne, Inc. (NYSE: LIZ) since the company announced that Isaac Mizrahi would be taking over as creative director for its flagship brand. The stock is down a little since that announcement back in January, but with the re-launch under Mizrahi's direction scheduled to hit stores in February, investors could start bearing the fruits of that deal soon.
A piece (subscription required) in yesterday's Wall Street Journal looked at Mizrahi and his plans for the Liz Claiborne brand, which has seen its sales decline by about 50% so far this decade: "The collection includes modern styles like cork-covered high heels and oversize tote bags in soft neutrals, metallics and bright colors, according to two people who were there. The designs also incorporate an updated Liz Claiborne logo."
Goldman Sachs analyst Benjamin Rowbotham called the relaunch "the single most important issue" for the company, and Liz Claiborne has reportedly given Mizrahi a rare level of creative freedom in reviving its brand.
Liz Claiborne has struggled of late, even more so than the industry at large, but remember: Mizrahi made Target Corporation (NYSE: TGT) a cool place to shop for clothes. With the stock trading in the bargain basement, Mizrahi's new collection offers savvy investors tremendous upside potential.
Even with the stimulus checks, retail sales numbers for June and July have been nothing to cheer about. And this coming week should provide another look at how things have been shaping up in the apparel and accessories arena. A number of companies are scheduled to release quarterly numbers, from upscale retailer Nordstrom to the parent of discounter TJ Maxx, from hipster Urban Outfitters to global giant Wal-Mart. Here's a look at what Wall Street is anticipating.
Analysts surveyed by Thomson Financial expect the following to report strong earnings growth when compared to the same period of the previous year.
So I'm looking at Liz Claiborne (NYSE: LIZ) and its latest earnings report. I don't currently have a retailer in my portfolio, so I'm thinking to myself, hey, maybe I'll want to buy Liz after I check out its latest numbers. Well, that didn't happen.
Net sales (excluding discontinued operations) dropped 3% for the fourth quarter, and adjusted net income declined dramatically, coming in at $0.20 per diluted share -- last year at this time, the metric was over four times as big at $0.94. For the year, net sales dropped over 1% (excluding discontinued operations), and adjusted net income was $1.30 per diluted share -- yet another huge drop, considering that Liz Claiborne took in $2.99 per diluted share of adjusted net income in 2006. Oh, and there are other things here that will make any prospective investor shudder -- operational cash flow was down, the dividend was stagnant, and the margins weren't anything to write home about. And comps at some of the company's stores have been challenged (Juicy Couture, however, did report a strong 25% increase in comparable sales in the fourth quarter).
This was an easy one for me -- I'll stay away from Liz Claiborne. The company, which competes with the likes of Jones Apparel Group (NYSE: JNY) and Polo Ralph Lauren (NYSE: RL), currently exists in the land of strategic reviews, cost reductions, and discontinued operations. I don't want to travel to such a land with this particular business.
Disclosure: Steven Mallas owns none of the companies mentioned.
Liz Claiborne (NYSE: LIZ) has agreed to sell its Ellen Tracy brand to a group of investors including Radius Partners LLC, William Sweedler of Windsong Brands LLC, Barry Sternlicht and Marvin Traub in cash deal that could reach $42 million -- $27.3 million in cash and an earn-out of up to $15.
Liz Claiborne CEO William McComb said that "Ellen Tracy is an iconic brand, and we are confident that the new owners will invest in this business and give it the care and attention it deserves. We are also thrilled that the substantial majority of Ellen Tracy employees will be retained as part of the deal."
Perhaps Liz's management should have given the decision to acquire the company in the first place more attention. In 2002, the company paid $180 million for Ellen Tracy.
The company's failed effort to diversify its brands aside, there may be reason for optimism now that Liz Claiborne has made the decision to sell non-core brands and focus on the flagship. The signing of design legend Isaac Mizrahi could lead to a major turnaround of the company over the next few years, and investors willing to go against the grain may want to take a look in light of today's pullback.
It's been awhile since shareholders of Liz Claiborne (NYSE: LIZ) have had any good news. In the past year, the company's stock has declined from north of $45 per share to Monday's closing price of $16.40: the lowest the stock has traded since 1998.
If anyone can save the struggling fashion house, it's the man they just signed to be creative director of the company's flagship brand: Isaac Mizrahi. You can be sure he didn't come cheap, but he's just what they need. After all, this is the guy who actually managed to make Target (NYSE: TGT) a cool place to shop for clothes.
Liz Claiborne has a lot of potential. In the press release announcing the signing, Mizrahi himself summed it up best: "Liz Claiborne is an American fashion icon. Her clothes were not only beautiful, not only smart, they were revolutionary. She invented separates, and invented an entirely new category in the department store. She made fashion friendly and accessible and in doing so she became every woman's best friend. These are all ideas I treasure and I'm honored to have the opportunity to build on this fantastic legacy and excited to reestablish the label as a must-have." (emphasis mine)
There are no sure things in fashion, but at a discount to its book value and a low price/earnings multiple, you have to like the chances of a Mizrahi-led Liz Claiborne line delivering value to shareholders for the first time in a long time.
In a move to capitalize on its Hollywood franchise, JP Morgan Chase & Co (NYSE: JPM) is expected to announce plans today to invest $200M of its own money into the entertainment industry, the Wall Street Journal reported.
The WSJ also reported that while stocks like Countrywide Financial Corporation (NYSE: CFC) may face big discounts to book value, signs of the turmoil in the credit market are beginning to appear elsewhere causing analysts to remain cautious on jumping back in to banking stocks.
Fortune has learned that Liz Claiborne Inc (NYSE: LIZ) has received at least two final round bids for nine of its apparel brands, but the outcome is in doubt as some of the potential suitors dropped out.
Liz Claiborne (NYSE: LIZ) reported lower earnings today as sales continued to be weak and the company took several restructuring charges. However the results were slightly above guidance, and on the conference call, CEO Ellen Tracy said the company had been contacted by "dozens of parties" interesting in acquiring brands from the company. The stock traded up modestly in after-hours trading.
Adjusted diluted EPS for the second quarter 2007 were $0.26 compared to adjusted diluted EPS of $0.45 for the second quarter of 2006. The adjustments reflect the restructuring charges. Sales increased just 0.5% year over year.
A piece in today's New York Times looked at some of the challenges the company faces relating to its falling out with Macy's. Liz Claiborne hopes to continue to move away from department store sales and establish a stronger single-brand retail presence, which would have higher margins.
But the transition, even if it is successful, may be painful for shareholders in the interim.
Zac Bissonnette is a partner and writer for Hedge Funnies, a satirical take on the financial markets.
Thanks to a downturn in sales, sportswear maker Liz Claiborne Inc (NYSE: LIZ) will seek to divest itself of 16 of its 36 apparel brands, equal to about $800 million of its $5 nillion in annual revenue, reported the Wall Street Journal (subscription required)
The Financial Times (subscription required) reported that Dell Inc (NASDAQ: DELL) has listened to customer concerns and has moved to eliminate "trialware" from a range of small business laptops and desktops computers.
OTHER PAPERS:
British mining company Rio Tinto plc (NYSE: RTP) is believed to be preparing a $34 billion, or $90 per share, takeover bid for Canadian aluminum company Alcan Inc (NYSE: AL), reported the U.K. Times.
According to the Economic Times, FedEx Corporation (NYSE: FDX) has failed in its attempt to buy out Indian logistics company SafeExpress.
The Chicago Tribune reported that the U.S. faces an "increased risk" of a terror attack this summer, according to U.S. Homeland Security Secretary Michael Chertoff.
Liz Claiborne (NYSE: LIZ) will sell 16 of its 36 brands in a move that will cut [subscription required] about $800 million of the company's $5 billion revenue.
The move is very risky. The company believes that by moving out of brands that have modest profits it can focus more on its core brands. A difficult environment in department-store sales is behind the company's thinking for focusing on a fewer number of product lines.
To get around problems with slow department-store sales, the company will also open 300 of its own outlets by 2010.
The Wall Street Journal, however, points out that the brands Liz will cut are not necessarily the slowest growing brands. The company has not said whether they are less profitable than the ones to be retained or not.
That is why the strategy may make little sense. Having a larger number of brands would appear to give the company more leverage at the retail level.
Well, perhaps the management knows something Wall Street does not know. Earnings over the next couple of quarters will bear watching.
Barron's cited insider buying and the upcoming analyst day as reasons that could spur investor interest, which are good reasons. Also, Liz's stock now sells for $38.45, down 28% from the $46.60 high posted earlier in the year.
However, one has to question the hiring of William McComb, a long-time Johnson & Johnson (NYSE: JNJ) executive, to become head of one of the most influential fashion companies in New York. McComb replaces Paul Carron, a well-respect executive within fashion circles. Also, another former top executive from Liz, Trudy Sullivan, took the CEO spot at Talbots.
Investors should check out the analyst day before jumping into this stock. If the management presentation is all about pruning brands and lowering costs, I'd run to the hills. Fashion at the end of the day is about new products. No new products and customers leave the store with empty bags.
AnnTaylor (NYSE: ANN), whose colleagues include Liz Claiborne (NYSE: LIZ) and Talbots (NYSE: TLB), reported Q2 earnings stats that beat the views of Wall Street. The retailer said it made $0.54 per share in the second quarter versus $0.51 per share earned in the similar period a year ago. These bottom-line results are on an adjusted basis. According to Reuters, analysts were looking for about $0.49 per share. So that's a nice $0.05 beat.
Even with the stimulus checks, retail sales numbers for June and July have been 
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