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Liz Claiborne Inc. Reports Operating Results (10-Q)

October 25, 2012 | About:

Liz Claiborne Inc. (LIZ) filed Quarterly Report for the period ended 2012-09-29.

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Highlight of Business Operations:

We ended the first nine months of 2012 with a net debt position (total debt less cash and marketable securities) of $386.0 million as compared to $734.9 million at the end of the first nine months of 2011. The $348.9 million decrease in our net debt primarily reflected: (i) the receipt of $412.3 million primarily from sales transactions (including $20.0 million received from JCPenney, which is refundable under certain circumstances); (ii) net proceeds of $160.6 million from the issuance of the Additional Notes; (iii) the repurchase of the remaining 221.5 million euro aggregate principal amount of our Euro Notes; (iv) the conversion of $58.4 million aggregate principal amount of our Convertible Notes into 17.0 million shares of our common stock; and (v) the funding of $74.3 million of capital and in-store shop expenditures over the last 12 months. We also generated $63.2 million in cash from continuing operations over the past 12 months.

Net sales for the first nine months of 2012 were $1.019 billion, a decrease of $53.1 million, or 5.0%, compared to the first nine months of 2011. Excluding the impact of a $150.6 million decline in net sales related to brands that have been exited, net sales increased $97.5 million, or 9.1%. The decrease in net sales due to brands that have been exited related principally to the conclusion of: (i) wholesale sales in early 2012 for the former licensed DKNY® Jeans family of brands; (ii) AXCESS wholesale sales in Fall 2011; and (iii) licensing revenues related to the LIZ CLAIBORNE family of brands and the DANA BUCHMAN brand due to the sales of the trademark rights for such brands in the fourth quarter of 2011. Net sales increased in our KATE SPADE and LUCKY BRAND segments, partially offset by a decline in net sales within our JUICY COUTURE segment.

Loss from continuing operations in the first nine months of 2012 increased to $120.7 million, or (11.8)% of net sales, from $99.9 million in the first nine months of 2011, or (9.3)% of net sales. Earnings per share, Basic and Diluted (EPS) from continuing operations was $(1.12) in 2012 and $(1.06) in 2011.

Net sales for the third quarter of 2012 were $364.6 million, a decrease of $16.1 million, or 4.2%, compared to the third quarter of 2011. Excluding the impact of a $38.7 million decline in net sales related to brands that have been exited, net sales increased $22.6 million, or 5.9%. The decrease in net sales due to brands that have been exited related principally to the conclusion of: (i) wholesale sales in early 2012 for the former licensed DKNY® Jeans family of brands; (ii) AXCESS wholesale sales in Fall 2011; and (iii) licensing revenues related to the LIZ CLAIBORNE family of brands and the DANA BUCHMAN brand, due to the sales of the trademark rights for such brands in the fourth quarter of 2011. Net sales increased in our KATE SPADE and LUCKY BRAND segments, partially offset by a decline in net sales within our JUICY COUTURE segment.

Cash and Debt Balances. We ended the first nine months of 2012 with $32.2 million in cash and marketable securities, compared to $12.4 million at the end of the first nine months of 2011 and with $418.2 million of debt outstanding at the end of the first nine months of 2012, compared to $747.3 million at the end of the first nine months of 2011. The $348.9 million decrease in our net debt position over the last twelve months primarily reflected: (i) the receipt of $412.3 million primarily from sales transactions (including $20.0 million received from JCPenney, which is refundable under certain circumstances); (ii) net proceeds of $160.6 million from the issuance of the Additional Notes; (iii) the repurchase of 221.5 million euro aggregate principal amount of our Euro Notes; (iv) the conversion of $58.4 million of our Convertible Notes into 17.0 million shares of our common stock; and (v) the funding of $74.3 million of capital and in-store shop expenditures over the last 12 months. We also generated $63.2 million in cash from continuing operations over the past 12 months.

Read the The complete Report

About the author:

10qk
Charlie Tian, Ph.D., is the founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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