By Evan Clark
From WWD Issue 03/29/2011
Liz Claiborne Inc. said its Kate Spade brand continued to shine in February with an 87 percent gain in comparable-store sales, but the overall company is projected to post adjusted first-quarter losses of $11 million to $17 million before interest, taxes, depreciation and amortization.
Comps at Lucky Brand also rose in February, perking up 12 percent, but the firm’s other direct-to-consumer businesses saw declines. Juicy Couture comped down 5 percent, while Mexx Europe slid 8 percent and Mexx Canada dipped 3 percent. Claiborne includes e-commerce in its comp totals.
The company continues to expect adjusted EBITDA to rise to between $100 million and $120 million for 2011 from $50 million last year.
Claiborne had net losses of about $150 million last year and has been working to refinance its debt.
On Monday, the company said it intended to sell up to $200 million in senior secured notes due 2019. The proceeds would be used to fund a previously disclosed tender offer to acquire up to 155 million euros, or $218 million at current exchange, of its 5-percent euro notes.
Claiborne had been planning to hold an investor day Thursday, but pushed it back to April 28 in light of the refinancing.
Moody’s Investors Service assigned the new notes a rating of “B2” and affirmed the firm’s “B3” corporate family rating and the “Caa2” rating on the euro notes.
“Liz’s ‘B3’ corporate family rating reflects the company’s weak credit metrics, its recent sizable operating losses, and the persistent weakness of its Mexx brand,” Moody’s said. “The rating also reflects the company’s overall good liquidity and lack of near-term debt maturities.”
The debt watchdog also said it expected the company’s performance to “begin to show meaningful improvement over the remainder of 2011 as a result of initiatives such as the change in its distribution strategy for its Liz Claiborne brand family and initiatives of new management teams to execute recovery at certain segments, notably Mexx and Lucky Brand Jeans.”
The Liz Claiborne brand is sold at J.C. Penney under a 2009 licensing agreement.
The company’s shares Monday closed at $5.22, down 24 cents, or 4.4 percent.
