Apparel giant Liz Claiborne has recorded a drop in fourth quarter profits due to stock option expenses and lower wholesale sales. Net income for the quarter ended 31 December 2005 fell 5.3 percent to $78.3 million (£44.8 million). Sales remained basically flat, with only a slight increase of 0.2 percent to $1.2 billion. Wholesales sales dropped 7.4 percent to $647 million as a result of declines in the US of Liz Claiborne, Ellen Tracy, Sigrid Olsen and licensed DKNY Jeans men’s brands.
The company said that it would aggressively expand it retail store network to at least 1,400 units. Company executives said that each of seven formats could have an average of 200 stores, or between 150 and 200 stores for brands like Lucky, Juicy Couture and Sigrid Olsen.
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“In the face of a challenging market environment we are continuing to focus on those things we can control,” said chairman and chief executive Paul Charron. “We’re taking significant steps to take costs out of the business and streamline our operations to more efficiently manage our brand portfolio and more closely align our business with the rapidly changing customer and consumer needs.”
Retail sales rose 10.4 percent to $368 million, thanks partly to new store openings, a 6 percent rise in same-store sales in its specialty store business a 2 percent increase in its outlets business.
Income during the year rose 1.2 percent to $317.4 million, while sales for the year rose 4.6 percent to $4.85 billion.
Charron said during a conference call with analysts that high energy costs, rising interest rates and increasing inflation have caused consumers to pull back, creating a volatile retail environment. He added that the company is continuing its global expansion plans for its brands with the highest growth. These brands include Juicy Couture, Lucky Brand, Sigrid Olsen and Mexx.
According to Charron, the company is also looking at various multiple merger and acquisition opportunities. “We’re interested in brands that occupy unique niches in the marketplace.We are particularly focused on assets that will further bolster our direct-to-consumer, men’s, international and accessories businesses,” he said.
Speaking about the Claiborne stable of brands, Charron said: “Each of these brands has a unique aesthetic with an especially clear target consumer and positioning in the marketplace.” For Lucky the company would pursue “a strategy that capitalizes on its rock ‘n’ roll, American heritage to create a truly unique, global denim based, lifestyle retailer”, while for Sigrid Olsen “we’re looking to expand our domestic retail presence by about 20 to 24 stores.ultimately envisioning this as a 150-plus store chain.”