Liz Claiborne finds new owner for global Mexx business

Liz Claiborne finds new owner for global Mexx business

Stock Market Predictions

(Global Markets) - Liz Claiborne Inc (LIZ.N) said it would sell its money losing international Mexx business to a joint venture with Gores Group LLC, allowing the women's clothing maker to cut down on debt and focus on its core brands.

Shares of the company rose 12 percent in morning trade on the New York Stock Exchange.

"One word on this: finally," said Wall Street Strategies analyst Brian Sozzi.

"The Mexx business has been the black sheep of the Liz Claiborne portfolio for some time ... the fact that they were able to get anything for the brand underscores the work that has been done to reposition it and clean up the store base profile," Sozzi said.

Liz Claiborne will sell the unit and get an 18.75 percent stake in the joint venture, plus $25 million in cash. The joint venture will also assume $60 million of debt.

Liz Claiborne bought Mexx in May 2001 for about $264 million, as part of an effort to diversify its portfolio -- a strategy it has stepped back on over the past few years as it works to realign its business model and become profitable.

The New York-based company has not seen a profit since 2006.

In July, the company said it was considering roping in an investor to take a majority interest in its international Mexx business.

"We've brought the Mexx European business to the early stages of a true turnaround. But there is more to be done, and in uncertain times and true market volatility, de-risking became essential," Liz Claiborne Chief Executive William McComb said in a statement.

McComb also said the deal will do away with a forecasted loss of about $25 million before interest, taxes, depreciation and amortization associated with the global Mexx business.

Last month, Liz Claiborne said it would sell the trademarks on some of its perfumes, including Curve, to Elizabeth Arden Inc (RDEN.O) in part to lower the size of its debt.

The company -- which owns Juicy Couture, kate spade, Lucky Brand and Mexx -- has sold, licensed, or closed a bunch of underperforming wholesale brands in recent years to switch its attention to brands in its own retail stores.

The global Mexx business, which had sales of $730 million last year, will continue to be led by Thomas Grote as chief executive.

The deal is expected to close in the fourth quarter.

Shares of the company were up 10 percent at $5.59 in late morning trade on Friday on the New York Stock Exchange. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Viraj Nair and Gopakumar Warrier)

Read More

Timberland disappoints as margins shrink; shares plunge

Timberland disappoints as margins shrink; shares plunge

Stock Market Predictions

BANGALORE (Global Markets) - Timberland Co (TBL.N) said it expects margins to remain under pressure this year as the shoemaker battles rising product and labor costs, sending its shares plunging 32 percent.

The company, known for its rugged outdoor footwear brands such as Earthkeepers, Howies and Mountain Athletics brands, also posted a quarterly profit that missed Wall Street expectations for the first time in seven quarters.

Timberland has consistently warned of margin pressures from rising leather, labor and transportation costs this year.

The Stratham, New Hampshire-based company said it delayed meaningful price increases to deal with the higher costs to the second half of 2011.

The company also said it would invest in marketing to drive sales growth over the second half of the year.

"(Timberland's) miss was pretty shocking. They surprised the market in terms of how much they are spending on investments," Wall Street Strategies analyst Brian Sozzi told Global Markets.

"One area of investment is China and the other is technology to support their store growth initiatives."

The results are in contrast to the better-than-expected earnings of rivals Wolverine Worldwide Inc (WWW.N) and Deckers Outdoor (DECK.O).

Skechers USA Inc (SKX.N), however, posted a smaller-than-expected first-quarter profit on declining demand for the once-hot toning shoes.

For the quarter ended April 1, Timberland earned 35 cents a share, missing analysts' expectations of 59 cents a share, according to Thomson Global Markets I/B/E/S.[ID:nASA022NO]

Timberland's shares dived 32 percent to a three-month low of $28.10 on Thursday on the New York Stock Exchange. The meltdown has wiped out around $650 million of the company's market value.

(Reporting by Viraj Nair in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty)

Read More

Discounts weigh on Ann Taylor parent's margins; shares fall

Discounts weigh on Ann Taylor parent's margins; shares fall

Stock Market Predictions

BANGALORE (Global Markets) - Ann Inc (ANN.N), the parent of Ann Taylor and LOFT stores, saw first-quarter margins slip as it discounted more to get sales in an unseasonably cold spring and a highly competitive space, raising concerns about the company's turnaround this year.

Shares of the women's clothing retailer fell 6 percent to a near two-month low of $28.47 in Friday morning trade on the New York Stock Exchange.

Chains like Ann and Chico's FAS Inc (CHS.N), which cater to women over 35, have benefited from increased traffic as they overhaul merchandise, but an extremely competitive environment has forced them to discount and keep prices low.

A rapid rise in prices of raw materials have further pressured margins, forcing many retailers to forecast weak quarters ahead.

On Wednesday, Chico's beat quarterly profit estimates, but its sales fell short of estimates.

Ann, which sells office wear through its Ann Taylor chains and more casual clothes at LOFT, saw the margins slip to 57.3 percent from 59 percent last year.

However, sales rose 10 percent to $523.6 million, beating estimates. Comparable sales increased 7.8 percent.

Ann, which dropped "Taylor" from its corporate name in March, has been investing in e-commerce and outlet stores as it grows its presence beyond traditional retail.

Ecommerce sales on a comparable basis rose 43.1 percent at Ann Taylor and 32.8 percent at LOFT. Traditional stores at Ann Taylor saw a 13.7 percent rise, while LOFT comparable sales at brick-and-mortar stores dropped 1 percent.

The growth of higher margin ecommerce businesses and stabilization of sales at Loft should drive sales and margin gains in 2011, UBS analyst Roxanne Meyer said in a note.

Sales at Loft, being called out as a brand that was beginning to fundamentally improve at the store level, could have contributed to the share movement as well, added Wall Street Strategies analyst Brian Sozzi.

The company expects second-quarter profit to be "slightly higher" than current analyst estimates, on strong sales.

For the first quarter, the company earned 51 cents a share, while analysts, on average, expected 48 cents a share, according to Thomson Global Markets I/B/E/S. [ID:nWNAB0453]

Ann shares were down 3 percent at $29.43 On the New York Stock Exchange on Friday. (Reporting by Nivedita Bhattacharjee; Editing by Maju Samuel)

Read More