Aug 12, 2009
Macy's, Liz, Maidenform show thrift still in style
Aug 12, 2009
SEATTLE, Aug 12 (Reuters) - Department store operator Macy's Inc (M.N) posted a better-than-expected quarterly profit and raised its full-year outlook as cost cuts overshadowed lower sales, but mixed results from two of its suppliers showed that the retail industry remains challenging.
Liz Claiborne Inc (LIZ.N), which makes Juicy Couture clothes and Kate Spade bags in addition to its namesake sportswear, posted a deeper-than-expected loss, while intimate apparel maker Maidenform Brands Inc (MFB.N) reported a better-than-expected profit and raised its full-year forecast.
Macy's second-quarter net profit fell to $7 million, or 2 cents a share, from $73 million, or 17 cents a share, a year earlier.
But excluding one-time items, Macy's earned 20 cents a share, while analysts had expected 17 cents, according to Reuters Estimates.
Retailers such as Macy's have been cutting inventory levels and offering discounts to match weak consumer demand from budget-conscious consumers. That hurts vendors such as Liz Claiborne, which also saw deep declines at its own stores.
"Where other companies that are in our industry have cash-cow, fully-scaled businesses, the two largest and most mature components of our business are, in fact, losing money, dragging down the P&L rather than providing supporting pillars," Liz Claiborne Chief Executive William McComb said on a conference call.
One example of a cash-cow, fully-scaled business is Maidenform, which cited strong sales of shape-improving underwear, market share gains at some retailers and the launch of its Donna Karen and DKNY businesses.
It also raised its full-year outlook.
Macy's shares were up 2.8 percent at $15.91 while Liz Claiborne was up 2.7 percent at $4.12. Maidenform shares were up 3.5 percent at $14.75.
MACY'S OUTLOOK UP
Macy's said quarterly sales fell 9.7 percent to $5.16 billion. Same-store sales fell 9.5 percent.
Macy's has cut 7,000 jobs, slashed its dividend and begun tailoring its stores to suit local demand as it tries to compensate for weak sales and lure shoppers back.
The company said it now expects to earn 70 to 80 cents a share for the year, excluding one-time items, up from its prior forecast of 40 to 55 cents a share. Analysts were expecting 80 cents.
Liz Claiborne does not give specific earnings forecasts but said it expects sales comparisons to improve during the fourth quarter as the company cycles the start of the economic downturn that began last September.
In addition, the company said it should benefit from cost cuts, inventory reductions, a wider selection of lower-priced merchandise and lower sourcing costs.
(Additional reporting by Martinne Geller in New York, Ben Klayman in Chicago and Abhishek Takle in Bangalore, editing by Gerald E. McCormick)
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