That's the feeling we get from the latest announcement from the financial office over at Liz Claiborne.
A pre-announcement of Q4 and full-year 2007 earnings forecasts greater-than-expected profit losses prior to the official report due out Feb. 27.
Bear with us as we go through the details. It gets foggier than Pynchon prose at times as you roll down the balance sheet expectations.
For the fourth quarter, the company said it now expects losses of $0.90 to $1.00 per share, with earnings per share of $0.15 to $0.25, compared to earnings of $0.71 per share in the year-earlier period. Net sales for the fourth quarter are projected at $1.21 billion, down 3% from the prior year.
For the full year, expects losses of $0.25 to $0.35 per share, on the assumption of posting earnings of $1.25 to $1.35 for 2007, a serious dip from earnings of $2.46 a share in 2006. Net sales for 2007 are estimated at about $4.6 billion, down 1.4% from 2006.
It's important to call out that the projects don't include any impact from the sale of the Ellen Tracy brand today, which went to Radius Partners LLC, Westport, Conn., for $27.3 million (plus up to $15 million more, depending on how the brand performs over the next four years). That adds some dollars to the coffers that could help offset some of the expected weakness.
But it's equally important to remember that the projections don't include the impact of costs associated with the company's efforts to "streamline operations," the shuttering of some of its cosmetics brands, as well as what appear to be the weakened status of those 16 brands the company had under review.
But well, let's let CEO William McComb sort it out. Here's what he had to say.
"While 2007 marked a very difficult period, we see the fundamental in this company heading in the right direction," McComb said in a statement. "This conservative view we are taking in our 2008 guidance-specifically around our Partnered Brands performance—is only prudent given the challenging retail environment."
He also added that "markdown pressure" hit those Partnered Brands—which include Liz Claiborne and Dana Buchman—hard during the quarter, but that they're going on the offensive with recent design deals for Claiborne that include Isaac Mizrahi tackling the women's end and John Bartlett handling men's, as well as licensing Dana Buchman out to Kohl's. For more on that, see here.
On a positive note, it looks like Juicy Couture is doing well, with Q4 comp store sales expected to be up 25%, while the brand jump 23% in sales for the full year. The Lucky brand remains flat against year (hey, it's better than being in the red, people!), though Mexx was down 3% for the quarter and 2% for the year.