Monday, January 9, 2012

Liz Drops After Hours













After the close Liz Claiborne (LIZ) dropped over 11% on a release that the CFO would be leaving in March and the EBITDA numbers would be slightly lower than expected.

Not surprising to see the stock dropped based on those data points, but it shouldn't shock anybody that LIZ has struggled to hit numbers. The stock doesn't trade based on them exceeding guidance so a slight guide down for next year really shouldn't hit the stock that much.

More important is the fact that both the kate spade and Lucky brands had huge comp growth in November and December. In fact, kate spade had 39% comp store growth in December after 81% in November. That is the highest number I've seen.



Brand November December *
kate spade 81% 39%
Lucky Brand 16% 21%
Juicy Couture (7%) (5%)


The stock will have a market cap around $850M at the open or just 6.4x the 2012 EBITDA estimate. As I'll continue to argue the stock trades at a level that doesn't suggest it was trading based on the original estimates. kate spade alone could be valued at more than the current market cap.

The CFO leaving is a slight negative. It isn't until 2 months from now so it isn't something that should alarm investors. Stock might bounce back in the morning as investors might be over reacting after hours. LIZ traded at 52 week highs today.

  • Expects 2011 pro-forma adjusted EBITDA to be in-line with guidance, at the low end of the range of $80 to $90 million 
  • Revises forecasted 2012 adjusted EBITDA from a range of $130 to $150 million to $125 to $140 million 
  • Expects year end net debt to be in the range of $265 to $270 million


Disclosure: Long LIZ. Please review the disclaimer page for more details.












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