NEW YORK — Liz Claiborne Inc. might want to hold on to that gold watch for Paul Charron.
As the apparel giant posted a 7.1 percent second-quarter earnings gain on sales that also rose 7.1 percent, Charron, 62, told investors and analysts on a conference call that he is too young to retire.
The chairman and chief executive officer of the apparel giant also told Wall Street that there are opportunities for growth in the specialty retail segment and that the company continues to evaluate quality acquisitions.
Asked on a conference call following the firm’s quarterly results if he was ready to retire, Charron said: “Absolutely not. I’m way too young to retire. I’m committed to serving as chairman and [ceo] at least until the end of 2006. Nobody should read anything into this date other than that’s the expiration date of my current contract.”
There had been an assumption in the market that Charron was getting ready to retire, possibly before the end of his contract, which likely prompted the question from Noelle V. Grainger, an equity analyst at J.P. Morgan. In addition, executive recruitment firm Spencer Stuart has been conducting a search in recent months for a potential successor to Charron.
Regarding second-quarter results for the period ended July 2, the company said net income rose to $54.1 million, or 51 cents a diluted share, from $50.6 million, or 47 cents, in the same year-ago quarter on sales that climbed to $1.1 billion from $1.03 billion.
Wholesale apparel sales rose 2.8 percent to $653 million, while wholesale nonapparel sales jumped 19 percent to $141 million. Retail sales increased 11.5 percent to $294 million.
For the half, net income climbed 5.2 percent to $125.6 million, or $1.17 a diluted share, from $119.3 million, or $1.09, a year ago. Sales jumped 8.6 percent to $2.31 billion from $2.13 billion.
Angela Ahrendts, executive vice president, noted that Juicy Couture remained a top performer in the quarter, both domestically and abroad, with a diversified collection in women’s, and an aggressive expansion in men’s and an accessories collection. While the bridge segment of the business is still evolving, the traditionally designed bridge businesses have had a challenging spring. Dana Buchman, for example, posted solid increases at Neiman Marcus and Bloomingdale’s, but saw a disappointing shortfall at Saks Fifth Avenue because of that upscale retailer’s new merchandising strategies. Ellen Tracy also had a difficult season at Saks.
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Trudy Sullivan, also an executive vice president, noted that Emma James and J.H. Collectibles were two of the standouts in the moderate zone, with Emma outperforming last year by high-single digits and J.H. surging ahead by middouble digits.
On the conference call, Charron said he’d had a succession of two-year contracts, and that he’s been “nominated to serve on the board and elected to serve for an additional three-year term,” which expires at the end of 2008.
“A thorough reading of our [Securities and Exchange Commission] filings indicates that I must maintain a rather substantial ownership position in the company stock at least through 2008 or 2009,” Charron said. “There is no question I’m actively engaged and involved and committed to Liz Claiborne, period.”
Liz, meanwhile, will be making more acquisitions, as well as maintaining a focus on specialty retail.
Charron said quality brands that are often aspirational and possess some allure and distinctiveness are some of the key qualities the company desires, either through an acquisition or by developing the brand itself.
“We’re currently evaluating multiple attractive M&A opportunities that meet our strict criteria on strategy [and that are] financially attractive with manageable executional risk….Going forward, we will continue to pursue growth opportunities in our specialty retail and international businesses,” the ceo said. Previously, the company said it expects specialty retail and its international segment to grow at a faster rate than the rest of its business.
On the call, Charron described the current M&A market as “strange,” saying that there are companies going public or making deals that do $100 million in sales, but have market capitalizations of $650 million.
“What does this mean for acquisitions? It means that there will be people who are less disciplined in terms of paying price, [and] people that do due diligence in three weeks instead of three months. We’re not going to fall into that trap,” Charron said.
The ceo said Liz will continue to work with acquisition candidates that have strategies that the company believes are relevant.
For fiscal 2005, the company adjusted its sales increase guidance to between 6 and 7.5 percent. The company said it expects the wholesale apparel segment to gain 2 to 3 percent in sales, with the nonapparel business to increase 11 to 13 percent. Retail sales are expected to increase between 14 and 17 percent.