US Announced Preliminary Q3 2012 Direct-to-Consumer Comparable Sales

"This means our near term guidance must be brought in line with the trends we are seeing while we continue to work through merchandising improvements there.We continue to be optimistic about our ability to turn around the Juicy business results and capitalize on its very strong global brand awareness and reputation;in the meantime,kate spade's results are powerful and encouraging,and Lucky Brand is continuing to perform well."

 

Mr.McComb continued,"Where previously kate spade's outperformance of its forecasts had kept us on target overall for the year,even while Juicy had experienced difficulties during the first half of the year,because of what we know about the third quarter at Juicy,we are now forecasting consolidated fiscal 2012 adjusted EBITDA,excluding unrealized foreign currency transaction gains or losses,to be in the range of$100 to$115 million,compared to the previous range of$125 to$140 million,primarily driven by significant shortfalls in full price sell-through rates at Juicy Couture in the third quarter and expectations for these trends to continue for the balance of the year."

 

"This new forecast also assumes continued strong performance at kate spade and performance at Lucky Brand to slightly exceed expectations.For the third quarter of 2012,we are forecasting adjusted EBITDA,excluding unrealized foreign currency transaction gains or losses,to be in the range of$17 to$20 million."

 

Mr.McComb added,"We are executing a number of initiatives at Juicy to address these issues and improve profitability going forward.Key amongst these initiatives are plans to modify the allocation process to deliver more product to higher performing doors,moving excess inventory to the outlet channel sooner to improve sell-through,new merchandising and pricing strategies in the retail stores-including the enhanced regionalization of merchandise-and significant cost reduction and globalization of organizational roles within the Juicy brand.Despite this obviously disappointing reduction in the current outlook for the Juicy brand,we expect that we will be able to achieve our long term targets for the brand as we believe we have an appropriate plan to correct these merchandising-related issues."

Mr.McComb concluded,"Our initiative to outsource our distribution function from our Ohio distribution center has encountered some start up issues that will delay our expected timeline for closing our Ohio facility.We have delayed the migration of product out of Ohio to the related third party logistics facility.As a result,we currently expect that we will continue to ship some goods from our Ohio distribution center for the near term to mitigate the risk of late deliveries.The expenses associated with this delay in 2012 are expected to be in the range of$2 to$4 million and are included in our revised outlook."