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Maintaining guidance + comp momentum across all concepts is all McComb could ask for heading into tomorrow’s analyst day. LIZ remains one of our top long ideas.

There are going to be plenty of puts and takes to dissect coming out of tomorrow’s analyst day, but the bottom-line here is that maintaining guidance + comp momentum across all concepts is all McComb could ask for heading into the event. Here are the key takeaways from Q1 results: 

  1. Reaffirmed 2011 and 2012 EBITDA guidance. Simply confirming guidance isn’t noteworthy, but the fact that the company didn’t lower guidance for the umpteenth consecutive time is = positive. (don’t hold us to the exact number, but LIZ preannounced and/or guided down about 20 times over 20 quarters).
  2. Direct Brand comps are up across the board = positive.
  3. Focus on turning operating results at Mexx Europe appears to have shifted from product to right-sizing the store base.  Not only does this imply that product has improved, but closing stores is a more manageable task from both an operating and execution perspective = positive.
  4. Partnered Brands posted positive adjusted operating profit in the quarter in-line with expectations for the same at year-end = positive.
  5. Availability under the current credit facility contracted $100mm to $139mm. Yes, Q1 is the most challenging from a cash flow perspective, but leverage matters on this name more than most. = negative.

Net/net, in looking at Q1 results the positives outweigh the negatives = we like this one and continue to think that LIZ has one of the most positive asymmetric risk profiles in retail – still. We’ll provide additional color and thoughts following the analyst day tomorrow.

LIZ: Yes, It's That Simple - LIZ Comp Traj 4 27 11

Casey Flavin