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Top-line trends look good in LIZ’s 1Q results with earnings coming in shy by a dime due to less aggressive cost reduction measures. Kate came in stronger than expected reaccelerating underlying 2-year comps reflecting in part the added holiday boost and management reaffirming F12 EBITDA targets. The story is pressing forward here…

Some additional callouts:

-          Brands Comp Trends:

    • Kate came in strong up +38% in 1Q posting a +73% comp in March ahead of the high end of our expectations reflecting a sequential acceleration in the 2-year comp in both March and 1Q reflecting in part the added holiday boost.
    • Lucky comps came in up +21% - slightly below our expectations of +24%, but still well within the range we expected. 2Q will be the brand’s toughest compare of the year so we expect a deceleration in comps over the near-term and our modeling +12% for the year.
    • Juicy comps came in -4% as expected. I’m sure we’ll hear more about the latest line on the call, but sounds like early results are still positive.
    • The absence of an April comp update suggests that management will likely run through the impact of the holiday shift. As we highlighted in our preview, Lucky is likely running negative in April and Kate could be low double-digit to slightly negative even depending on the magnitude of the shift. This will be one of the key focuses of the call.

-          Outlook

    • F12 EBITDA targets of $125-$140mm were reaffirmed. The absence of a revision here is net positive given the company’s history.

-          Corporate Expense Initiative:

    • We expect more detail from Bill and the team regarding the timing of cost reductions. Aside from the April brand update, this is another key focus for the call, but given Q1 progress, we expect more aggressive cuts over the balance of the year.

We’ll have more after the call at 10am EST. The dial-in number is with pass code 72892664.

Casey Flavin