Kellwood (NYSE:KWD)
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Kellwood Company Lowers 2004 Guidance for the Fourth Quarter and
Total Year Outlook for Sales in Fiscal Year 2005
ST. LOUIS, Jan. 24 /PRNewswire-FirstCall/ -- Kellwood Company announced today
that it expects sales in the fourth quarter to be approximately $585 million
which is below the previous guidance of $600 million provided on December 2,
2004. Last year the Company reported sales of $521 million in the fourth
quarter.
Net earnings from continuing operations in the fourth quarter are expected to
be approximately $6.5 million, or approximately $0.23 per diluted share, which
is below the December 2 guidance of $13.7 million or $0.48 per share, according
to Hal J. Upbin, chairman and chief executive officer. Last year, the Company
reported net earnings of $12.8 million and earnings per diluted share of $0.46
from continuing operations in the fourth quarter.
"The late Fall and Holiday 2004 selling season at retail was disappointing for
our customers. As a result the stores took aggressive Holiday markdowns and
cut back on Spring 2005 open-to-buy.
"Essentially all of the drop in sales and earnings from our earlier forecast
occurred in the women's sportswear segment due to a combination of having to
provide significantly more end-of-year markdown assistance for some of our
brands, having to sell more units off price to liquidate seasonal inventory,
and lower than expected Spring 2005 orders," said Upbin.
The Company now expects sales for the year to be approximately $2.55 billion,
versus its earlier forecast of $2.57 billion. Last year Kellwood reported
sales of $2.35 billion.
Net earnings for fiscal year 2004 from continuing operations are now forecasted
to be in the range of $70.0 million, or approximately $2.50 per diluted share.
On December 2, 2004 Kellwood provided net earnings guidance of $77.5 million,
or $2.75 per diluted share. Last year the Company reported net earnings of
$72.6 million, or $2.68 per diluted share from continuing operations.
"Given the current disappointing pace of consumer demand for moderately priced
women's sportswear we expect sales in fiscal year 2005 to be flat with the
level forecasted for fiscal year 2004.
"During our third quarter conference call, we discussed the major issues
impacting the near term performance of our women's sportswear business which
were expected to result in lower sales for Spring 2005. These issues include:
-- In Spring 2004, retailers enjoyed relatively strong year-to-year same
store sales increases. Thus, retailers will be facing more challenging
comparisons in the first half of this year and have cut their 2005
open-to-buy versus prior year.
-- The consumer who shops moderate price points has not yet benefited from
the improving economy. This is the consumer who buys Kellwood's core
brands. Job uncertainty, higher energy and food costs and a relatively
high level of consumer debt have put a damper on discretionary spending
for apparel. If the economy and the rate of job creation continue to
improve, we are hopeful to see some uptick in spending in the second
half of the year.
-- The dress market continues to shrink. As a result, we are planning for
lower sales for Spring 2005.
-- The environment is certainly a major factor. However, we also have
some work to do to further modernize the look of some of our core
moderate brands in response to the consumers' rapidly evolving taste
level, and some fine-tuning of the merchandise assortments offered by
some of our new marketing initiatives," added Upbin.
Sales in the first quarter of 2005 are expected to be approximately $640
million, versus $686 million last year.
"We are very disappointed in our fourth quarter 2004 expected results and in
the outlook for the first quarter of 2005. We have initiated and will continue
to take the necessary steps to update and modernize our product offerings.
However, we do not expect to see the benefits of these efforts until Fall 2005,
which we begin shipping in July, due to the seasonality and lead-time attendant
with the apparel business.
"Finally, as with most new and transforming endeavors, the economic benefits
always cost more and take longer to realize. This is true for the launching of
some of our new higher profile, and better price point brands. We are committed
to this strategy because we believe it will better position the Company for
more profitable growth beginning in the second half of 2005 and beyond," said
Upbin.
Kellwood will provide further guidance for the first quarter of 2005 and fiscal
year during our regularly scheduled conference call on March 11, 2005.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. The words "believe",
"expect", "will", "estimate", "project", "looks ahead", "forecast", "should",
"anticipate" and similar expressions may identify forward-looking statements.
These forward-looking statements represent the Company's expectations
concerning future events, are based on various assumptions and are subject to a
number of risks and uncertainties. These risks include, without limitation:
changes in the retail environment; an economic downturn in the retail market,
including deflationary pressures; economic uncertainty due to the elimination
of quotas on Chinese imports; a decline in the demand for the Company's
products; the lack of customer acceptance of the Company's new designs and/or
product lines; the increasingly competitive and consolidating retail
environment; financial or operational difficulties of customers or suppliers;
disruptions to transportation systems used by the Company or its suppliers;
continued satisfactory relationships with licensees and licensors of trademarks
and brands; ability to generate sufficient sales and profitability related to
licenses containing minimum royalty payments; the economic impact of
uncontrollable factors, such as terrorism and war; the effect of economic
conditions and trade, legal social and economic risks (such as import,
licensing and trade restrictions); stable governments and business conditions
in the countries where the Company's products are manufactured; the impact of
acquisition activity and the ability to effectively integrate acquired
operations; and changes in the Company's strategies and expectations. These
risks are more fully described in the Company's periodic filings with the SEC.
Actual results could differ materially from those expressed or implied in
forward-looking statements. The Company disclaims any obligation to publicly
update or revise any of its forward-looking statements.
Kellwood (NYSE:KWD) is a $2.5 billion marketer of apparel and consumer soft
goods. Kellwood specializes in branded as well as private label products, and
markets to all channels of distribution with product specific to a particular
channel. Kellwood brands include Phat Farm(R), Baby Phat(R), Sag Harbor(R),
Koret(R), Jax(R), David Dart(R), Democracy(R), Dorby(TM), My Michelle(R),
Briggs New York(R), Northern Isles(R), David Brooks(R), Kelty(R), and Sierra
Designs(R). Calvin Klein(R), XOXO(R), Liz Claiborne(R) Dresses and Suits,
IZOD(R), Claiborne(R) Dress Shirts, Dockers(R), David Meister(TM), Gerber(R),
Slates(R), Bill Burns(R) and Nautica(R) Dress Shirts are produced under
licensing agreements. For more information, visit http://www.kellwood.com/ .
DATASOURCE: Kellwood Company
CONTACT: Financial, Roger D. Joseph, VP Treasurer & IR, +1-314-576-3437,
fax, +1-314-576-3325, , or W. Lee Capps III,
Executive VP Finance & CFO, +1-314-576-3486, fax, +1-314-576-3439,
, or Media, Donna Weaver, VP Corp. Comm., +1-212-329-8072,
fax, +1-212-329-8073, , all of Kellwood Company
Web site: http://www.kellwood.com/