McComb says he indicated when he joined the company in November that he wouldn’t be guiding the 2007 year until he had time to work with his management team, analyzing what’s happening with the company’s wholesale customers. “We had a very light first quarter,” he says, which was marked by extensive markdowns in inventory, among other things. McComb attributes the stock weakness to consumer weakness across the board in the first quarter and changes in buying patterns that department stores are making for the fall season, such as carrying smaller inventory. He admits the Claiborne products need to perform better, but says there are bright spots in the company like Mexx, Kate Spade and Juicy Couture – all of which are brands that control their own destiny by having retail stores.
Jeff Macke says he was surprised to see department store stocks getting bought after the news today. With regard to Claiborne, he says he needs to explore it more. He’s a fan of the specialty retailers but he says he’s horrified by what’s happening in the company’s wholesale business.
McComb believes the turnaround is in motion. Just wait until the July 11 investor conference call, he says, when he expects to have much better news than he had today.
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