Interview: Liz Claiborne
>> liz claiborne loses a top executive. brands who include ellen tracey is facing declining sales growth also as consumers face near record energy costs. let’s take a closer look at company with chief executive paul charron. he just finished ringing the closing bell at the new york stock exchange. we welcome you to our show today.
>> good to be here.
>> let’s start with some of the executive changes that you have had going on. what does angela going to burberry mean for your company?
>> loss of a highly valued executive. she’s a great merchant and great leader. by the same token we have a number of great executives and the woman picking up her responsibilities is going to -- is an accomplished professional. i don’t think we’ll miss a beat. it’s an occupational hazard when you run a company as highly regarded as liz is that you will occasionally lose top talent and who find a need to go elsewhere.
>> this also after hiring pamela thomas brown to be an executive. your contract may expire next year. can we expect to see other executive changes at your company?
>> i don’t think there’s a connection between the pamela thomas graham hiring, my contract coming due, if you will and angela’s departure. i certainly would expect no more than the average executive turmoil. as i said, a company likes ours creates, develops, trains nurtures great executives. we try hard to do that. not surprising that owe kaoeugsally we lose someone.
>> let’s talk about a few other topics including one why is you’re at the new york stock exchange today.
>> domestic violence is a subject that has been near and dear to our hearts if you can say that about something as insidious. but this has been a subject we have been close to since 1991. we see this as a real problem in american society, whether it is domestic violence, relationship violence, dating violence. it’s violence against women. women are the people that buy a majority of our products. we try to embrace, if you will, an issue that has such relevance particularly today.
>> there today to help promote it an give some light to the issue. let’s talk as well about a few of the other issues having to do with your company. one thing that has been very much a story for liz claiborne has been your growth through acquisitions. we named some of the brands when we introduced you. what kinds of deals are you looking for now? are there specific holes in the makeup of your company?
>> we’re always looking for speciality retail, international men’s and accessories opportunities. occasionally we find one or another that fits all the bills, if you will. but those have been our areas of focus for some time. kind of like a football draft. when you see a great athlete in a position when you are not looking for that athlete, you may pick him up because it adds strength to your team.
>> perhaps you haven’t made inroads into the moderate apparel. is that an area you may be looking in.
>> we have been successful in moderate which are more popular priced goods. we have done that by building brands ourselves. emma james, tape measures, crazy horse at jcpenney, villager and access at kohl’s. we have a substantial presence in moderate but haven’t felt a need to go outside and spend our acquisition money, if you will, on that. instead we built them from scratch. i’m pleased with the size and scope and growth rates of our moderate portion of our port followo.
>> paul, speaking of the moderate portfolio and moderate consumer, what fallout are you seeing from what happened to gas prices and that looming presence of winter where heating oil bills will go higher for so many consumer as soon as
>> i’m not an economist or prognosticator of things in the macro sense. i’m focused on things we can control here at liz claiborne and that’s turning out the very best product at the very best price. i will say that the comps in september, particularly at the retailers who deal with consumers of more moderate means were a bit disappointing. however, the upper end of the market , places like neimans and saks and bloomingdale’s and nordstrom where we have a strong presence with lucky, lottery, dana buchman business, that area of retail has been considerably more robust than at moderate price points. in addition we have a rather substantial number, 600 to 700 stores of our own speciality stores and we have a strong international presence that represents about 25%, 26% of total sales. we’re a rather diversified portfolio.
>> paul, thank you for joining us today.
>> you’re quite welcome. thank you.
>> paul charron, chief executive of liz claiborne. apple out with earnings after the bell. shares turn lower. after the break, we break down the numbers. we speak with ted shandler of forester research.
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Listen Market briefing -- Ellen (slow)
Tax breaks --- Peter (slow)
>> welcome back to “after the bell.” i’m ellen braitman. analysts were looking for $3.74 billion in revenue for apple. coming in below what analysts were looking for. as for earnings per share, the company said for the fourth quarter it earned 50 cents per shear. that beats what analysts had been looking for. on average analysts were looking for 37 cents a share. apple also saying that fourth quarter ipod sales were 6.4 million units in terms of what had been shipped. also the company saying it sees first quarter revenue about $4.7 billion―first quarter revenue it appearance will be about $4.7 billion. let’s go over headlines again out after the bell from a.m. saying fourth quarter revenue was $3.68 billion. on that basis, shy of what analysts were looking for. but that earnings per share figure coming in stronger than what analysts were looking for, coming in at 50 cents a share. being helped there by 12 cents a share in terms of tax items. what apple also―give you some background. earnings coming one week after the apple shares had surged to a record. they trade for 30 times fiscal 2006 earnings. analysts say the key to maintaining momentum is new products. they may bring out a new product tomorrow at an event held in california called “one more thing.” anticipating the company may unveil a video ipod. some investors and analysts are concerned about a squeeze on consumers from gas and heating oil bills saying that could crimp demand for gadgets. also some investors and analysts saying they want to see if the company is able to sustain the ipod sales whether it has peaked or not. so more on apple in just a few moments time. we’ll speak with ted shandler with forester research. will give us his take on the apple numbers in a few minutes’ time. another story we have been following. ‘ president’s tax panel has its way, americans in the future would not face a national sales tax. they could lose housing and health care tax breaks. let’s get details from peter cook. peter?
>> with the november 1 deadline, the date is fast approaching. specific proposals are starting to emerge. some of the items on the table will be controversial. at the next to last meeting here today in washington, a majority of panel members express support for capping tax deductions for employer-provided health care plans possibly at the current federal employee limit of $11,000. right now the current execution would save american workers $1.9 trillion over 10 years. a majority on the panel express support for capping the mortgage interest and property tax reductions for homeowners. not only would changes raise revenue for the government to offset the cost of eliminating the alternative minimum tax, supporters on the panel including liz anne sonders is.
>> if you could let a little bit of air out of the bubble by kind of reining in excesss in terms of prices, i think on the margin that would be beneficial to the economy overall. >> two proposals unlikely to make the cut, a valued a tax similar to that used in europe. a majority of panelists said the taxes wouldn’t work efficiently in the united states.
>> i think we have heardened evidence has been presented to the panel that the evasion factor is very large. we have a high retail sales tax. also the complexity of trying to have a value add tax on top of income tax, the complexity of it is very, very bad.
>> ultimately the panel’s recommendations will only take effect if congress approves them. a former chairman of the house ways and means committee is not optimistic lawmakers will embrace a major overhawley.
>> i wonder whether the administration and the congress will be willing to go forward with something that i would call unique.
>> the panel holds a meeting next week to finalize its recommendations. the final deadline november 1.
>> thank you so much. sanford bernstein analysts forecasting $80 oil in four years because of small producer costs. su keenan gave us a preview of that. a closer look right now with editor-at-large tom keene. he will join us for an abbreviated “chart of the day.” we wanted to get in the apple earnings.
>> oil production in the united states. it’s not a pretty picture. down 30% since 1978. ok. we’re done with the chart. here’s the story behind the chart.
>> let’s talk about the $80. how do you get there?
>> sanford bernstein says don’t look at average cost of production. do calculus and look at marginal costs, the next barrel, next to last barrel to be produced. it’s a much bigger number than we perceive. what he does is he subdivides oil into exxon, the big majors and then subsidizes into the middle and what he focuses on was 52% of our oil comes from small phraeurts and their marginal costs are skyrocketing. when you factor in five more years out, those small producers push their marginal costs which comes into an $80 per barrel oil. so modeling out. we go up another $20.
>> in terms of smaller players, how much of the market do he they represent?
>> they represent 52% of the market . they make more oil than saudi arabia. just amazing.
>> interesting analogy. tom, thank you so much. we’ll come back and have more time tomorrow. thank you so much. tom keene with our “chart of the day. wgs we take a break. when we come back, we continue to look at apple earnings. also we’ll zero in on the apparel industry and get a view from the top. the chief executive of liz claiborne will be our guest.
