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The secretary of state has released the annual, odd-numbered year February report of voter registration, one that typically shows a cleaning of the voter roll following a gubernatorial election to delete names of those who moved or died, and it reveals a continuation of the trend for voters to declare themselves as nonpartisans.

In Ventura County, both Democrats and Republicans lost voters between February 2009 and February 2011-- in nearly equal number. Registered Democrats declined by 2,252 to 167,087, and registered Republicans declined by 2,336 to 155,174.

As has regularly been the case in recent years, only those registered as nonpartisans -- "decline to state" -- grew in number. That pool of voters increased by 2,325, to 78,261.

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These forward looking statements are based on current expectations and are subject to the qualifications set out in this morning's press release, as well as in the company's 2011 annual report on Form 10 K previously filed with the SEC and in its second quarter 2012 Form 10 Q under the captions Item 1A, Risk Factors and Statement Regarding Forward looking Statements, which is being filed with the SEC. The company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise.Also, please note that during this call and in the accompanying slides and press release, sales, gross profit, gross margins, SG SG as a percentage of sales, operating income, operating margin, interest expense, net income or loss from continuing operations and EPS are presented on both a GAAP and a non GAAP basis. EBITDA; adjusted EBITDA; adjusted EBITDA, excluding foreign currency gains and losses; adjusted EBITDA margin; and comparable adjusted EBITDA, excluding foreign currency gains and losses are non GAAP measures that are also presented in the accompanying slides and press release.The company presents EBITDA measures because it considers them important supplemental measures of its performance and believes they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. The company believes that the adjusted results for the second quarter and first half of the 2012 and 2011 represent a more meaningful presentation of its historical operations and financial performance since they provide period to period comparisons that are consistent and more easily understood.Now I would like to turn the call over to your host, Mr. McComb. Please go ahead, sir.Good morning, and thank you for dialing in to hear our remarks for our second quarter 2012 earnings results, which we posted in our press release this morning. Joining me here on the call is George Carrara, our CFO and our Chief Operating Officer. During the call, I'll review the sales and operating results for the segments and I'll provide commentary on each brand's performance, and then George will walk you through some detailed P and balance sheet metrics that we routinely provide. And of course, we'll end the call with a Q session.Overall, we're pleased with how the business performed during the second quarter. kate spade and Lucky Brand posted strong positive growth, both overall and on a comparable basis, with strong margin performance. You'll hear shortly how these brands are not only executing well, but also capitalizing on firmly established strengths to achieve future growth. At Juicy Couture, we've seen positive reactions around the globe to the elevated image and product that we launched during the spring and summer seasons, but we have many operational challenges still to fix there, challenge which unnecessarily impeded performance and impaired our ability to present a cohesive new presentation during the past 2 quarters. We're making some progress on these issues, which I'll discuss in greater detail shortly, and we expect to see ongoing improvements sequentially as planning and allocation enhancements are realized along with product improvements in accessories, as well as assortment adjustments in apparel.I'll also say right here at the outset that we believe the markets that we serve demographically and geographically are holding their own in terms of state of demand. I realize that there are widespread external concerns about Europe and even a slowdown in China. Our exposure to Continental Europe though is limited, and we are still nascent in China even with kate spade and Juicy Couture's presence there.So here's how it shakes out in our forward looking perspective. We expect kate spade and Lucky Brand to deliver ahead of plan. We expect Juicy Couture to come in below plan, and we expect that corporate costs will be right in line. Therefore, we are reiterating our adjusted EBITDA guidance of $125 million to $140 million for the 2012 fiscal and calendar year. And during the quarter, we made 2 very important announcements. First, in June, we completed a $152 million add on to the 10.5% senior secured notes due in 2019. The add on was priced at 108 1/4 [ph]. The primary use of this add on was to redeem the remaining 5% Euro Notes in July 2012 that were coming due in the summer of 2013 and to pay down $37 million in revolver borrowings that we had used to fund repurchases of the Euro Notes earlier in June of this year.Second, we announced that we plan to use most of the remaining proceeds from the add on to exercise a conditional call option on the kate spade Japan joint venture. This means we expect to acquire the remaining 51% of a very healthy and fast growing business and integrate it into the global kate spade operation. This is a business with revenues of $71 million in the JV's last full fiscal year, which ended August 2011, and incremental low double digit EBITDA, both of which, after closing, will be incrementally consolidated into kate spade's results in 2013. Really tremendous.Let's now look a little deeper at the second quarter, starting here on Slide Page 3 with kate spade's performance. kate spade's direct to consumer comp for the quarter was up 34%, showing continued and growing momentum through the quarter with strong sell throughs, great margins and healthy growth in all of the channels. The brand has been redressing its outlet stores recently with strong results showing while sustaining momentum in both the full price and e commerce channels and wholesale performance has exceeded expectations.Comps were up 23% in April, up 35% in May and up 46% in June, incredibly, really, given that year ago comps were also up 56% for the month of June. kate spade is on track to meet or exceed its key goals for the year, including reaching a blended fleet average of $1,100 per square feet in 2012, broadening its customer base by launching new product categories in more entry price points. Results from these efforts include a 25% increase in Facebook fans year to date, a 54% increase in Twitter followers and a 16% increase in the CRM database, as well as a 30% increase in traffic in our retail stores. Really stunning metrics.In 2012, the brand will meaningfully move forward in its agenda to expand globally. This includes a focus on Asia comprising our recently launched JV in China and the announced conditional exercise of our option to acquire the remaining 51% of the Japan JV, as well as new stores in Rio de Janeiro, So Paulo and London. And the brand will do it all in a smart, healthy and sustainable way based on learnings from its proven business model to date. We continue to avoid image diluting points of sale.As a result, we see strong growth across categories, geographies and channels with total sales for the quarter up 48% and for the whole first half up 47%. The second quarter adjusted gross margin rate was in line with the plan and with first quarter as well. It reflects our strategy of broadening the brand assortment, doing more at entry price points with jewelry and tech, for example. And while this can bring down the AUR, the average unit retail price, it drives more in higher transactions by attracting new shoppers to the brand. Very important initiative.During the quarter, we opened 2 new locations, a kate spade store in Seattle and a Jack Spade store in Brazil. As I said on the last call, we will be adding more stores more quickly over the next 18 months in this business with plans to open between 40 and 45 between now and the end of 2013.Turning to Slide Page 4. At Lucky Brand, DTC comp for the quarter was up 8%. April and May showed strong comps at plus 10% and plus 9% In June, the comps slowed to plus 3%, reflecting the deliberate strategy to position the business for more full price selling during that month. June at Lucky Brand specialty retail stores saw an increase in full price sales of 22% on a comp basis and a 31% reduction in comp sales of markdown goods. In other words, they traded markdown sales in June based on a strategy to more tightly manage and control inventory and drive gross margin, and it worked.In June, gross margin at full price stores was 870 basis points higher than year ago. In fact, the brand showed outstanding direct to consumer gross margins performance throughout the quarter with direct to consumer gross margin dollar comp up 20% during the quarter and direct to consumer gross margin rate up 720 basis points to last year. And specialty women's fashion was up 10% for the quarter, and women's denim was up 8%.The brand is now working, and we're seeing consistent product sell through trends in each channel. fleet. And wholesale is working well, as I said, and is now growing again. We expect continued progress here with the launch of Ginger, Lucky Brand's plus size product offering, which has been very well received. After focusing for 2 years on improving product and inventory management, Lucky Brand is driving solid comp store sales and margin gains on leaner inventory.End of quarter comp store inventory in the direct to consumer business was down 12% in the second quarter of 2012 versus last year, and that is clearly a great accomplishment. And while the team was successful in finding a good balance with the right product allocations on the newer fits to drive the top line and meaningfully improve turn, in hindsight, we probably tightened the inventory a little too much on the legacy relax fits, losing some potential sales. But the team has fixed this now going into the fall season.One of the most exciting trends during this last quarter was the fix to the outlet business. By replicating the merchandising strategies from the full price specialty store fleet into the outlets, after first dramatically clearing old inventory, the outlet business is showing high growth rates and very strong gross margin expansion. I've said we believe this is a business that could support a fleet of up to 100 outlet stores and the team is now ready to start expanding, given their accomplishments with sourcing, inventory management, sizing, pricing and style innovation for this channel.On the real estate front, we opened 1 new store during the quarter and closed 4. to replace a store in The Grove.In terms of growth and innovation, we just announced that Lucky Brand has signed a licensing agreement with Parigi to officially relaunch Lucky Kids. The product includes boys and girls denim, tops and outerwear and is targeted for kids from 18 months to age 12. 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For each of the deliveries for January through June, we initially allocated anywhere from 20% to 30% fewer units. This was the result of being overly conservative, yes, but equally, just plain poor planning, and even more to the point, poor planning processes. Juicy's systemwide global merchandise planning and allocation process has been overly complicated, a process that treated channels and geographies in silos, not managing total systemwide global inventory like a true vertical retailer would. So on top of just being overly conservative on units bought, the allocation of product really foiled our results. We were lightest on the best products, had poor size allocations to the stores and the replenishment mechanism was neither nimble nor responsive.I think it's fair to say that no aspect of the planning and allocation process was working. stores by June and to run a full clearance promotion to end the quarter with a clean inventory position. Late arrival of these goods did, in fact, bring retail inventory levels to a better place than we had seen in the first 5 months but landed just in time for our clearance sale. We took the decision to clean up the remaining inventory and make room for new fall goods by July 8. The sale was effective in driving traffic and conversion. We took some deep markdowns and moved a lot of product.The second major callout is outlet. Outlet at Juicy is now really lagging. The product direction there reflects Juicy Couture in 2010 and 2011. It has none of the newness that we're showing and selling in fashion apparel in the full price channel. We're seeing declines in sales and margins there, and I point to the success that both kate spade and Lucky Brand have seen when they develop merchandising and product strategies for outlet that mirror the current seasonal trends that they show in their full price channel. 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95 percent accurate
Over the last 25 presidential elections, Ventura County voters have backed the winner 24 times, or over 95 percent of the time. It is one of only a handful of counties in the nation that has been such a predictable bellwether.
about Timm Herdt
Timm Herdt
The Ventura County Star's Sacramento Bureau Chief Timm Herdt on state issues and politics from Sacramento to Ventura County. He can be contacted at therdt@vcstar.com
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