Liz Claiborne Lowers Outlook, Shares Tumble


Liz Claiborne said fourth-quarter and 2008 earnings will be well below analysts' expectations, as the clothing company's sales suffer amid a consumer spending slowdown, sending shares falling as much as 15 percent.

The company also said it will delay its fourth-quarter earnings report and the filing of its 2007 annual report due to complexity surrounding a current restructuring, which includes selling the Ellen Tracy unit, discontinuing the Sigrid Olsen line and licensing Dana Buchman to Kohl's.

New York-based Liz , which had amassed more than 40 brands over the years aside from its namesake sportswear line, announced a sweeping reorganization in July that included trying to sell 16 wholesale brands and cutting up to 800 jobs.

So far, it has announced plans for all but two brands -- Mac & Jac and Kensie -- and pledged to finish the review by the end of the current quarter.

At a time when clothing manufacturers are being squeezed by higher labor and energy costs and fewer orders from department stores that are pushing their own private labels, Liz Claiborne is seeking to revive its fortunes.

It is focusing on four brands -- Mexx, Juicy Couture, Lucky Brand Jeans and Kate Spade -- that have their own retail stores, which appeal to young and hip customers.

In the fourth quarter ended Dec. 29, the company said those brands performed well amid the difficult retail environment.

Quarterly sales at stores open at least a year fell 3 percent for Mexx and 1 percent for Lucky Brand, but rose 25 percent for the much smaller Juicy Couture chain.

The company, which expects to release fourth-quarter earnings no later than March 13, expects to report a net loss of 90 cents to $1 per share, compared with a year-earlier profit.

Excluding expenses from the restructuring and other one-time items, Liz expected earnings of 15 cents to 25 cents per share, way below analysts' average estimate of 63 cents, according to Reuters Estimates.

Net sales in the quarter fell 3 percent to $1.21 billion, the company said, slightly below the analysts' average expectation of $1.24 billion, according to Reuters Estimates.

The company also projected fiscal 2008 earnings per share in the range of $1.50 to $1.70 per share, excluding items, citing caution over the uncertain macroeconomic situation.

Analysts, on average, had been expecting $1.98 per share, excluding items, in 2008, according to Reuters Estimates.

Liz was the top percentage loser on the NYSE.