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Liz Claiborne Sees Profit Drop

Third-quarter earnings per share fall some 12%.

Liz Claiborne


reported third-quarter earnings results Thursday that showed a year-over-year drop in earnings.

The women's clothing retailer posted earnings of $95.2 million, or 93 cents a share, in the third quarter, down from the $113.5 million, or $1.06 a share, it posted in the prior-year period. Excluding the impact of certain charges, earnings were 96 cents a share. Analysts, on average, were expecting 99 cents a share, according to Thomson First call.

Net sales were $1.37 billion, up from the $1.34 billion in the comparable period last year and in line with the average analyst estimate.

Comparable-store sales increased by an overall 2.6% in the fourth quarter, with a 2.9% increase in its specialty retail business and a 2.3% increase in its outlet business.

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"While we were disappointed by results in our European retail business, which negatively impacted the overall performance of our retail segment in the quarter," said CEO Paul Charron, "we are encouraged by the continued strong performance of our Lucky Brand, Juicy Couture and Canadian retail businesses, as well as the beginning of the turnaround in our domestic outlet business."

The company is increasing its streamlining initiative from $60 million to $80 million and now expects to recognize an eventual $70 million to $75 million in annual savings, as compared to the $60 million to $65 million that it previously projected. So far in 2006, it has realized $30 million to $35 million of cost savings.

Looking forward, the New York-based company expects fourth-quarter net sales to increase in the high single digits over last year and earnings per share to range between 75 cents and 80 cents. Analysts are looking for fourth-quarter EPS of 96 cents a share on $1.28 billion in revenue.

For the full year, the company expects a low single-digit increase in net sales over 2005 and earnings per share in the range of $2.50 to $2.55. The average analyst estimate calls for full-year earnings of $3.01 a share on $4.96 billion in revenue.

"While we are seeing the macroeconomic environment begin to improve and consumer confidence increase as energy prices decline, equity markets recover, and interest rates level out, our outlook remains conservative as we factor in the pressures of ongoing retail consolidation," Charron said.

Shares were down $1.95, or 4.7%, at $39.92 in midday trading Thursday.