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Liz Claiborne Shares Ripped

The stock plunges after the clothing maker posts a big shortfall and warns of a weak 2007.

Updated from 10:01 a.m. EDT

Shares of

Liz Claiborne

(LIZ)

unraveled Tuesday after the apparel maker missed first-quarter earnings estimates by a wide margin due to problems in its wholesale business and forecast a weak 2007.

Shares were down $8.43, or nearly 19%, to $36.29 in recent trading.

The New York-based owner of brands such as Juicy Couture, Ellen Tracy and Dana Buchman said first-quarter earnings slid to $16.2 million, or 16 cents a share, from $46.9 million, or 45 cents a share, a year earlier.

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Excluding restructuring-related charges, earnings were 22 cents a share. Still, those results were well below Thomson Financial's average analyst estimate of 60 cents.

Sales dropped to $1.15 billion from $1.17 billion, missing Wall Street's expectation of $1.25 billion.

"Those of you who met me know I don't believe in mincing words," CEO William McComb told analysts during a conference call. "Clearly, we wish we could have reported better first quarter earnings and provided a stronger outlook for the year."

McComb said the problems in the quarter reflected challenges in company's domestic wholesale business, though he said this was partially offset by an improved performance in its direct-to-consumer operations.

He told analysts that the company's results were "a tale of two cities," as the wholesale segment's dismal performance contrasted with positive results from the Juicy Couture, Lucky Brand, and Kate Spade brands.

The company said results were hurt by lower-than-expected domestic wholesale reorders, greater reliance by retailers on private brands, increased markdowns and changes in the retail calendar that shifted some shipments into the second quarter.

McComb said the company expects a significant shortfall in projected 2007 earnings compared to its internal plan and last year's results. For 2007, Liz Claiborne forecast earnings of $1.90 to $2.05 a share, excluding any charges. Analysts were targeting full-year earnings $3.12 a share.

"We are aggressively addressing the risks and pressures in the business," he said. "The actions we're taking are aimed at building the business not for one quarter, but for the long haul and will therefore take some time to achieve the desired result."