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Weak Forecast Frays Liz Claiborne

Shares plunge after the retailer slashes its 2007 estimates.
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Shares of Liz Claiborne (LIZ) tumbled 12% early Thursday after the beleaguered apparel maker slashed its profit projections for 2007 and offered a weaker-than-anticipated guidance for 2008.

The company now expects to report a loss of 25 cents to 35 cents a share for last year, as results were hit by charges from an ongoing restructuring and continued weakness in certain brands.

Excluding charges, Liz Claiborne estimates full-year earnings of $1.25 to $1.35 a share, below its prior forecast of $1.70 to $1.80 a share and less than half of the $2.99 a share the company earned in 2006.

For the fourth quarter, the company projects adjusted earnings of 15 cents to 25 cents a share.

Analysts polled by Thomson Financial had forecast adjusted earnings of 63 cents a share for the fourth quarter and $1.73 a share for the year.

Liz Claiborne has been battling a slowdown over the past two years, hurt by changing fashion tastes among its core female customers and consolidation in the department store industry. Last year, the company began efforts to unload underperforming brands and tighten its focus, selling brands such as Laundry and C&C California.

The company said Thursday that it agreed to sell its Ellen Tracy mid-tier women's clothing brand to an investor group for $27.3 million cash plus up to $15 million in performance-based payments.

Liz Claiborne said its fourth-quarter weakness was specifically tied to its "Partnered Brands" segment, which includes its namesake brand and DKNY jeans. The company indicated particular weakness for the Liz Claiborne brand, noting higher-than-expected markdowns and order cancellations from retail customers.

The company said its "Direct Brands" segment -- including the trendy Kate Spade, Juicy Couture and Lucky brands -- performed well.

For 2008, Liz Claiborne forecast earnings of $1.50 to $1.70 a share, excluding charges and results from brands that might be sold. Analysts, on average, projected earnings of $1.95 a share.

Shares of Liz Claiborne recently were down $2.97 to $19.46. With that loss, the stock has fallen 58% from its 52-week high of $46.84 last February.

This article was written by a staff member of