Liz Claiborne forecasts wider loss in an uncertain environment

When a company decides to warn investors about earnings, let's just say there's never really a good time for it, but some days seem just worse than others.

A day after Eddie Bauer Holdings Inc. (EBHI) filed for Chapter 11 bankruptcy protection and Abercrombie & Fitch (ANF) announced plans to shutter its struggling 29-store Ruehl chain, Liz Claiborne Inc. (LIZ) projected a wider second-quarter loss than analysts forecast. LIZ shares plunged on the news.
The women's apparel manufacturer and retailer troubles didn't start with the recession. Liz Claiborne has been in restructuring since 2006, which even included a management shuffling at the top that brought CEO William McComb to the head job. In 2006 and 2007 it sold many of its brands and increased cost cutting measures, planning to expand with its core brands by moving away from department store sales and establishing a stronger retail presence with higher margins.

In 2008, Liz put its hopes with Isaac Mizrahi as its flagship brand and continued to sell non-core brands, but no matter what it did, barring a few surprises, sales generally continued to decline and the stock to plunge (it's been on a steady decline since the beginning of 2007, dropping over 90 percent) as the recession also hit with full force, hampering many of its plans.

A New Look for Old Brands

    What Changed: Pillsbury is going for more soothing tones in these tough economic times with its first re-branding campaign in years. The Pillsbury Dough Boy is still around, but the focus is on happy families gathering around a table of tasty food.

    Paul Sakuma, AP

    What changed: Little girls have been inundated with Disney princess paraphernalia for years now, and the line has been so popular that the company wants to try to do the same thing with fairies. Tinker Bell, a mere side character in J.M. Barrie

    AP | Disney

    What changed: Pepsi has unveiled its fifth new logo in 2 decades, right, as part of a new plan to redefine itself as a cultural leader. The redesigned Pepsi packages should hit store shelves early next year. Mountain Dew and Sierra Mist drinks will also get a new look.

    AP / Pepsico

    What changed: For the first time, Long John Silver's will be offering its first non-fried items. The Freshside Grille selections includePacific Salmon (pictured), Shrimp Scampi and Tilapia.

    YUM! / AP

    What changed: The national restaurant chain went through a drastic decor makeover in 2008 to make the furnishings more upscale and sleek from its former look with Tiffany-style lamps and antiques. Total cost? $65 million. When the company got to the last of its locations, it staged a mock explosion, blowing up the interior and replaying the action on YouTube. Now all 600 locations of the 36-year-old chain have a modern look with black awnings outside and black-and-white checked tablecloths inside, plus a new straightforward logo.

    What changed: Popeye's is sporting a new look with an orange and red logo with the words "Louisiana Kitchen" set off by fleur-de-lis designs and a giant "P" in the middle


    What changed: Chex Party Mix, invented in 1955, will get a makeover with new recipes, new packaging and a new spokeschef, Katie Lee Joel, (pictured in the center, with Suzanne M. Grimes, president, Food & Entertaining at Readers Digest on the right and Cheri Olerud, senior cookbook editor and test kitchen expert for Chex cereal on the left.

    Business Wire

    What changed: The venerable crock pot, long a staple of the American kitchen, is trying to become the ultimate multi-tasker for the contemporary two-income family that wants to eat healthy. Crock Pot

    Crock-Pot | Hughes Design Group

    What changed: The 400-location hotel worldwide hotel chain is in the middle of a $1.7 billion project to renovate about half its U.S. hotels. The new look includes brighter colors in the room, with pillowtop beds and white duvets and flat-screen TVs. Sheraton is rolling out a branded line of toiletries, called Shine by Bliss, and fitness centers will get upgrades. Lobbies will feature restaurants, most with a casual dining chain called Relish, and cafes with Internet stations. Some locations may also have a steakhouse developed by Shula


    What changed: Now owned by Stride Rite, which re-acquired the rights to the sneaker brand from hip-hop mogul Damon Dash (a recent foreclosure victim), PRO-Keds are going to get a makeover as they come back into the fold. Stride Rite will focus on classic styles, such as the

When Liz last reported earnings in May, it disappointed investors with a wider-than-expected loss. The struggling clothier also said that its second-quarter loss will be narrower on a sequential basis.

Today, Liz said it is predicting its second quarter loss to be wider than the first quarter one, but because of lower restructuring costs the GAAP loss will be narrower than the first quarter. No reason was given for the wider loss though, and one can only assume performance.

LIZ shares have actually performed well along with the market since March lows, mostly due to a Goldman Sachs upgrade in early May that sent the shares up 30 percent. Year-to-date, LIZ has actually outperformed most of its peers and the S&P 500 with a 27 percent climb, but underperformed over the past year with a near 80 percent drop.

It's hard to turn a company around, and doubly hard doing it during a recession, nearly impossible without an economic recovery to accompany it. Sure, cutting costs, selling under performing brands and getting a new, hip, young brand to revive a mature fashion business are certainly important steps to take, but when most predict retail will not fully recover to 2007 levels before 2012, the future of Liz is clouded.
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