Liz Claiborne Shares Soared: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Liz Claiborne (NYS: LIZ) soared 30% on Wednesday after agreeing to sell more of its major brands -- including its namesake line -- to J.C. Penney (NYS: JCP) for $328 million.

So what: The move will allow the embattled Liz Claiborne, which hasn't reported an annual profit since 2006, to significantly reduce its debt load and focus on its high-end premium brands -- namely, Juicy Couture, Lucky, and kate spade. "Over the past few years, we have worked diligently to turn this into a more efficient, dynamic, brand-centric, retail-based company, and today marks the culmination of these efforts," CEO William McComb said.

Now what: Liz Claiborne should certainly be on better footing soon. While management lowered its full-year EBITDA guidance as a result of the sale, it expects net debt at the end of the year to be between $270 million and $290 million, down from about $740 million as it stands now. The company said it is even looking to change its name, hoping that a luxury focus will help fuel a turnaround as lower-end shoppers pull back on spending.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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