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Liz Claiborne to Cut up to 800 Jobs, May Sell 16 Brands in Restructuring

Associated Press
Published | Updated

NEW YORK – Apparel designer and marketer Liz Claiborne Inc. on Wednesday said it plans to cut 600 to 800 jobs and is considering whether it should sell 16 brands in a bid to cut costs and focus on profitable lines.

Under its restructuring plan, Claiborne expects to save $100 million in 2008 and an additional $90 million over the following two years.

It plans to cut 600 to 800 jobs, or 7 percent to 9 percent of its non-retail based global work force, including cutting senior positions.

The brands under review account for about $800 million of its projected annual sales of $5 billion.

The company will separate its brands under two operating segments.

Its retail-based direct-brand segment, which the company said should generate about $2.2 billion in revenue in 2007, includes Juicy Couture, Kate Spade, Lucky Brand Jeans and Mexx brands.

Its wholesale-based partnered brand segment includes its Liz Claiborne brands, DKNY Jeans group, Monet brands and its cosmetics brands. The company expects its partnered brands to have about $2.8 billion in revenue, including $800 million in revenue from brands under strategic review.

Liz Claiborne said it is reviewing its strategic alternatives, which include selling, discontinuing or licensing, for the brands C&C California, Dana Buchman, Ellen Tracy, Emma James, Enyce, First Issue, Intuitions, J.H. Collectibles, Kensie, Laundry by Design, Mac & Jac, prAna, Sigrid Olsen, Stamp 10, Tapemeasure and Tint.

In fiscal 2007, the company expects adjusted earnings of between $1.90 and $2 per share, compared with a previous forecast of $1.90 to $2.05 per share, with adjusted net sales expected to be flat to down in the low-single digits from last year.

Analysts are expecting a profit of $2.06 per share for the year, according to a Thomson Financial poll.

The guidance excludes 6 cents in costs in the first quarter and 14 cents to 16 cents in costs related to the restructuring. Guidance also excludes any additional costs or additional income or expenses related to its strategic review of its brands.

In 2008, the company expects adjusted earnings between $2.35 and $2.50 per share on revenue of $4.2 billion to $4.3 billion. Analysts expect a profit of $2.34 per share on revenue of $5.12 billion.

The company expects annual revenue growth in the high-single digits and earnings per share growth in the high teens over the long term.