Liz Claiborne Inc. will divest itself of unprofitable brands

Liz Claiborne Inc. said yesterday that it might sell or discontinue 16 unprofitable brands geared to older customers and eliminate as much as 9 percent of its workforce to reverse six straight quarters of lower profit.

The maker of its namesake line of women's apparel may divest brands such as Dana Buchman and Ellen Tracy with $800 million in annual sales to department stores. It intends to eliminate as many as 800 non-retail jobs, the company said yesterday.

Liz Claiborne plans to add more than 300 stores selling Juicy Couture clothes and bags from Kate Spade, whose customers tend to be younger than at some of the lines under review. New chief executive officer William McComb wants to lift revenue from company-owned locations after a drop in sales to Macy's Inc., as department stores demand lower prices.

Shares of New York-based Liz Claiborne rose 33 cents to close at $37.56. They had lost 14 percent this year through Tuesday.

McComb, who took over in November, already eliminated the Elisabeth line of clothes for larger women. The company bought Kate Spade in December. His predecessor, Paul Charron, who took over the company in 1995, made at least 10 purchases, including Mexx Group B.V. and the Monet Group Inc., to bring the number of Liz Claiborne brands to about 40.

Founder Liz Claiborne, 78, died last month. She started the company in 1976 to bring midpriced stylish clothing to professional women. The company posted almost $5 billion in sales last year.

The company also lowered its annual per-share profit forecast to a range of $1.90 to $2 from $1.90 to $2.05, excluding some items. The company had per-share profit of $2.99 last year.

Last month, Liz Claiborne said it would reorganize its brands under two divisions: One would focus on Juicy Couture, Lucky and other lines sold at company-owned stores. Such lines may post $2.2 billion in sales in 2007.

The other unit includes brands sold at department stores such as Liz Claiborne and Monet, with annual sales of about $2.8 billion.

Other lines that may be divested or discontinued include Sigrid Olsen, Enyce, and Laundry by Design.

The 16 brands under review lost a total of $15 million to $25 million last year, said Brad Stephens, an analyst at Morgan Keegan & Co. Inc.