By  on May 1, 2007

NEW YORK ­ William L. McComb has a tough turnaround on his hands.

The chief executive officer of Liz Claiborne Inc. warned Tuesday that there was more bad news ahead as the company reported a 65.5 percent slide in first-quarter earnings as a result of weak wholesale figures in Claiborne’s traditional women’s sportswear brands.

For the quarter ended March 31, net income fell to $16.2 million, or 16 cents a diluted share, from $46.9 million, or 45 cents, in the year-ago period. Sales fell a more modest 1.6 percent, to $1.15 billion from $1.17 billion in the same quarter last year.

Wall Street reacted negatively Continued from page oneto the news; Liz shares fell to $37, down 17.3 percent from the previous day’s close of $44.72.

“It’s a very serious day for the company,” McComb told WWD. “We did what needed to be done, though we didn’t see it coming with a long runway. These are hard headlines, but we aren’t alone in this, particularly in the women’s sportswear area.”

For 2007, the $4.99 billion firm projected on Tuesday that net sales would be flat to down by low-single digits, with adjusted earnings per share in the $1.90 to $2.05 range, excluding the impact of streamlining and strategic review expenses, as well as acquisitions, divestitures or stock repurchases. Claiborne expects its retail segment to continue to lead growth, but also expects it will lose more ground on the wholesale side.

“We are aggressively addressing risks and pressures in the business. We have a sense of urgency,” McComb said. “The actions we’re taking are aimed at building the business, not for one quarter, but for the long haul, and we’ll therefore take some time to achieve the desired results.”

The ceo put off answering many questions from analysts and the press by saying they would be addressed at a half-day meeting on July 11, which he called “a strategy summit of sorts.”

“We will frame out the key elements of the growth strategy that we will pursue over the next three years and beyond, including financial targets,” McComb said. “More specifically, we will detail our thinking about the current portfolio, including an understanding of our historical overreliance on traditional wholesale apparel brands, what we intend to do about it and how it will impact our M&A strategy.”

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