Liz Claiborne Inc. shored up its finances with an amended bank facility and narrowed first-quarter losses, but a weaker-than-expected outlook and general market turmoil helped push the stock down 15.2 percent.

This story first appeared in the May 7, 2010 issue of WWD. Subscribe Today.

Claiborne reduced its revolving credit facility to $350 million from $600 million, but the expiration date was pushed out to August 2014 from May 2011 and the springing fixed-charge coverage covenant was eliminated, leaving chief executive officer William L. McComb additional room to operate.

And he could use the extra leeway given major changes across the company, from the licensing of the Liz Claiborne brand to the installation of Erin Fetherston at the design helm of Juicy Couture to the repositioning of Lucky Brand Jeans and the turnaround of Mexx.

McComb told WWD that while he had felt secure in the company’s financial underpinning, the refinancing was important.

“To the Street and to the accountants, it’s a big deal and it’s great,” he said. “This deal has no LIBOR floor and the fees are significantly lower.”

On a conference call with Wall Street analysts, the ceo added: “We achieved positive retail [comparable-store sales] at Juicy and Kate Spade. We initiated significant changes at Lucky Brand, implementing an inventory clearance strategy which brought down [average unit retail] significantly and drove negative comps, but achieved our goal of cleaning out this system very effectively.”

First-quarter losses attributable to the company narrowed to $71.8 million, or 76 cents a share, from $91.4 million, or 97 cents, a year earlier.

Sales for the three months ended April 3 slipped 21.5 percent to $608.5 million from $775.3 million. The firm’s top line is down, in part, due to its licensing deal to give J.C. Penney Co. Inc. exclusive rights to the Liz Claiborne brand. The line launches in the chain for fall.

Adjusted losses from continuing operations tallied 38 cents a share and were better than the 48-cent loss analysts expected, but sales fell short of the $637 million anticipated.

Investors, though, seemed to focus on the outlook for the second quarter, which McComb said would be “slightly worse than the first quarter” on an adjusted basis.

Analysts were looking for losses to narrow to 27 cents a share.

Shares of Claiborne fell $1.22 to $6.79. Over the past year, the stock has traded as low as $2.40 and as high as $9.72.

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