Liz Claiborne Inc. might be preparing to change more than the distribution of its flagship brand.

Now that the company’s Liz Claiborne label is heading to J.C. Penney and Liz Claiborne New York is bound for QVC, William L. McComb, chief executive officer, told WWD the company might be ready to take the leap and change its name.

This story first appeared in the November 10, 2008 issue of WWD. Subscribe Today.

“In some ways, it telegraphs a company that was, if you will, a company from a different era,” McComb said Wednesday after the firm reported an expanded third-quarter net loss of more than $90 million and a critical amendment to its bank credit agreement.

However, he noted, “LIZ as a ticker and to the investment community is an absolutely sterling set of letters.”

The firm has been transformed from the one McComb took over in late 2006. With the path of the namesake brand set, Claiborne is now focused on turning around the Mexx European business and growing the Juicy Couture, Kate Spade and Lucky Brand divisions. It’s jettisoned much of its earlier brand portfolio and contracted out sourcing operations through Li & Fung Ltd.

With Liz Claiborne set to be sold exclusively at Penney’s and QVC in the U.S. next year, Claiborne expects to deliver cost savings of about $65 million annually in marketing, in-store support and other areas, the company disclosed on its earnings call. The switch, however, cost 115 Claiborne employees their jobs, though 15 were offered positions at QVC, which will carry the Liz Claiborne New York line designed by Isaac Mizrahi.

Still, the group doesn’t appear to be on track to move into the black until late next year. In the meantime, Claiborne will have to battle the general economic headwinds of low consumer confidence and high unemployment.

“Things like talks of tax hikes, pending unemployment — that stuff still has people very spooked,” McComb said. “We’re still more than ever competing for the few bucks in their wallet that they’re willing to spend.”

But Claiborne, like most of the fashion industry, is finally competing with styles, price points, marketing and inventory levels that were planned with today’s cash-strapped consumer in mind.

About a month into its fourth quarter, the company said comparable-store sales are “significantly improved” from the trend earlier in the year and that quarterly comps should be flat for the Juicy Couture, Lucky Brand and Kate Spade businesses and down about 10 percent at Mexx.

That hint of better times ahead, as well as the rejiggering of the credit agreement, helped drive Claiborne’s stock up as much as 6.8 percent to a high of $5.85, before investors switched directions, leaving the issue with a 3.3 percent decline for the day, ending at $5.30.

McComb described the amendment to the bank agreement as “euphoria.” The agreement has a fixed-charge covenant that will now be in effect only if availability under the facility falls below a certain level. Prior to the amendment, Claiborne had said it did not expect to be able to comply with the provision unless it returned to profitability in 2010.

“We played defense all year long and it was a dark cloud looming over our building,” said McComb. “It’s great to move beyond that.”

The ceo said it was more a problem of perception than reality since he was always confident the bank agreement could be changed.

“The amendment is very helpful,” said Scott Tuhy, debt analyst at Moody’s Investors Service. “It essentially improves their availability under this facility for another year. The critical date for them is now May 2011 as opposed to July 2010. It gets you two more seasons and that will be important.”

Tuhy said the company had successfully cleared two of the three big hurdles it faced by adjusting the bank agreement and stabilizing the namesake business.

Now, the company needs to fix the Mexx business — the third hurdle seen by the analyst. Claiborne recently installed Thomas Johannes Grote, a former president of Esprit, as ceo of Mexx to turn the operation around.

Quarterly losses attributable to Claiborne widened to $90.5 million, or 96 cents a share, from a deficit of $68.7 million, or 73 cents, a year ago. Adjusted losses from continuing operations tallied 43 cents a share, including a 6-cent currency-related charge, and were worse than the 20 cents of red ink Wall Street expected.

Operating losses totaled $33.1 million for the partnered brands wholesale division, $19.2 million for the international direct brands business, which covers Mexx, and $7.4 million for the direct brands unit, which covers Juicy, Kate Spade and Lucky.

The firm’s sales for the three months ended Oct. 3 fell 24.2 percent to $769.6 million from $1.01 billion.

For the nine months, Claiborne’s net losses widened to $264 million, or $2.81 a share, from $122.9 million, or $1.31, a year ago. Sales fell 27.4 percent to $2.23 billion from $3.07 billion.

Over the last 12 months, sales per square foot at stores open at least a year were $786 at Juicy doors, $565 at Kate Spade and $455 at Lucky Brand.

McComb declined to predict when Claiborne would return to profitability, but the company’s various projections point to improvements on the bottom line by the fourth quarter of next year. Mexx is expected to lose money again in 2010, but be on the upswing and on its way to breaking even or better in 2011. The wholesale Liz Claiborne business is slated to make money with J.C. Penney and QVC, and the Liz Claiborne outlets could also turn a profit next year.

The deal to pull Claiborne from Macy’s and the other traditional department stores was generally seen as a good one for the vendor.

“It stops the bleeding from the perspective that they don’t have to deal with the markdown allowances, the returns, all that kind of stuff,” said Jennifer Black, analyst and president of Jennifer Black & Associates.

“It puts them on a different playing field,” she said. “They can now focus on growing the top line. They’ve got the whole issue of Liz Claiborne in a good place versus a bad place and it frees up resources and talent.”