Byline: Anne D’Innocenzio / Diane E. Picard

NEW YORK — With its casual lines bulking up sales, Liz Claiborne Inc.’s third-quarter earnings soared past Wall Street estimates, with more of the same expected in the fourth quarter.
Earnings for the third quarter ran up 18.5 percent to $66.6 million, or 95 cents a share, from $56.2 million, or 78 cents, a year ago. Wall Street was looking for 91 cents for the latest quarter.
Sales for the three months ended Oct. 4 rose 10.3 percent to $685.9 million from $622.1 million. Gross margin improved to 41.3 percent of sales from 40.8 percent.
Paul R. Charron, chairman and chief executive officer, said in a statement that this year’s third quarter marked the company’s seventh consecutive quarter of sales growth and its 11th quarter of earnings improvement. He added that “based on holiday and early spring season bookings, we continue to be optimistic about our ability to report further progress going forward.”
In a telephone interview, Charron further pointed out that the most recent quarter was the first in five years in which the firm has generated a double-digit sales increase.
Looking to the fourth quarter, Samuel M. Miller, chief financial officer, predicted that the quarter’s sales would be up at least 10 percent.
For the nine months, Claiborne’s earnings jumped 19.9 percent to $137.6 million, or $1.95, from $114.8 million, or $1.58. Sales improved 8.4 percent to $1.82 billion from $1.67 billion.
Despite the strong figures, Claiborne’s stock slipped 11/16 to 52 1/2 on the New York Stock Exchange Wednesday. However, on Tuesday the stock had picked up 1 3/8 in anticipation of good quarterly results. And on Wednesday, with the release of the figures, analyst Jennifer Black Groves, with Black & Co., Portland. Ore., said she had raised her 1997 earnings estimate for Claiborne to $2.64 a share from $2.58, and expects it to earn $3.03 in 1998. In 1996, Claiborne earned $155.7 million, or $2.15, on sales of $2.21 billion.
Discussing the latest quarter, Charron said the casual business accounted for the bulk of its sales increase, but the firm also did well in men’s wear, fragrances and its special markets division, which includes mass label Russ, as well as moderate line First Issue, which is sold exclusively to Sears, Roebuck.
The Collection division, which has been undergoing a makeover for two years, remains a puzzle, although it is picking up sales, Charron said.
Claiborne’s casual business — Lizsport, Lizwear and Liz & Co. — was up by more than 20 percent for the third quarter, while Collection was up by high single digits. Within Collection, the misses’ area saw an increase, but the petites business was down since stores put more of their dollars in the better casual collections, Charron said.
“Collection has been a challenge for a while,” Charron noted. “I don’t know why. We either did not understand the consumer, or we did not do a good job, or it could be a little bit of both.”
He noted that the recent changes in top management in Collection — in particular, the hiring of Elissa Bromer, who had been president of Andrea Jovine — should be a big plus. Bromer, who succeeded Glenn Palmer as president of Collection, joined the firm this month. The company also named Richard Korman, who was vice president of merchandising at the Jones New York unit of Jones Apparel Group, to be vice president of product development at Collection. Charron said the company will be announcing other new executives in sales and manufacturing.
Claiborne’s casual business could be further strengthened if reports come to fruition that it is cooking up a licensing deal to do the DKNY jeanswear line. Charron declined to comment on the reports, as did John Idol, ceo of Donna Karan International. Reports that such talks were in progress were carried in WWD Wednesday.
Further discussing current business, Charron said dresses had been another problem area, but he believes the division will see a dramatic sales increase at retail starting in January, given new management changes.
In other areas, Charron said, the Dana Buchman bridge division, which was off 5 percent for the third quarter, appears to be making progress. The division, whose leanings toward tight silhouettes for winter and early spring were not well accepted, has corrected its fashion direction and started seeing strong sell-throughs in September, he said.
“I think our problems are behind us,” he noted.
Special markets has been forging ahead with a 25 percent sales gain for the third quarter, Charron said. The Russ label is now in 800 Wal-Mart stores and 500 Kmart doors. The upper moderate line Emma James, which had a lackluster debut in February, is being tweaked — the collection is becoming more item-driven. As reported, the company has revived Crazy Horse and will market the brand exclusively to J.C. Penney, starting in August 1998.
As for the company’s in-store fixture program for its core better sportswear labels, Charron said that by the end of the year, the company will have 600 of its newly designed concept shops in 370 doors, with another 500 requests that will go unfilled.
Liz Claiborne is planning a party, set for Nov. 10, to celebrate the launching of its new fixture program here at Macy’s Herald Square. It will be the largest presentation of Liz merchandise in the world, with 10,000 square feet of selling space on two floors. The career shop opened on Oct. 11, while the casual shop will is opening this week. The party, which is expected to draw 5,000 people, will feature a fashion show starring Niki Taylor. Taylor stars in the company’s national advertising campaign.
In another development, Miller noted that under its $875 million stock repurchase program, which started in 1989 and has been extended several times, the company has purchased or agreed to purchase 25.5 million shares of its common stock for about $803 million.

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