New York Post Claims Isaac Mizrahi’s Liz Claiborne Line Was ‘Flop,’ As The Designer Heads To QVC

True to tabloid form, the New Yotk Post Thursday headlined its story about Liz Claiborne’s dismal third-quarter earnings “Liz Whiz Fizzles: Fashion Boss Stung by Mizrahi’s $6M-a-year flop.”

The failed “Whiz” is Liz Claiborne CEO William McComb. The Post notes that since McComb came to the company, its stock has dropped from $43 to $5 and change.

And there is photo illustration that only the Post would do. They put McComb’s head on the body of man wearing a sleeveless hoody, being arrested by two cops. The cutline says “Its time for Liz Claiborne to call the fashion police.” That illustration is just in the print paper, not online.

The Post reports that Isaac Mizrahi, who left Target to be part of Liz Claiborne’s team, has not done well with his special line for the women’s apparel maker. The tabloid said Mizrahi was making $6 million a year at Target, but that he is “sucking financial wind” at Liz Claiborne.

The Post failed to mention that Liz Claiborne has struck a deal for Mizrahi to do a line of premium clothes and other goods for QVC. The home shopping channel expects the Mizrahi goods to be one of its biggest, if not its biggest, sellers.

Liz Claiborne is also making JCPenney the exclusive retailer for most of its lines.

Red, As In Ink, Was Liz Claiborne’s Color In Third Quarter, But It Expects QVC And Isaac Mizrahi To Come To The Rescue Next Year

It is not a pretty picture for Liz Claiborne, which reported dismal third-quarter earnings Wednesday. It was lots and lots of red ink, but CEO William McComb expects the company’s new deal with QVC to bring it to profitability next year.

To start off, Liz Claiborne’s net sales from continuing operations for the third quarter were $770 million, a decrease of $245 million, or 24.2 percent, from the comparable 2008 period.

There are a lot of fancy numbers here, an accountant’s wet dream, and we’ll give them to you at the end. But the bottom line is that Liz Claiborne has serious financial troubles, and has very high expections for its new pact with QVC and JCPenney.

Beginning this fall, the Liz Claiborne and Claiborne brands will be sold exclusively at JCPenney and the Liz Claiborne New York brand designed by Isaac Mizrahi will be available at QVC.

Mizrahi, who was such a success at Target, is doing a premium line of clothes and other goods for QVC. QVC expects the Mizrahi merchandise to become one its biggest lines, perhaps it’s biggest.

And it looks like Liz Claiborne is banking on QVC, and the success of the Mizrahi line, to bail out the company and turn its fortunes around.

“Fourth quarter to date, we are posting significantly improved comparable store sales results compared to the year to date trend as we have seen solid execution overall on the merchandising initiatives we outlined on our August call,” McComb said in a prepared statement. “Our recently announced licensing agreements with JC Penney and QVC will result in a dramatic shift in profitability for the Liz Claiborne brand wholesale business from a meaningful loss in 2009 to a profit in 2010.”

A quick FYI for cable-industry folk: USA Network founder Kay Koplovitz is chairman of Liz Claiborne.

Here are all the adjusted and non-adjusted numbers, and the entire press release here for real masochists. Translate the thing into English and here’s what it means: Liz Claiborne is bleeding lots of red ink, with lots of losses, adjusted numbers or non-adjusted numbers.

For the first nine months this year, the women’s clothier recorded an operating loss of $199 million compared to an operating loss of $18 million in 2008. Adjusted operating loss in the first nine months $121 million compared to adjusted operating income of $137 million last year.

The company recorded a loss from continuing operations in the first nine months of 2009 of $251 million, or $2.67 per share, compared to a loss from continuing operations in 2008 of $31 million, or 33 cents a share.

Adjusted loss per share from continuing operations in the first nine months was $1.28 compared to adjusted diluted EPS from continuing operations of 83 cents last year. Net sales from continuing operations for the first nine months were $2.233 billion, a decrease of $841 million, or 27.4 per cent, from the comparable 2008 period.

The adjusted results for the third quarter and first nine months of 2009 and 2008 exclude the impact of expenses incurred in connection with Liz Claiborne’s streamlining and brand-exiting activities and non-cash goodwill and trademark impairment charges.

“The Company believes that the adjusted results for the third quarter and first nine months of 2009 and 2008 represent a more meaningful presentation of its historical operations and financial performance since these results provide period to period comparisons that are consistent and more easily understood,” Liz Claiborne said in its press release.

And McComb had his own statement.

“Our financial results in the third quarter reflect some early signs of turning around underperforming businesses,” he said. “We reduced our adjusted operating loss by $12 million compared to the second quarter as comparable store sales in our key retail formats were better overall compared with the outlook we provided on our August call, resulting in decreases of 13 percent at Juicy Couture, 16 percent at Lucky Brand, 3 per cent at Kate Spade, 13 percent at Mexx and 13 per cent n the U.S. Liz Claiborne outlets.”

Net sales from continuing operations for the third quarter were $770 million, a decrease of $245 million, or 24.2 percent from the third quarter of 2008, primarily due to decreases in the International-Based Direct Brands and Partnered Brands segments. The impact of changes in foreign currency exchange rates in international businesses decreased net sales by $12 million, or 1.2 percent.

The third-quarter operating loss was $60 million compared to an operating income of $16 million in the third quarter of 2008, including $27 million of expenses associated with streamlining and brand-exiting activities in the third quarter, compared to $36 million in the third quarter last year.

Adjusted operating loss in the third quarter was $33 million compared to adjusted operating income of $62 million in 2008. The impact of changes in foreign currency exchange rates in our international businesses reduced operating loss by $2 million during the quarter.

Loss from continuing operations in the third quarter of 2009 was $88 million, compared to a loss from continuing operations in the third quarter last year of $9 million.

Net loss in the third quarter of $91 million, inclusive of losses related to discontinued operations of $3 million, compared to a net loss of $69 million, inclusive of losses related to discontinued operations of $59 million in the third quarter a year ago.