Apparel maker Liz Claiborne Inc and designer Narciso Rodriguez are to go their separate ways after struggling to agree on how to develop the luxury brand.

The announcement today (8 October) ends an 18 month business deal signed in May 2007 in which the mid-market apparel firm bought a 50% stake in the name and trademark of Narciso Rodriguez.

Narciso Rodriguez will now regain full ownership of the trademarks and business bearing his name.

William L McComb, chief executive officer, Liz Claiborne Inc, said: "We have decided to terminate our business relationship by mutual agreement.

He added: "Initially we both saw significant opportunities to develop the collection in multiple product categories, channels and geographies, but differences emerged as to how best to achieve this organic growth."

Liz Claiborne said the operating results of the Narciso Rodriguez brand and the impact of this termination will be included as discontinued operations in the company's financial statements.

Mr Rodriguez added: "Ownership of my trademark and the company will give me the ability to explore a multitude of new opportunities and realise our full potential as a luxury brand."

The partnership was significant because it marked Liz Claiborne's first tentative steps into the luxury market, and the plans were to form a new company to market the designer's name worldwide.

The apparel maker was also hopeful that it would be able to extend the brand in non-apparel and licensing categories, as well as increased international distribution and even its own stores.

But for Rodriguez, who attained instant celebrity when he designed the dress Carolyn Bessette wore when she wed John F Kennedy Jr in 1996, it is thought this strategy clashed with his vision of staying true to his high-end image.

The challenges of building Rodriguez's business also come at a time when Liz Claiborne is distracted by its own problems.

In August the company narrowed its full-year earnings guidance after slipping to a second quarter loss of US$23m from a profit of $14m a year earlier. Sales in the quarter fell 7.1% to $974m.

It has also spent the best part of the past year reviewing 16 of its apparel brands as a precursor to focusing on smaller, more powerful labels such as Mexx, Juicy Couture, Lucky Brand and Kate Spade.

But even in its so-called direct brands there have been problems, with the company last month reshuffling the management at its Mexx fashion business in Europe in an attempt to reinvigorate the brand.

It also hired John Moore, a creative force from Abercrombie & Fitch's Hollister Co line and Modern Amusement for Mossimo Inc, to oversee all design, product development and merchandising at Mexx.

Moves are also underway to relaunch the flagship Liz Claiborne brand in 2009 under the design direction of Isaac Mizrahi and relaunch the Claiborne's men's business with John Bartlett.