Apparel maker Liz Claiborne Inc on Friday (24 October) slashed its fourth quarter earnings projections as consumers in every region continue to cut back on discretionary spending, and said it plans to cut capital expenditure by half next year.

William L McComb, chief executive officer of Liz Claiborne Inc, said sales and profitability throughout the holiday season are likely to be "significantly below our prior expectations."

Earnings per share guidance for the fourth quarter tumbled to $0.19 to $0.24 - down from earlier forecasts of $0.66 to $0.71 - and is based on a low double-digit decline in comparable store sales.

The new outlook expects full year earnings per share to fall to $1.00 to $1.10 from previous estimates of $1.40 to $1.50, and the company warned this may fall even further if current trends deteriorate.

Liz Claiborne, whose brands include Kate Spade, Juicy Couture, Lucky Brand and Mexx, added that it will not provide 2009 guidance as part of our third quarter earnings release on 11 November because of "the uncertain environment and our lack of visibility."

McComb said changes in spending patterns at its stores took hold in September, at about the same time that department stores dramatically increased their promotional activity.

"Traffic in malls and street locations is off in every region, including Europe," he said. "Consumer confidence has clearly been impacted in a way we hadn't seen earlier this year."

For its third quarter, the company expects to report a loss per share of $0.08 - $0.14, which compares to earnings per share of $0.33 for the prior year period. Net sales for the quarter were down 15.9% to $1.015bn, it said.

Same store sales at Juicy Couture rose 5% in the third quarter, but dropped 4% at Lucky Brand and  were down 13% at both Kate Spade and Mexx.                        

The apparel firm, which operates a total of 605 stores, has reduced its 2008 capital expenditures forecast to $195m from $210m plans to reduce this by 50% next year.

New York based Liz Claiborne 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 these 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.