Some Liz Claiborne brands exclusive to JC Penney

NEW YORK — Clothing maker Liz Claiborne Inc. said Thursday it will help reverse its fortune by moving its namesake line to J.C. Penny Co. from Macy’s Inc. and other stores and taking the line designed by Isaac Mizrahi to the TV shopping channel QVC.

News of the 10-year deal with J.C. Penney sent Liz Claiborne’s stock up 28 percent. J.C. Penney’s shares rose to a 52-week high.

Under the licensing agreement, J.C. Penney will be the sole U.S. department store to sell the company’s Liz Claiborne and Claiborne lines of women’s wear, along with its Liz & Co. and Concepts by Claiborne brands. The deal includes accessories, shoes, household products and men’s clothing, as well as women’s. The lines will debut next fall.

The company said prices for the Liz Claiborne New York brand designed by Isaac Mizrahi will be higher than prices for the lines at Penney but said prices have not been set.

Claiborne’s deal with QVC is a multiyear deal with renewal rights.

Mizrahi made big news when he moved to Liz Claiborne after his long-standing deal with low-price retailer Target Corp. ended. His arrival was seen as a way for Liz Claiborne to update its image.

The company’s other lines — including Kate Spade, Juicy Couture, Lucky Brand and Mexx and those brands’ stand-alone stores — are not affected by the deal announced Thursday.

Women’s clothing makers have been hit hard as consumers rein in spending because women often cut spending on themselves before cutting back for their families. Although it has said it expects to post a loss for 2009, Liz Claiborne said it expects a profit for 2010 because of the agreement.

In a conference call with investors Thursday, CEO William McComb said the collection designed by Mizrahi did not get the support it needed from department stores when it launched last spring in the depths of the recession.

“Floor sets and marketing support weren’t different enough to break through the clutter,” said McComb. “We found ourselves in a strategic no-man’s land.”

New York-based retail consultant Walter Loeb said the deal was a win for both companies because the exclusive line will likely boost Liz Claiborne’s sales as it expands and it will draw traffic to J.C. Penney.

After Liz Claiborne’s second-quarter loss widened compared with its loss a year earlier, the company said in August that it would cut costs by outsourcing some corporate functions, consolidating distribution centers, closing some stores and consolidating some support and production jobs.

The company’s overall sales, including the luxury brands Juicy Couture and Kate Spade, slipped 29 percent to $683.8 million from $963.4 million in the second quarter, the company reported. In September, it hired turnaround firm Alvarez & Marsal to review its operations for ways to improve its cash flow in the U.S. and Europe.

But New York-based Liz Claiborne’s relationship with Plano, Texas-based J.C. Penney began with Penney’s 2007 launch of Liz and Co.

Macy’s had been Liz Claiborne’s main retailer. The Cincinnati-based chain’s spokesmen Jim Sluzewksi said in a statement that the brand has sold poorly in recent years and customers have been “confused” by seeing multiple brands carrying the Liz name.

“The management of Liz needed to take corrective action,” he said. “We support their decision.”

Liz Claiborne shares rose $1.43, or 27.5 percent, to $6.63 during afternoon trading. The stock has traded between $1.46 and $14.39 over the past year. J.C. Penney’s shares 25 cents o $35.16, after earlier trading to a 52-week high of $35.42. Macy’s shares rose 93 cents, or 5 percent to $1952 after earlier reaching a 52-week high of $19.58.

Associated Press Writers Anne D’Innocenzio in New York and Ashley Heher in Chicago contributed to this report.