Liz Claiborne in exclusive deal with J.C. Penney

CHICAGO Thu Oct 8, 2009 10:50am EDT

A Liz Claiborne label is shown on a woman's blouse in Burbank, California May 13, 2008. REUTERS/Fred Prouser

A Liz Claiborne label is shown on a woman's blouse in Burbank, California May 13, 2008.

Credit: Reuters/Fred Prouser

CHICAGO (Reuters) - Liz Claiborne Inc said on Thursday that its namesake apparel line would be sold exclusively at J.C. Penney Co Inc department stores, and it expects a profit from its Liz Claiborne wholesale brands in 2010, sending its shares up more than 12 percent.

The company also said television shopping network operator QVC would have exclusive rights to sell the Liz Claiborne New York line by celebrity designer Isaac Mizrahi. The shift, which begins with the fall 2010 line, means department stores will no longer sell that brand's apparel, merchandise and home products.

The moves come as Liz Claiborne tries to turn around its business, which has suffered in the recession as retailers place fewer orders for its clothes or sell them at steep discounts.

In September, the clothing and accessories maker hired turnaround firm Alvarez & Marsal on a "short-term basis" to help it improve operations and cash flow.

Under the deal with J.C. Penney, the Claiborne and Liz Claiborne brands will be sold only through J.C. Penney, also beginning with the fall 2010 line.

The agreement can run up to 10 years. After five years and again after 10 years, Penney can acquire the trademarks and other Liz Claiborne brands for use in the United States and Puerto Rico.

Under the QVC deal, Liz Claiborne will receive royalty payments on net sales of the Mizrahi-designed line, which will be more high-end.

Liz Claiborne Inc will receive design service fees and royalties as a percentage of sales, plus gross profit-sharing with guaranteed minimums.

Liz Claiborne shares were up 12.5 percent at $5.85 in early New York Stock Exchange trading.

(Reporting by Brad Dorfman, editing by Gerald E. McCormick and Lisa Von Ahn)