UPDATE 5-Liz Claiborne outlook disappoints, shares tumble

* Q1 adj loss 38 cents/share; Street view loss 48 cents

* Net sales fall 21.5 pct to $608.5 mln

* Sees Q2 loss/shr $0.45-$0.55, steeper than Street view

* Cuts 2010 sales outlook

* Shares down 15.2 percent to close at $6.79 (Updates shares to closing price)

By Martinne Geller

NEW YORK, May 6 (Reuters) - Clothing maker Liz Claiborne Inc LIZ.N reported better-than-expected first-quarter earnings on Thursday, but forecast disappointing results for the quarter and year. Its shares sank more than 15 percent.

The owner of the Juicy Couture, Kate Spade and Lucky Brand chains forecast a loss of 45 cents to 55 cents per share for the current second quarter, citing weakness at its Mexx chain in Europe and declining wholesale shipments at Lucky Brand as the denim-centered label refreshes its offerings.

That was worse than analysts' average estimate for a loss of 27 cents per share, according to Thomson Reuters I/B/E/S.

The company also said it expects 2010 sales to decline 10 percent to 15 percent, compared with its prior forecast for a 10 percent decline. In February the company had announced "a stretch goal" of break-even adjusted operating income for the year. It said on Thursday that this was "still a possibility," it was "not the most likely scenario."

"We still lack the visibility to be able to actually provide an adjusted earnings guidance range for the full year, but we still expect meaningful operating profit improvement in both the third and the fourth quarters," said Chief Executive William McComb.

The reduced forecast overshadowed positive developments including the first-quarter results and an amended credit facility, said Wall Street Strategies analyst Brian Sozzi.

Liz Claiborne's net loss was $71.8 million, or 76 cents per share, for the first quarter ended April 3, compared with a loss of $91.4 million, or 97 cents per share, a year earlier.

Excluding one-time items, the loss from continuing operations was 38 cents per share. On that basis, analysts on average were expecting a loss of 48 cents per share, according to Thomson Reuters I/B/E/S.

Net sales fell 21.5 percent to $608.5 million, due in part to the loss of sales from the Liz Claiborne brands, which are now licensed to J.C. Penney Co Inc (JCP.N) and Liberty Media Corp's (LINTA.O) QVC television shopping network.

The company said its gross margin was 46.4 percent in the quarter, up from 44.8 percent a year earlier, helped by an increased proportion of sales from its retail business, which generally has higher margins than its wholesale business.

Net sales in the company's direct brand business, which includes the retail operations of Juicy Couture, Kate Spade and Lucky Brand, fell 6.4 percent to $243 million, though sales at stores open at least a year rose 4 percent.

In the company's international retail unit, which includes the Mexx chain, net sales fell 13 percent to $181 million.

Sales in the company's wholesale business fell 40 percent to $184 million.

The company also arranged an amendment to its revolving credit facility, reducing its size to $350 million from $600 million and extending its maturity date to August 2014.

Liz Claiborne shares fell $1.22, or 15.2 percent, to $6.79 on the New York Stock Exchange amid a wider stock market sell-off that saw the Standard & Poor's 500 Index .SPX shed 3.2 percent. (Reporting by Martinne Geller; Editing by Gerald E. McCormick, Dave Zimmerman and Robert MacMillan)