UPDATE 4-Liz Claiborne forecasts deeper loss; shares tank

* 2nd-quarter loss wider than 1st-quarter before items

* Sees narrower GAAP loss

* Shares fall nearly 26 percent (Adds more analyst comments, updates shares to close)

NEW YORK, June 18 (Reuters) - Women's apparel manufacturer and retailer Liz Claiborne Inc (LIZ.N) on Thursday projected a wider second-quarter loss than analysts forecast and its shares plummeted nearly 26 percent.

The owner of the Lucky Brand, Kate Spade and Juicy Couture brands said in a regulatory filing it expects a wider loss in the current second quarter than in the first quarter, before one-time items. The company gave no reason why the loss would widen.

The forecast came a day after the apparel company said it planned to launch an offer for $75 million in convertible debt. The news also weighed on the stock, since the offering could ultimately dilute the shares, said Standard & Poor's equity analyst Marie Driscoll.

"It is just a reflection of what a difficult environment this is," Driscoll said. "While they have very nice brands, it's going to be difficult this year."

Liz Claiborne and other apparel companies have faced a tough climate during the recession as department stores and other chains trim inventory and shoppers cut back nonessential purchases.

The company said it expected sales to be flat compared with the year-earlier quarter.

Citigroup analyst Kate McShane expects fundamentals for the company's wholesale and retail brands to remain "highly challenging" for the rest of 2009.

"We expect significant comp (same-store sales) declines and continued balance sheet uncertainty to keep the stock trading in a tight range over the next 12 months," McShane said.

Last week, Liz Claiborne Chief Executive William McComb said the company was revamping operations to perform well in the "new normal" cautious environment. [ID:nN10450912]

That includes having celebrity designer Isaac Mizrahi breathe new life into its namesake Liz Claiborne line. Driscoll applauded the new line, but cautioned that it is no quick fix.

"On the merchandise front, while we think the new Isaac Mizrahi Liz Claiborne line is super at Macy's (M.N) Herald Square, we expect weak regional assortments for another six months," Driscoll said.

Liz Claiborne reported a loss of 37 cents a share, excluding one-time items, in the first quarter. Analysts, on average, forecast a second-quarter loss of 33 cents a share, according to Reuters Estimates.

The company said "there is still some uncertainty regarding the results for the quarter," which ends on July 4. It cautioned investors to take that uncertainty into account.