UPDATE 2-Manhattan Associates cuts Q2 earnings outlook

* Sees Q2 loss per share of $0.05-$0.09

* Sees Q2 EPS $0.08-$0.12, ex items

* Sees license rev around $4 mln

* Shares fall as much as 13 percent (Adds analyst's comments, updates share movement)

By Manasi Phadke

BANGALORE, July 2 (Reuters) - Manhattan Associates Inc (MANH.O), which develops supply chain management software, slashed its second-quarter earnings outlook on an expected decline in license revenue and lower customer spending, sending its shares down as much as 13 percent.

The company expects second-quarter license revenue to be around $4 million. Last year, it reported license revenue of $19.4 million.

The drop in license revenue over the last two quarters is starting to affect its bottom line, which has steadily been declining, prompting Manhattan Associates to look for new ways to sustain growth.

The company is suffering as most of its customers come from the retail segment, among the worst hit in the global downturn, Broadpoint Amtech analyst Yun Kim said.

Build-A-Bear Workshop Inc (BBW.N), Urban Outfitters Inc (URBN.O) and The Men's Wearhouse Inc (MW.N) are a few of Manhattan's customers from the retail industry.

Usually license revenue accounted for more than 15 percent of Manhattan's total revenue. But in the previous quarter, it was only about 8 percent.

Kim said the company has recently been relying more on bigger deals, amounting to more than a million dollars each, than smaller ones.

"The deal size is getting bigger and execution risk is also getting bigger," Kim said. "Bigger than what it was two years ago."

The analyst cited two such deals in the past three years. The first with the U.S. supermarket chain Kroger Co (KR.N), considered to be the largest deal in Manhattan Associates history, and the second with apparel retailer Liz Clairborne Inc (LIZ.N).

OUTLOOK DISAPPOINTS

The company expects a second-quarter loss of 5 cents to 9 cents a share, compared with its previous forecast of a loss of 2 cents to a profit of 13 cents a share.