A Sagging Bottom Lineat Liz Claiborne

Can a huge, troubled apparel designer that was a high-flier in the 1980s remake itself for the 1990s? That's what anxious department-store executives, nervous shareholders, and disillusioned shoppers are wondering about Seventh Avenue titan Liz Claiborne Inc.

Claiborne's raiments were the uniform of choice for baby-boomer women climbing the career ladder in the 1980s. But sales of the $2 billion apparel manufacturer have flattened, and operating income has plummeted (chart). The company has been bedeviled by inventory problems and its inability to make a key acquisition pay off. It has done little to instill loyalty to the brand among the waves of women who have entered the workforce since the boomers. And key executives have left, including founder Liz Claiborne and her husband, co-chairman Arthur Ortenberg. Both retired from the company in 1989 and sold their stock and moved to Montana in 1990.