Liz Claiborne Inc. Takes Strategic Steps to Better Capitalize on Brand Growth Opportunities

-- Streamlining of Operations and Redeployment of Resources Expected to Generate $60-65 Million of Gross Annual Savings before Increased Investment in Targeted Brands

-- Company Expects Charges Totaling Approximately $60 Million

Liz Claiborne Inc. (NYSE: LIZ) today announced that it isstreamlining its operations and redeploying resources to moreefficiently manage its multi-brand and multi-channel portfolio, moreclosely align its business with customer and consumer needs, andbetter capitalize on the compelling growth opportunities across anumber of its brands.

As a result of this initiative, brands and operations will begrouped according to consumer offerings and channels. Brands will havetheir own key brand-specific functions, such as design, merchandisingand marketing, while benefiting from shared functions within eachgrouping such as planning, sales, sourcing and consumer research.Previously, these shared functions were organized by brand.

Paul R. Charron, Chairman and Chief Executive Officer, said, "Aswe continue to execute our strategy of organic growth and brandacquisitions, this fundamental realignment of how we organize ourbusiness will enable us to strengthen our competitive edge in achanging market. This strategic initiative will enable us to bettercapitalize on the compelling growth opportunities in our brandportfolio while increasing the benefits of shared resources andeconomies of scale."

The new operating responsibilities, reporting to Trudy Sullivan,President, are as follows:

-- Pamela Thomas-Graham, Group President, has responsibility for overseeing apparel for the better and moderate department stores, including brands such as Liz Claiborne, Sigrid Olsen, Emma James, JH Collectibles and the recently acquired Mac & Jac, Kenzie and Kenziegirl brands, among others.

-- Susan Kellogg, Group President, has responsibility for overseeing apparel for the bridge and contemporary lines, including brands such as Juicy Couture, Ellen Tracy, Dana Buchman, Laundry by Shelli Segal and the recently acquired Prana.

-- Susan Davidson, Group President, has responsibility for overseeing apparel for Lucky Brand, DKNY(R) Jeans and DKNY (R) Active, and C&C California, in addition to all brand offerings in accessories and cosmetics.

-- Karen Murray, Group President, has responsibility for overseeing apparel for Claiborne and Enyce, as well as for men's and women's mid-tier brands for Kohl's, Sears and JC Penney. She will also oversee all of the Company's international businesses in the western hemisphere and its licensing business.

-- The Company is conducting a search for an executive to oversee its Direct to Consumer operations, which include retail, outlet and e-commerce, and will consider both internal and external candidates.

Rattan Chadha, CEO of Mexx Europe Holdings B.V., continues to beresponsible for the Company's operations in Europe and the MiddleEast. Mr. Chadha continues to report to Mr. Charron.

The Company expects this realignment to yield annual gross costsavings of $60 to $65 million starting in 2007, with $30 to $35million of cost savings anticipated in 2006. The cost savings in 2006and 2007 are before increased investment in marketing and in-storesupport for high-potential growth brands, including Juicy Couture,Lucky Brand and Sigrid Olsen, as well as targeted brands such as LizClaiborne. The Company expects to take charges related to thisinitiative totaling approximately $60 million, the majority of whichwill occur in the first half of 2006. Approximately $6 million ofthese charges are expected to be non-cash.

As a result of this new organizational structure, the Companyexpects a net reduction of approximately 500 positions, or about 4% ofits global work force, with significant staff reductions at the moresenior levels of the organization. The Company also intends torationalize select distribution facilities and office space as well asclose or repurpose approximately 20 retail stores.

Charron added, "While it is always a difficult decision toeliminate staff, this is the right thing to do for the business. In anincreasingly competitive marketplace, these changes will make us animbler, more flexible organization that is closer to our customersand better positioned to optimize our assets and increaseprofitability and shareholder value."

President Trudy Sullivan added, "We are confident this strategicinitiative will enable us to better leverage the best opportunitieswithin our expansive collection of brands, while recognizing thedifferent role each brand plays within our portfolio. A morecentralized sales approach will allow us to better serve our wholesalecustomers and be even more responsive to the rapidly changing needs ofconsumers. We expect that this leaner operating platform will alsoincrease margins and facilitate smooth integration of futureacquisitions."

The Company will provide further details regarding itsstreamlining initiatives, along with updated 2006 guidance, when itreleases fourth quarter and full year 2005 results on March 1, 2006.

About Liz Claiborne Inc.

Liz Claiborne Inc. designs and markets an extensive range ofwomen's and men's fashion apparel and accessories appropriate towearing occasions ranging from casual to dressy. The Company alsomarkets fragrances for women and men. Liz Claiborne Inc.'s brandsinclude Axcess, Belongings, Bora Bora, C&C California, City Unltd.,Claiborne, Crazy Horse, Curve, Dana Buchman, Elisabeth, Ellen Tracy,Emma James, Enyce, First Issue, Intuitions, J.H. Collectibles, JuicyCouture, Kenzie, Kenziegirl, Laundry by Shelli Segal, LIZ, LizClaiborne, Lucky Brand Jeans, Mac & Jac, Mambo, Marvella,MetroConcepts, Mexx, Monet, Monet 2, Prana, Realities, Rhythm & Blues,Sigrid Olsen, Soul, Spark, Stamp 10, Tapemeasure, Tint,Trifari,Villager and Yzza. In addition, Liz Claiborne Inc. holds theexclusive, long-term license to produce and sell men's and women'scollections of DKNY(R) Jeans and DKNY(R) Active in the WesternHemisphere. The Company also has the exclusive license to producejewelry under the Kenneth Cole New York and Reaction Kenneth Colebrand names.

Forward Looking Statements

Statements contained herein that relate to future events or theCompany's future performance, including, without limitation,statements with respect to the Company's anticipated results ofoperations or level of business, are forward-looking statements withinthe safe harbor provisions of the Private Securities Litigation ReformAct of 1995. Such statements are based on current expectations onlyand are not guarantees of future performance, and are subject tocertain risks, uncertainties and assumptions. The Company may changeits intentions, belief or expectations at any time and without notice,based upon any change in the Company's assumptions or otherwise.Should one or more of these risks or uncertainties materialize, orshould underlying assumptions prove incorrect, actual results may varymaterially from those anticipated, estimated or projected. Inaddition, some factors are beyond the Company's control. Among thefactors that could cause actual results to materially differ includerisks related to the continuing challenging retail and macroeconomicconditions, including the levels of consumer confidence anddiscretionary spending and the levels of customer traffic withindepartment stores, malls and other shopping and selling environments,and a continuation of the deflationary trend in prices for apparelproducts; risks associated with the Company's dependence on sales to alimited number of large United States department store customers; theimpact of consolidation among one or more of the Company's largercustomers, such as the recently completed merger between FederatedDepartment Stores, Inc. and The May Department Store Company; risksassociated with providing for the succession of senior management;risks related to retailer and consumer acceptance of the Company'sproducts; risks related to the Company's ability, especially throughits sourcing, logistics and technology functions, to operate withinsubstantial production and delivery constraints, including risksassociated with the possible failure of the Company's unaffiliatedmanufacturers to manufacture and deliver products in a timely manner,to meet quality standards or to comply with Company policies regardinglabor practices or applicable laws or regulations; risks related tothe Company's ability to adapt to and compete effectively in the newquota environment, including changes in sourcing patterns resultingfrom the elimination of quota on apparel products, as well as loweredbarriers to entry; risks associated with the Company's ability tomaintain and enhance favorable brand recognition; risks associatedwith the operation and expansion of the Company's own retail business;risks associated with the Company's ability to correctly balance thelevel of its commitments with actual orders; risks associated with theCompany's ability to identify appropriate acquisition candidates andnegotiate favorable financial and other terms, against the backgroundof increasing market competition (from both strategic and financialbuyers) for the types of acquisitions the Company has made; risksassociated with acquisitions and new product lines and markets,including risks relating to integration of acquisitions, retaining andmotivating key personnel of acquired businesses and achievingprojected or satisfactory levels of sales, profits and/or return oninvestment; risks associated with the Company's ability to attract andretain talented, highly qualified executives and other key personnel;risks associated with any significant disruptions in the Company'srelationship with, and any work stoppages by, its employees, includingits union employees; risks associated with changes in social,political, economic, legal and other conditions affecting foreignoperations, sourcing or international trade, including the impact offoreign currency exchange rates, currency devaluations in countries inwhich the Company sources product; risks associated with war, thethreat of war and terrorist activities; work stoppages or slowdowns bysuppliers or service providers; risks relating to protecting andmanaging intellectual property; and such other economic, competitive,governmental and technological factors affecting the Company'soperations, markets, products, services and prices and such otherfactors as are set forth in our 2004 Annual Report on Form 10-K,including, without limitation, those set forth under the heading"Business-Competition; Certain Risks" and under the heading "StatementRegarding Forward-Looking Statements" and other documents filed by theCompany with the Securities and Exchange Commission. The Companyundertakes no obligation to publicly update or revise anyforward-looking statements, whether as a result of new information,future events or otherwise.