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NEW YORK CITY-Quarterly profits rose just 2% at Liz Claiborne Inc. as rising energy prices and interest rates curbed consumer spending, prompting the upscale clothing maker to slash its financial outlook.

Net income for the third quarter rose to $113.5 million, or $1.06 a share, up slightly from $111.6 million, or $1.03 per share, a year earlier and below the expectations of analysts, who were looking for earning to average $1.09 a share. Sales for the period ending Oct. 1 were up to $1.34 billion from $1.31 billion a year earlier, above analysts estimates of $1.28 billion.

Citing the impact of higher energy prices and increasing interest rates that have cut into consumer spending, Paul Charron, chairman and chief executive of the firm, predicted earnings for the fourth quarter of 70 cents to 74 cents a share, below analysts estimate of 81 cents. For the fiscal year, earnings are projected at $2.90 to $2.94 a share, down from the company’s prior target of $2.98 to $3.04 a share and below analysts’ average estimates of $3.05 a share. The company also took a cautious stance for fiscal 2006, predicting earnings of between $2.90 and $3.06 a share, well below analysts expectations of $3.35.

But while cautious in its outlook, company officials said several of its brands, including Lucky Brand Jeans, Mexx and Juicy Couture, continued to show significant growth.

Lucky Brand, now in its 12th straight quarter of comparable store growth, was up 18% while US growth of the firm’s Mexx brand was up 9% for the quarter, said executive vice president Trudy Sullivan. Juicy Couture, the firm’s trendy, modern line, “continues to surpass even our most aggressive plans,” Sullivan said.

The New York-based company plans to add 25 to 30 stores to Lucky’s 100-store base and will increase Mexx stores’ current 209 outlets by 15 to 20 stores next year, she said. In addition, 10 stores are planned for the Juicy Couture line, including several in Europe and one in Japan.

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