U.S. apparel company Liz Claiborne Inc. said on Wednesday that it will cut up to 800 jobs and consider its options for 16 apparel brands under a plan to cut costs.

The brands under review -- which include Dana Buchman, Ellen Tracy and Laundry -- are expected to generate 2007 sales of approximately $800 million, the company said.

Liz Claiborne, suffering from a downturn in department store sales, made the announcement ahead of an analyst meeting on Wednesday. It also plans to aggressively expand the specialty retail store base of its Juicy Couture, Kate Spade, Lucky Brand Jeans and Mexx brands.

Analysts were expecting the company to announce these sweeping changes as a key step in remaking the iconic brand from new company Chief Executive William McComb.

Liz shares rose about 2 percent before the market opened.

Credit Suisse analyst Omar Saad said he expected that Juicy, Lucky, Mexx and Kate Spade would become the company's primary growth engines and expected the company would pursue strategic alternatives for its remaining brands.

While many labels will either be sold or discontinued, some of the more interesting brands could be licensed out, either directly to retailers on an exclusive basis or to third-party operators, Saad wrote in a research note dated June 28.

We think any combination of these scenarios provides Liz with a mechanism to monetize residual value of those brands the company is not willing to invest in, Saad said. Post restructuring, Liz will transform from an M&A driven company to an organic growth story.

The company expects a net reduction in 2007 of 600 to 800 positions, or 7 to 9 percent of its non-retail based global work force, which includes significant staff reductions at the more senior levels of the organization.

Liz Claiborne, based in New York, said it expects its structural realignment and other initiatives to yield annual cost savings of $100 million in 2008, and an additional $45 million in each of 2009 and 2010, totaling annual cost savings of $190 million by 2010.

It said the savings will drive significant operating margin expansion beginning in 2008.

In addition, it adjusted its full-year 2007 adjusted earnings per share forecast to $1.90 to $2.00, with adjusted net sales expected to be flat to down low single digits compared to last year.

In the second quarter, it sees net sales flat from a year ago, with earnings in a range of 22 to 24 cents a share.

Analysts surveyed by Reuters had expected a second-quarter profit of 29 cents a share, and a full year earnings of $2.06 a share, according to Reuters Estimates.

RESHAPING THE BRAND

McComb, who has been on the job for less than a year, is trying to reduce the company's dependence on department stores by focusing on its more fashionable, younger brands.

The company, founded in 1976 by Claiborne -- then a relatively unknown dress designer -- her husband, and two partners, has since grown into a $5 billion a year conglomerate of brands.

Ms. Claiborne, who retired from active management in 1989, died on June 26 at 78 after a long battle with cancer.

The news of the restructuring sent Liz shares up about 2 percent to $38.00 in premarket trade after closing at $37.23 on the New York Stock Exchange on Tuesday. The shares have traded in a 52-week range of $46.84 and $33.24.

The shares trade at a forward price-to-earnings ratio of 16.1 times versus competitors Coach Inc. at 23.9 times and VF Corp. at 15.5 times.

(Reporting by Franklin Paul, Martinne Geller and Patrick Fitzgibbons)