The world of fashion in the form of Liz Claiborne Inc. (LIZ) has taken a financial hit due to the current economic situation as well as prior financial challenges.

Liz Claiborne recently posted a much wider-than-expected third-quarter loss of $90.5 million or 96 cents a share compared with a year-earlier loss of $68.7 million or 73 cents per share, but did offer stockholders and brand fans some glimmers of hope for the future.

Excluding write-downs and other items, continuing operations swung to a loss of 43 cents from year-earlier income of 39 cents. Sales dropped 24% to $769.6 million.

Liz Claiborne which also owns the beloved Juicy Couture brand along with Kate Space, Lucky Brand and Mexx reported a 90.5 million dollar loss for the quarter ending October 3, 2009.

The famous apparel company, which sells through its own stores (and outlet stores) and at other retailer locations has released information about upcoming the upcoming 2009 Christmas shopping season.

Liz Claiborne Chief Executive William McComb in a call with analysts said we are “more comfortable about the Christmas season, with same-store sales having improved “significantly” since the company’s fourth quarter began in early October.”  He also told analysts “I definitely feel a little less melancholy about what the fourth quarter could have brought.”

Although it was reported that Liz Claiborne is seeing positive comparable-store sales for its Juicy Couture, Lucky and Kate Spade brands, because of lagging business in its Mexx overseas division and poor sales of its Liz Claiborne namesake lines, overall fourth- quarter sales are still expected to drop 10% to 15%.

McComb also indicated new plans for the Liz namesake line, in which J.C. Penney Co. (JCP) will be the only U.S. department store to carry and expand the brand.  McComb indicated to analysts that switching the Liz Claiborne namesake line to J.C. Penney should hopefully allow that part of the business to show earnings in 2010.

Continued high unemployment which is seriously crimping consumer spending could hamper the company’s goals of continuing to maintain momentum for its widely reported turnaround.

The company did show progress on its capital structure during the quarter, continuing to pare debts as well as amending  its credit agreements. Inventory fell 25% from a year ago.

The progress of the companym despite negative third quarter results has actually lifted share prices. The stock was recently up 4.6% at $5.72.

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