Apparel designer Liz Claiborne Inc. (NYSE: LIZ) on Tuesday lowered its fourth-quarter earnings guidance and announced that it amended as well as extended its credit facility.

CEO William L. McComb said in a statement "the operating environment in the fourth quarter was the most challenging we have experienced in decades. Despite a pickup in store sales in the last few weeks of the quarter, our comps for Juicy Couture, Lucky Brand and Kate Spade were each in the negative mid-teens while Mexx's comps were negative 12 percent.” He added that "the highly promotional retail environment also negatively impacted margins in both our retail and wholesale businesses,"

The company now expects fourth quarter adjusted results from continuing operations to be in the range of breakeven to loss of 15 cents a share, compared to the earlier forecasts of earnings of 19 cents to 24 cents a share.

Analysts on average had projected fourth-quarter earnings of 19 cents a share.

Liz Claiborne also said that it successfully completed an amendment and extension of its existing bank revolving credit facility. The amended terms and conditions provide for a reduction in the facility size to $600 million from $750 million and extend the maturity date to May 31, 2011 from October 2009.

"We know that the financial community has been closely monitoring this transaction in light of very challenging credit market conditions,” said McComb. He made it clear that reduced facility is appropriate for its projected needs following the recent divestitures, an extension of the maturity date, a secured asset-based structure, elimination of the leverage covenant and asset coverage covenant as well as an increase in fees and interest rates.

The New York based company said that the facility may continue to be used for working capital as well as general corporate purposes and will back both trade and standby letters of credit in addition to the company's synthetic lease. J.P. Morgan Securities Inc. and Banc of America Securities LLC were Joint Lead Arrangers of the amendment and extension.

"While we continue to aggressively manage our balance sheet and preserve liquidity, this amendment and extension affords us stability in the face of a most uncertain 2009," said William L. McComb, the company's chief executive.

The company repaid $175 million in bank debt during the fourth-quarter, ending fiscal 2008 with bank debt of $234 million, it said in the statement. At the end of the year, the total debt was $745 million, which is below the guided range of $750 million-$775 million.

Retailers and apparel designers have been hit hard in the current economic downturn. Deepening economic recession, mounting layoffs has forced customers to tighten their purse strings.

Shares of Liz Claiborne fell 14 cents or 4.71% to $2.83 on Tuesday.

Disclosure: Author does not own any of the stocks discussed here.