Liz Claiborne (NYSE:LIZ) may have reported lower profits, but investors apparently still think the stock is fashion forward, since it rose in Wednesday's trading. In a tough retail climate, does Liz Claiborne have the fit, fashion, and style to suit investors?

Fourth-quarter profits for Liz Claiborne decreased by 6% to $78 million, or $0.74 per share; that still beat Wall Street analysts' expectations by $0.02. Sales rose a scant 2% to $1.2 billion. Stock option expensing sapped $0.04 from Liz Claiborne's bottom line.

Although Liz Claiborne's sales did rise slightly, its wholesale apparel sales fell 7.4%, because of the company's significant exposure to the department store retailing environment. In its conference call, management said that retail consolidation is creating a conservative environment for its wholesale partners. Investors need to bear in mind that the future of department stores will likely affect Liz Claiborne as well.

The company has made some savvy investments, with brands like Lucky and Juicy Couture defying the namesake line's more staid image. But the company recently lost bidding for J. Jill (NASDAQ:JILL) to Talbots (NYSE:TLB). (Given J. Jill's recent woes, Liz Claiborne may have actually lucked out.) In its conference call, management discussed how it was "unable to acquire J. Jill at an appropriate price;" investors can take solace in the company's conservative approach to such potential acquisitions.

Retail is a tricky business, and Liz Claiborne lacks some of the luster of hotter names like Chico's (NYSE:CHS). Then again, it's not quite suffering from the woes that plague Gap (NYSE:GPS). Sometimes, staying off the fashion radar might be a good thing.

A quick glance at Liz Claiborne's trailing-12-month P/E ratio of 13 might suggest that it's a better value than some of its retail brethren. After all, Chico's currently trades at 48 times earnings, and even beleaguered Gap trades at a higher P/E ratio than Liz Claiborne, at 15 times earnings. But where's the growth going to come from? The absence of a catalyst, and Liz Claiborne's exposure to the changing face of department store retail, should give pause to Foolish investors before they try this stock on for size.

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Alyce Lomax does not own shares of any of the companies mentioned.