Shares of Liz Claiborne were essentially flat on the news. I'm surprised that they weren't punished more severely. This company just isn't delivering the goods. The gross margin isn't pretty, and additional cost reductions were announced. Cash flow was much improved for the six-month period, driven by positive differences in working capital and the net change in tax assets and liabilities.

I know what the market's probably thinking. Management is going to continue to go after efficiencies, and at some point, the bullet points will start to look a lot less scary. In fact, CEO William McComb mentioned an interesting thing: he said that same-store sales should see an improvement in the fourth quarter since the economic downturn is obviously getting older every day.

Sure, comparisons will get easier, and brave speculators might make some money off the company by buying the stock now. As for me, well, I'm not brave enough to buy into this story. Management will cut to the bone, certainly, but I'd want to wait for the data to show that the cuts are working.

The upcoming holiday season will, as always, be very competitive. Liz Claiborne will have to prove to me that it knows how to use its brand equity to bring traffic through the door. After checking out the Q2 numbers and the Q1 stats, I have no problem staying on the sidelines when it comes to this equity.

Disclosure: I don't own any company mentioned; positions can change without notice.