Project Rehab

Tim Gunn's right eyebrow is shooting toward the sky like a boomerang. It's the signature gaze, filtered through a pair of rimless glasses perched on his nose, that fans of reality television's Project Runway are used to seeing hurled at aspiring enfants terribles of fashion. But on this chilly morning in December 2006, Gunn's trained eye is on the suited businessman across the table. William McComb had invited Gunn to breakfast at Pastis, a bistro in Manhattan's Meatpacking District where pretty people with expense accounts linger over oeufs and brioches in an ersatz Parisian ambience. Now Gunn was waiting to hear what, exactly, the new CEO of Liz Claiborne Inc. was after.

Gunn had assumed McComb was just another new exec wedging his way into the anarchic and insular world of fashion. Two months earlier, McComb had left his senior post pushing orthopedic devices at Johnson & Johnson; no doubt he was reaching out for advice. But it turned out McComb had a different motive altogether. "I want you to be my first hire," the CEO proposed, nearly knocking the critic's designer socks off.

McComb knew that his $5 billion company had lost its creative juice. He wanted a chief creative officer, not to dictate product design but to put some meat on the bones of an atrophied design culture. The fact that Gunn ran Parsons's prestigious fashion program -- the source of a good 70% of the designers on Seventh Avenue, from Anna Sui to Tom Ford -- was key. He had a front-row seat to the industry's hottest emerging talent and a Rolodex that could be a serious weapon. What's more, McComb was intrigued by the Parsons turnaround story: Unknown to his TV fans, Gunn had almost single-handedly transformed the school from a hidebound, traditional program into one that bred marketwise designers -- just the entrepreneurial mind-set McComb was trying to instill at Liz Claiborne. A marketer to the marrow, he couldn't help but also appreciate that the Bravo breakout star was now a household name, gushed over by everyone from suburban moms to fashion plates like Sarah Jessica Parker. Gunn looked like money.

But Gunn was cautious. After nearly three decades as a college administrator, he had somehow landed on a hit TV show and become a pop-culture phenomenon. He routinely outshone the show's star -- supermodel Heidi Klum -- with his Victorian vocabulary, perfect posture, and prim Tim-isms ("Make it work!" "Carry on!"). He was in the midst of writing his first book, Tim Gunn: A Guide to Quality, Taste, and Style, and by the fall would have his own fashion-therapy show on Bravo. "I was having the most fun I'd ever had in my life," says Gunn, 54. What's more, he had never worked for a company. "I had the greatest respect for the private sector, but I had never been part of it," he says, from his new office at Liz Claiborne headquarters in New York's Garment District. "The whole prospect of coming here was terrifying."

As it should have been. While Liz Claiborne the woman passed away last summer, Liz Claiborne the brand has been in a deep coma for years. Claiborne pioneered American women's wear in the 1970s; her impeccable designs, paired with her ability to reassess every aspect of the business -- from merchandising to point of purchase -- led her to become the first female founder of a Fortune 500 company. But by the time she retired in 1989, the company had plateaued. And by late 2006, the once-noble house had devolved into an unwieldy conglomerate that couldn't keep pace with newer, more stylish competitors. When longtime CEO Paul Charron retired, Liz Claiborne's board took a page from LVMH and Gucci, which had successfully imported consumer-products execs -- P&G's Antonio Belloni and Unilever's Robert Polet, respectively -- and brought in McComb, 45, to make radical changes. "I didn't come here because I love clothes," McComb says. "It's a business."

Whether McComb's hiring of Gunn in March 2007 was an act of desperation or inspiration is still unclear. Liz Claiborne stock is down sharply since McComb -- one of the youngest CEOs in the industry -- took over, despite his whacking jobs, shuttering brands, and reorganizing what's left. This January, he succeeded in luring another high-profile recruit: Isaac Mizrahi, the designer who jump-started discount mass fashion for Target and boasts his own shows on the Style Network and Oxygen (and even starred in his own one-man off-Broadway show, Les Mizrahi). He will become the Liz Claiborne brand's creative director this summer. With Gunn's help, McComb has also added fashion stalwart John Bartlett to reboot the Claiborne menswear line and acquired the critically acclaimed Narciso Rodriguez. Still, as Lori Holliday Banks, a senior fashion analyst at the Tobe Report, puts it, "There's no room for mistakes when a business is in the position that Liz is in right now." In mid-February, the company announced that earnings would fail to meet expectations, and the stock fell 18% in a day. Gail Zauder of luxury-goods investment bank Elixer Advisers cautions: "They can certainly get the press. But the question is, can they translate it into sales?"