NEW YORK — Liz Claiborne Inc. sold off its 1.5 million shares of Kenneth Cole Productions Inc. in a move that will essentially pay for fourth-quarter restructuring charges the firm laid out on Tuesday.
The stock sale will produce a pretax gain of about $12 million, while the cash charges will range from $10 million to $11 million and will primarily cover severance payments for approximately 200 people.
Claiborne said $6 million to $7 million of the charge relates to restructuring in its European business, based on the operations of Mexx, acquired in 2001. The retooling includes the closure of the Mexx Europe catalogue business and the development of a multibrand platform.
The other $4 million of the charge will go toward severance costs associated with the closure of the firm’s Secaucus, N.J., distribution center. A new facility in Allentown, Pa., will pick up some of the distribution now handled by the closing center.
Claiborne first acquired a stake in KCP in 1999 after it signed a license to produce women’s sportswear under the Kenneth Cole name. In March, the firms said they would let that agreement expire at the end of this year. Paul Davril Inc. has taken over production for the brand’s women’s sportswear for spring.
KCP bought 500,000 shares of its own stock back from Claiborne for $13.9 million, or $27.87 a share. The stake represents about 4.1 percent of the KCP’s class A common stock and 2.5 percent of the total shares outstanding.
Shares of KCP closed down 34 cents, or 1.2 percent, Friday to $27.66 in New York Stock Exchange trading.
This story first appeared in the December 15, 2004 issue of WWD. Subscribe Today.