By and  on May 8, 2007

NEW YORK — Liz Claiborne Inc. rates the sales potential of the Narciso Rodriguez brand at about $100 million, and it is getting behind the designer financially and with other resources to achieve that number.

On Monday, the designer and William L. McComb, chief executive officer of Claiborne, outlined their hopes for the partnership, after the $4.99 billion apparel giant bought a 50 percent ownership in the designer's name and trademarks.

The plan is to strengthen the designer's resources while expanding into accessories and other fashion-related items.

"I feel great today," Rodriguez said. "For so long, I wanted to branch into shoes in a bigger way and all accessories, and I haven't been able to. For me, it's so important to create the total look, and now, to have the opportunity to do that is really exciting."

McComb said that while Claiborne was currently not in an aggressive acquisitions mode since it was trying to fix the wholesale department store business, deals like this come around once "every five years."

"How many designers of his taste level, his recognition, of his establishment are there that you can also buy and build a business, rather than buying an already developed, low-growth business?" McComb asked. "We will do this together, and grow this business organically."

Claiborne paid $12 million for the stake in Rodriguez's business, which has sales volume of $10 million, according to McComb.

"I have had the opportunity many times to partner with the wrong people, but was looking for somebody who believed in the vision and wanted to follow that vision," Rodriguez said. "And for me, it was important that the next association was going to be the right association. Bill McComb came in, saw not only the ideas on the walls and the sketches, but also all the ideas that were there that weren't being made. He saw the opportunities to make those come alive."

Claiborne plans to build the Rodriguez brand in multiple ways, from helping the designer with his resources to working with him on licensing opportunities.

"The next step is to provide the resources his business needs to fully flesh out the line with the right fabrics, the right selling resources, right supply chain and sourcing partnerships so his product line can be fully developed," McComb said.He stressed there were currently no plans for diffusion lines in the better or bridge tiers in which Claiborne is so well-versed.

"We would see expanding into the opening price point in the luxury market in the way that Prada Sport has done it, as opposed to conceiving a whole diffusion line," McComb said. "At this time, our commitment with Narciso is to really do what others had not done with him, which is to fully play out the potential in the luxury market he is in now.

"He is a fantastic accessories designer...and even in some categories, like swimwear, he has had great success," he added. "I think the most important thing is to focus on the tier he is playing in now and fully develop it."

McComb added that Claiborne did not necessarily plan to make upscale acquisitions a priority under his leadership.

"We like the space that Narciso is in, but that doesn't mean you will hear in July that there is going to be a [luxury] sector that we go and stake out," McComb said. "When I talk about a development fund we will put behind great designers, it could be at the luxury end or at the popular price segment of better or bridge. Great design talent deserves to be funded because great design drives product turn and profitability. This does not necessarily mark an entry into a luxury segment strategy."

McComb said Claiborne and Rodriguez were still working on a transition plan with Aeffe, which will provide transitional manufacturing support until Claiborne fully takes over.

Aeffe chairman Massimo Ferretti said on Monday he was "very pleased" with the new partnership between Claiborne and Rodriguez. "The agreement will allow us to sell our 50 percent stake in Narciso Rodriguez LLC [the operation that managed the designer's licensing business], is in line with our strategy to focus on our core business and is functional to our plan to go public," said Ferretti in a phone interview. Ferretti also said he believed Rodriguez "chose the right path."

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