William L. McComb, the new chief executive officer of Liz Claiborne Inc., wants brands with the right stuff.
"It would be a mistake to think we are hunting for divestitures," McComb said in an interview. "It's not like we have a project called 'divestiture.' It's more like, what do we want to put our money in? We want to feed the real growth opportunities well."
Within 10 days last month, McComb, on the job since November, set about making his mark on the $4.99 billion vendor. He shook up the responsibilities of group presidents, announced the closing of Mexx in the U.S. and the retail side of Laundry by Shelli Segal, and disclosed on his first earnings call that he was open to divesting some of Claiborne's 40-plus brands.
Although McComb will not unveil his full plan until July, he has said he will focus on Claiborne's five "power brands'': Juicy Couture, Lucky Brand, Kate Spade, Mexx and Liz Claiborne. Those are the only units in the Liz Claiborne portfolio that appear to be untouchable.
Lucky Brand sales climbed 37 percent last year, and Juicy Couture sales increased 30 percent year-to-year. McComb has said he thinks Kate Spade, which the company acquired for $125 million in November, has the potential to generate $500 million in revenue.
"The power brands will get a disproportionate share of resources and time," McComb said. "Differentiated investment levels is the point. It's a question of where to focus the growth."
The group presidents were realigned to give each complete control over a key brand. Mark Walsh oversees Juicy Couture; Jill Granoff, Lucky Brand; Susan Davidson, Kate Spade, and Pamela Thomas-Graham, Liz Claiborne. Jeff Fardell — not a group president but rather president of Mexx Europe Holding — controls Mexx.
In closing Mexx in the U.S. and the three Laundry by Shelli Segal stores, Claiborne will focus its retail energy on Kate Spade, Juicy Couture, Lucky Brand and Sigrid Olsen stores.
"We've said we will close stores that aren't going to scale to 100," McComb said. "There's no question that Mexx has saliency here, but to get it there would have taken north of $50 million, and that didn't make the cut. If I gave Jeff [Fardell] $50 million to spend on Mexx marketing, he would not want to put it here."
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