“Today is an exciting and historic day,” said William L. McComb, chairman and chief executive officer of Fifth & Pacific Cos., who presided over the company’s first annual meeting under its new name.
Fifth & Pacific, formerly Liz Claiborne Inc., started trading Tuesday on the New York Stock Exchange under the symbol FNP. Speaking to the 50 shareholders gathered at corporate headquarters in North Bergen, N.J., McComb called FNP a “growth-oriented company” with a solid balance sheet that is focused on three core brands — Kate Spade, Juicy Couture and Lucky Brand. On its first day of trading as FNP, the stock closed at $12.98, down 2 cents or 0.2 percent from Monday’s close.
McComb, who has served as ceo since November 2006, called 2011 a transformative year for the $1.52 billion company. He said that “the seeds and labors of this transformation” actually began five years ago. “Since 2007, we have been skirting dramatic changes in the economy and in the industry’s structure while addressing our own vulnerabilities and shortfall,” said McComb. He said that during the process, the firm achieved three major goals that he first articulated in 2007:
• First was the transformation of the company from a domestic wholesaler of women’s moderate and better-price sportswear to “a company that is primarily a direct-to-consumer retailer of premium global lifestyle brands.”
• Second, the company narrowed both its portfolio and expense structure so that resources are now squarely focused on high-margin, high-growth segments of the industry.
• Third, the company eliminated the operating expense burden of turning around a complicated retail business spread across Europe, Mexx, while substantially reducing its debt levels.
Beyond these changes in 2011 came the sale of the Liz Claiborne brand to J.C. Penney Co., which had successfully held the license. “As that brand grows at J.C. Penney, we are emerging as a growth company with a path of our own,” said McComb. As a result of the Claiborne sale, the company needed to change its name. The name “Fifth & Pacific” was selected to reflect who the company is and what the future looks like, said McComb. “From New York City to the coasts of Los Angeles and Shanghai, we are a brand-focused organization serving consumers all across the globe with high-quality, imaginative and inspired products,” he said.
Reflecting on the accomplishments of 2011, McComb said he was most proud of the efforts of the three core brands, Kate Spade, Lucky and Juicy Couture, to serve their customers directly. Kate Spade, which a few years ago was in the midst of a restart, “has posted some of the highest growth rates in the industry,” he said. Lucky Brand, which also was a turnaround situation in 2010, ended 2011 having achieved strong comparable direct-to-consumer sales growth, with increased market share in women’s denim and tops. Juicy Couture, its largest brand, had considerable international growth, while undergoing a turnaround.
Overall, he said, all three brands have solidified their supply chains and refreshed their marketing and store presences. Their e-commerce is also on the upswing, as the company “posted total sales growth in 2011 of more than 100 percent across the brands,” he said. In addition, international expansion remains a key growth opportunity, with Kate Spade and Juicy Couture having strong head starts.
Now that the company is playing offense, McComb articulated three near-term goals to drive the agenda. One is revenue and earnings before interest, taxes, depreciation and amortization expansion, through new categories, productivity growth in its retail stores, new store and online expansion, and international penetration. He believes this will result in enhanced operating margins. Second, the firm is investing in its systems, and third, it’s using customer-relationship management “as the central nervous system of our company.” This entails further developing its database expertise.
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