NEW YORK — William L. McComb, chief executive officer of Fifth & Pacific Cos., is stepping down after seven years at the helm. He will be succeeded by Craig Leavitt, ceo of Kate Spade. F&P will undergo a name change to Kate Spade & Co., to reflect the company’s monobrand focus.
It’s been a controversial tenure for McComb, who oversaw the transformation of the company, which was previously known as Liz Claiborne Inc. When McComb took over in November 2006, Claiborne had about 40 brands and $4.99 billion in sales. After a portfolio review, McComb quickly put 16 of the company’s brands on the block — including Ellen Tracy, Dana Buchman and Sigrid Olsen — and reoriented the firm around four “power brands,” which were Kate Spade, Juicy Couture, Lucky Brand jeans and Mexx. The firm, which last year generated about $1.3 billion in revenues and has a market capitalization of $3.96 billion, also sold its namesake Liz Claiborne brand to J.C. Penney Co. Inc., which had the license, and has since sold Mexx.
“All told, I was a wartime ceo,” said McComb, in a telephone interview Thursday. “Any of us that led our companies through that very rough time in the world.…We had our own travails that had nothing to do with the external market. You put those two together, and to hold a board together and to hold all the constituents like the banks and even the investment community, it’s not easy. Did we make mistakes? Sure, but there were also things we had to do.”
Following the sale of Juicy Couture and the completion of the Lucky Brand jeans deal this year, the company will be left with just one brand: Kate Spade, which generated $742 million in sales last year.
In establishing the company, George Carrara, currently executive vice president, chief operating officer and chief financial officer of F&P, will be promoted to president and chief operating officer of Kate Spade & Co. Deborah Lloyd will continue in her role as chief creative officer of the renamed company. In addition, the company plans to name Thomas Linko, presently chief financial officer and chief operating officer of Juicy Couture, as cfo of Kate Spade & Co., after the Juicy wind-down is substantially complete. Leavitt and Lloyd will join the company’s board. The corporate name change and management transition are slated to take place following the release of fourth-quarter earnings results on Feb. 25, at which time the company will begin trading on the New York Stock Exchange as “KATE.”
While the company didn’t detail McComb’s severance package, it does plan to incur a onetime, noncash severance charge of $16 million and cash severance charges of $7 million associated with the senior management transition.
In addition to McComb, others leaving F&P are Jane Randel, senior vice president, corporate communications, and Robert J. Vill, senior vice president, finance and treasurer.
Throughout his difficult tenure, McComb aimed to transform the company from a domestic wholesaler of women’s moderate and better-price sportswear to a firm that was primarily a direct-to-consumer retailer of global lifestyle brands. He narrowed the portfolio and expense structure so that resources were focused on high-margin, high-growth segments of the industry. The transition was often painful, McComb was frequently criticized, and the stock took a beating, especially during his early years on the job. At the company’s May 2008 annual meeting, for example, McComb defended the company’s strategy, which had included the elimination of 1,300 jobs, including 25 percent of its management positions. Despite disappointing earnings and a lagging stock price, Claiborne’s board members remained behind McComb and his plan and consistently dismissed growing speculation that they were questioning McComb’s performance. Rather, they attributed the missed earnings to inherited problems, changes in the wholesale marketplace and macroeconomic issues.
Speaking at the WWD CEO Summit in October, McComb recalled, “Those years — 2008, 2009 and early 2010 — were really dark days,” he said, noting that Claiborne’s shares fell to $1 and they were facing bankruptcy. McComb rode the waves, made several bold moves and remained consistent in his strategy to build companies that could stand alone. “Job one is to build value, job two is to study ways to unlock value,” he said in an interview last year.
McComb said Thursday that he’d been planning this move for awhile.
“I always viewed that my role would go away, when frankly, my work was done. The team that has brought the brand to this point can and should take the company over. There shouldn’t be a layer between Wall Street, the investment community and that management team,” said McComb. He said the concept has always been that any one of the three (Juicy, Kate Spade and Lucky) or all of the three would eventually go the way “of becoming their own brand. Juicy and Lucky will do that through the route of private investors, and Kate will go the public platform route,” he said.
McComb explained that when he hired the teams and had three independent companies “they were really incubators,” and he ran the three businesses very separately. “Each had the resources that they needed and each had their own independent challenges,” he said, noting that he didn’t view it as a horse race.
“It’s been an incubator that has grown and grown and grown and now it’s a full house. I think we have the operating platform and the operating culture [at Spade] to deliver on all this promised growth,” he said. In fact, at Kate Spade’s Investor Day last spring, Leavitt said he sees the Kate Spade brand as a $4 billion retail opportunity.
McComb pointed out that Spade “was really adrift,” when Claiborne took it over from Neiman Marcus in 2007. “It was small, and we didn’t have to strip it down to rebuild it.” The Lucky and Juicy brands were $500 million each, and almost all wholesale. “Converting those platforms at scale into retail businesses was very difficult,” he admitted. “Rare is it that you have an opportunity with such high growth and a long runway trajectory. That when you’ve got it, it’s basically a mandate from Wall Street,” said McComb, about the future of Kate Spade.
Leavitt added, “Bill hired all of us in 2008, and has been a great mentor for us as we’ve built this business seven-and-a-half times since that point. This is really a story about continuity. We are adding additional resources to the Kate Spade team. There’s continuity with an enhanced management focus.”
McComb said one of the high points of his tenure was learning a new business “while standing on the balls of my feet on hot planks.”
As for his future, he added, “I have absolutely no plans. Up until two in the morning last night, I’ve been up to my eyeballs in running this company and working on these things. I usually don’t go through the same thing twice, I’ve done consumer products, pharmaceuticals, medical devices and fashion and retail. Who knows what’s next? I have a big interest in venture capital and emerging companies. I like this whole incubating of companies, but we’ll see.”
When asked how he would assess his tenure, he said, “I’m really proud of it. All along we reassessed, we reacted and it was a crisis from the very beginning, in a way that I’m not sure the industry understood back then, and maybe they still don’t understand.” He noted that the legacy apparel brands, which were the first that he sold off, brought him a lot of criticism. “They were in fact pivotal to allow us to make the investments and to carry an expense structure that got us through the worst of the tough times. I think that the jury is in.”
McComb said he never had an activist in its boardroom. “It’s no secret our stock dropped from near $40 to a low on Nov. 20, 2008 of $1.65. That’s a stunning set of statistics.” But he doesn’t believe things would have unfolded differently if he had an activist in the boardroom. “We were the activists ourselves. I don’t think it would have changed,” said McComb.
After rising 1.5 percent to $31.86 in Thursday’s trading session, shares of the company dropped 2.8 percent to $30.98 in after-hours trading following the news of McComb’s impending departure.
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye