Liz Claiborne Inc. said Tuesday it plans to shutter its 87 Liz Claiborne branded outlet stores in the U.S. and Puerto Rico in the next few months.
Consequently, Claiborne expects the meaningful operating losses related to this business will be eliminated in early 2011, when the closures are expected to be completed. The company’s other outlet stores in the U.S. and Puerto Rico, within its direct brands group, aren’t affected by the move. At the end of the first quarter, the U.S. outlet unit count was 46 for Lucky, 31 for Juicy Couture, 29 for Kate Spade and one for Kensie.
The decision coincides with the launches next month of both the Liz Claiborne brand at J.C. Penney and Liz Claiborne New York at QVC.
William L. McComb, chief executive officer of Liz Claiborne Inc., said, “Our current fleet of Liz Claiborne branded outlet stores was originally designed and leased to handle clearance for many brands in our portfolio — an outdated consumer proposition and one that no longer makes economic sense, given the vast changes we have made to portfolio and business strategy over the past three years.”
He noted the company allocates the majority of capital dollars to its retail-based direct brands, while leveraging partnered brands for additional revenue generation. “Considering the capital efficient, licensing-oriented model for the Liz Claiborne brand, our organizational energy and resources are better used to support successful and profitable businesses at J.C. Penney and QVC,” he said.
The firm estimates that it will incur noncash impairment charges of $7 million in the second quarter of 2010 and may incur additional noncash charges in future periods. Claiborne also expects to record cash charges related to lease terminations and severance and is in the process of determining these cash charges.
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