NORTH BERGEN, N.J. — Liz Claiborne Inc., a company whose signature brand used to account for the great majority of its sales, continues to diversify — internationally and domestically.

At its annual shareholders meeting here Thursday morning, Paul Charron, chairman and chief executive officer, highlighted the firm’s strategy during a time marked by uncertainty in world affairs and economic instability.

“We constantly search for new ways to increase market share and build revenues and profits vis-a-vis technology-enhanced retail partnerships, brands and line extensions, geographic expansions, alternative channels or appropriate acquisitions,” Charron said. “An important key to our success is our ability to anticipate the impact of the macroeconomic conditions, changing consumer tastes and shopping habits.

“Anticipation alone, however, is not enough to ensure success. The company must be able to understand the value and to adapt…then act quickly and decisively on opportunities as they arise. A multibrand, multichannel, multigeography strategy makes it possible for Liz Claiborne Inc. to do just that.”

The company’s 30 brands today, sold in more than 26,000 points of sale around the world, are represented in bridge, better, moderate and mass price zones. For fiscal year 2002, sales were up 7.8 percent, completing the $3.7 billion company’s 28th consecutive quarter of sales growth.

Charron noted that even though the Liz Claiborne brand only accounted for 43 percent of total net sales in 2002, compared with 70 percent in 1997, it remains the core of the business.

“There is no question Liz Claiborne is a critical factor in driving this company,” Charron said. “The brand remains extraordinarily healthy, especially in terms of consumer awareness, consistently appealing to a 35- to 54-year-old Baby Boomer who’s a key consumer of the product.”

Charron stressed that the company is a “commercial” fashion apparel and accessories business, not in the business of making low-margin commodity products. For this reason, he said, the company recently decided to remove the Russ brand from Wal-Mart “rather than shift our fashion coordinate strategy.”

“We succeed because we are obsessively focused on designing, marketing, producing and delivering trend-right, high-value fashion, apparel and accessories that consumers want to buy wherever they choose to shop,” Charron said.On the topic of expansion, Liz Claiborne will open three new Mexx specialty stores in New York this fall — at the former Fifth Avenue Liz Claiborne store and in Union Square in Manhattan, and in Westchester Mall in White Plains, N.Y. The Mexx line, which has boosted the company’s position in international markets and the specialty store channel, has doubled its revenues from the $336 million it had when it was acquired two years ago, he said.

“Mexx is now the second-largest division in our entire corporation after Liz Claiborne and we expect Mexx to be a mainstay in our international growth,” said Charron, adding while it’s not appropriate for every brand, the company now sells 20 of its brands outside of the U.S. — in every continent except Antarctica. International sales now account for 20 percent of sales, up from 7 percent in 2000.

This year, the company also will test Crazy Horse in J.C. Penney and continue to look for possible acquisitions. “We have a strong balance sheet and cash flow,” Charron said.

Answering a question about acquisitions versus licensing, Charron said, “We prefer to own rather than to rent. We have good relationships with Kenneth Cole and Donna Karan [DKNY lines] and closely monitor those…but when a business gets very large, like Polo Jeans and Lauren, that can get very risky,” referring to the dispute between Jones Apparel Group and Polo Ralph Lauren Corp. over their licensing agreement.

On another note, the meeting also recognized the retirement of board member Jim Gordon, one of its original investors, after 26 years. Charron called him a “bridge between the management” regime of Liz Claiborne and Arthur Ortenberg and Jerome Chazen, and Charron’s own taking of the the helm in 1994. Replacing Gordon is Oliver Sockwell, a co-founder, retired president and ceo of the Construction Loan Insurance Corp.

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