By  on October 11, 2007

Kate Spade has its new top banana.

Parent Liz Claiborne Inc. has hired Deborah Lloyd, Banana Republic's executive vice president of product design and development, to be co-president and creative director of Kate Spade as part of its plan to expand the brand to additional product categories — including, eventually, apparel — and more than triple its sales over the next three years.

Claiborne chief executive officer William L. McComb said Wednesday that Spade is focused on correcting its core handbags, footwear and small leather goods businesses between fall 2008 and fall 2009. But he added that Lloyd could decide to launch categories such as jewelry by fall 2009 and apparel by spring 2010.

"The brand seed pod is so rich and it has so much permission from a product category perspective, there's no doubt there will be expansion by fall 2009," predicted McComb. "We were in violent agreement that handbags, footwear and small leather goods were the bread and butter of the brand, and that, until we get that core humming as loud as it should, we probably won't expand into other categories. When we do enter other categories, it has to be a deposit in the brand equity account, not a withdrawal."

Emphasizing that Lloyd will be making those decisions over time, McComb added she is particularly excited about jewelry and had suggested starting with specific apparel pieces — for example, iconic white blouses — before doing a complete sportswear collection launch.

"Sportswear done right will play a very important role in making the brand as good as it can be," McComb said, perhaps cautious because of the tough road accessories brands such as Coach and Kenneth Cole have faced in the past in entering sportswear — or by what has been criticized as a too-rapid expansion by Spade's fellow Claiborne power brand Juicy Couture.

Lloyd's expertise is rooted in sportswear — not handbag — design, although she also designed accessories as the head of Banana Republic's product development since 2001. Before that, she was vice president of women's design for Burberry London for five years during the turnaround under former ceo Rose Marie Bravo.

"If I were running the brand in the old Liz structure, then maybe my first move would be to hire a handbag designer," McComb said. "But I'm the guy from Johnson & Johnson now at Liz — I don't niche people at all. What excited me about Deborah is how she goes about tackling a problem: She comes up with a brand vision, then she thinks about merchandising strategy, then it's all about irresistible product execution."Effective Nov. 1, Lloyd replaces Kate Spade, who, with her husband, Andy, said in July that they would step down from their respective roles as designer and ceo after the expiration of the couple's service agreement with Claiborne.

The company is still searching for a co-president with an emphasis on retail and merchandising. McComb said he and Lloyd will work together to find her partner, noting they have already narrowed the search and hope to hire a replacement by December. Until that person is named, Michael Blitzer will continue serving on an interim basis. Karen Harvey Consulting Group is handling the executive searches.

"In a company all about product, the priority in the search was to start with the creative director that I always envisioned as a co-leader with the business side," McComb said. "It's very hard to simultaneously appoint two co-presidents who do not know each other. For that reason, I started with the creative part because the business is anchored there."

Kate Spade carved a niche for competitively priced designer bags almost 15 years ago, but the hot bag market has changed dramatically. A wave of independent handbag designers such as Botkier, Kooba, Gryson and Katherine Kwei have gained a foothold with retailers on the hunt for innovative and luxurious designs. Spade has been criticized by some retailers for lack of freshness, and Lloyd's first order of business will be to get that core product back on track.

After acquiring the accessories brand in November, Claiborne said during the summer that it was searching for both a new ceo and a head designer or creative director for Spade, one of the four direct brands — along with Juicy Couture, Lucky Brand Jeans and Mexx — on which the $4.99 billion firm is focusing its attention and funds.

Claiborne expects Spade to do $90 million in sales this year and projects that by 2010 the brand will grow to revenues of $250 million to $350 million. Spade expects to see growth from improving product in its core categories, expanding into other product areas and adding 80 Kate Spade stores.

"There are very few things that would interest me in this stage of my career," Lloyd told WWD. "But after I got the call, I went straight down to the Kate Spade store, and I really had the connection there. It's a magical brand. There's a real style to it. It's about quality and color, and there's a little bit of whimsy to it that I react to because I'm British. I'm attracted to the entrepreneurial opportunity."But even the highest projection for Spade's sales is dwarfed by Banana Republic's size. When Lloyd joined the Gap division in 2001, sales were $1.9 billion and they have grown steadily since to $2.5 billion last year. With more than 500 stores in the U.S., Banana Republic represents 15 percent of Gap Inc.'s $15.9 billion in sales. Like its parent company, Banana Republic has ridden ups and downs in the past few years, but the smaller, higher-end line has fared better than the Gap and Old Navy divisions.

"Banana Republic is a strong brand with a great heritage — and I'm excited to build on the success of our base business while tapping the brand's strong potential by expanding into new categories," said Jack Calhoun, president of Banana Republic, in a statement. "Deborah has made many important contributions, including leading Banana Republic's talented and tenured team of designers. I've personally enjoyed working with Deborah for the past four years, and speak for our entire team when I wish her well in the future."

Both Lloyd and her as-yet-unnamed co-president will chair Spade's advisory board, which includes the Spades, McComb and executive vice president of Claiborne's direct-to-consumer division Jill Granoff.

Lloyd will report to McComb and be based in New York.

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