Liz Claiborne Inc. released its third-quarter numbers a day early, but the vendor’s Veteran’s Day earnings call was filled with news in its own right. Claiborne said it will outsource Mexx’s sourcing to Li & Fung Ltd., described the drastic wholesale markdowns that led to its third-quarter $68.7 million loss, and laid out plans for the Liz Claiborne brand relaunch under Isaac Mizrahi for spring.
Confirming an Aug. 15 report in WWD, Claiborne said it would outsource the Mexx Global Sourcing Operations to Hong Kong-based Li & Fung. The two entered into a buying agency agreement, expected to be completed by Dec. 19, under which the $1.25 billion Amsterdam-based retailer’s buying offices in Hong Kong, Bangalore, Shanghai and Shenzhen will be integrated into Li & Fung.
The news follows a 15 percent decline in Mexx’s third-quarter sales and a prolonged difficult turnaround of the brand, which prompted a shake-up of Mexx’s management team in September.
“At Mexx, we had many simultaneous challenges and, after carefully assessing the situation, we determined that Li & Fung could get us three giant steps in one [with product, cost and speed-to-market],” said Claiborne chief executive officer William L. McComb on the Tuesday call. “With all the other things going on at Mexx, we felt that the quantum leap step by doing Li & Fung made sense.”
McComb added he did not foresee outsourcing other areas of Claiborne’s sourcing to Li & Fung, nor did he plan to sell the retailer — the biggest and most troubled of the company’s four direct brands — to Li & Fung, as sources had speculated.
On the partnered brands side, McComb said that during the quarter wholesale conditions were worse than he had anticipated. He pointed to what he called a “feverish markdown cadence” with September and October 40-percent-off sales of fall merchandise in “tier one” stores including Saks Fifth Avenue, Neiman Marcus and Bloomingdale’s.
“There’s an arms race out there right now, where they’re really competing for traffic,” McComb said. “There’s no way that every vendor is going to be paying 100 percent of their liabilities here, given that the department stores themselves have made marketing and merchandising decisions to be very, very aggressive just so they are not caught empty-handed.”
Chief financial officer Andy Warren added the retailer was marking down less aggressively in its own stores, where the company is projecting low double-digit comp declines for the fourth quarter.
Going into spring, the focus shifts to the relaunched Liz Claiborne brand, where all of its outlet stores and 50 top shop-in-shops will be dramatically restaged by April.
“We own and operate 92 outlet stores, most of which are in dire need of capital improvement,” said Dave McTague, executive vice president of partnered brands. “On average they are 9,500 square feet and are 8.5 years old….They stopped being an effective point of distribution for the mother brand years ago.
“Flip to April 2009, when the number-one remaining capital spend priority is refurbishing these to be productive stores for the Liz Claiborne New York brand,” McTague continued. “For about $100,000 per store, we can improve lighting, carve down square footage, improve signage and fixtures. The vision Isaac has for the wholesale shop-in-shops applies here: minimalist, where the product is literally the hero of the shop.”
On the full-price wholesale side, the brand is exiting about 200 unprofitable D-doors for spring, to be in a total of about 1,200 doors. McTague said he expects top line numbers for the brand to be down slightly for spring, between the economy and reducing the door count, but said the retail reaction had been positive. The company is projecting margins for the first season to be at least 10 percent, and ultimately grow to beyond 25 percent.
“The retail community came in, and certainly we were the brand that everyone wanted to hate,” McTague said. “Well, they were all shocked, and I think the most compelling statement was, ‘You have completely screwed up our open-to-buy now.’ There isn’t anything in the marketplace that is as compelling as what we are bringing. We are, however, being conservative, as we do not want to over book this line. This is a long-term investment brand strategy for us, and we will grow it accretively over time.”
Additionally, the company shed light on the marketing plan around the Liz Claiborne relaunch with Mizrahi. For personal appearances, which have been attracting 500 to 600 customers, McComb said Mizrahi will likely make about five and Liz Claiborne Inc. chief creative officer Tim Gunn will likely make about 15. Marketing will also include live online trunk shows with Mizrahi, direct-mail and print advertising, and “a multitier event strategy” including collaborations with local charities and businesses.
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
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye