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Say farewell to Liz Claiborne Inc. and hello to Fifth & Pacific Cos. Inc.
After operating for 36 years as one of the industry’s best-known companies, Claiborne will change its name, effective in May.
The group said last fall that it would rename itself in light of the fact that it had sold its namesake brand to J.C. Penney Co. Inc., and it was no longer manufacturing Claiborne apparel.
“We didn’t want a contrived name. We didn’t want it to sound like it came out of a naming factory. We also didn’t want it to sound like a hedge fund or a financial services company or a high-tech Silicon Valley company,” William L. McComb, chief executive officer of Liz Claiborne Inc., told WWD exclusively.
Fifth & Pacific Cos. was chosen to reflect the company’s New York and Los Angeles roots, rather than a consumer brand.
“First of all, this is a holding company. It’s a not a consumer brand name. There are several brands in the closet [Juicy Couture, Lucky Brand, Kate Spade and Jack Spade]. We wanted a name that somehow captured the intrinsically American element of what we do, even though these are global brands,” McComb explained. He said that as they went through the naming process, “we talked about the lurking drama of New York and Los Angeles really being a defining element of what we are as a company.
“Even though we have a big presence in Asia, and a growing one in Europe, that’s kind of what the consumers buy in these brands. The New York and L.A. element ended up being a standout piece of the brief,” said McComb, who’s held the ceo reins since 2007.
In developing the company’s new name, McComb worked with Group SJR and the Bailey Design Group, which were already in-house partners on corporate communications work. “SJR coined the name, and Bailey did the graphics, and these are people who work with us on lots of other things that we do,” he said. “We avoided setting up a huge team and a big project and paying millions and millions of dollars to coin a name.”
He explained that they came up with the name during the first round of meetings. “There were lots of great options and this was far and away the name that we all liked and wanted,” said McComb, who, along with his communications chief, approved the name and then presented it to the board, which also approved it.
The company, which has traded publicly as LIZ on the New York Stock Exchange since 1981, will change its ticker to FNP around the time of the May board and shareholders’ meetings.
“It’s kind of like United and Continental. We’ll reskin some of the things that we do, but the stock will trade under the LIZ ticker until mid-May, and we’ll refer to our ourselves as Fifth & Pacific Cos., formerly known as Liz Claiborne Inc., during that transition period,” said McComb.
Starting today, the company will begin an education blitz, informing its employees and the public about the name change. It plans a series of videos, done by McComb, which will appear on a public landing page, fifthandpacific.com. It plans to advertise the name digitally, as well as in newspapers such as WWD, The Wall Street Journal and the Financial Times.
McComb explained that the decision to change the name of the company came after the Penney’s deal. “That was a bittersweet moment. This is exciting. It’s what the company is now. It changes your mind about what we do and who we are,” he said.
Founded in 1976 by Liz Claiborne, her husband Art Ortenberg, Leonard Boxer and Jerome Chazen, Claiborne became one of the most successful apparel companies in the world. The company’s designs became the backbone of the better-price sportswear area of department stores. After a public offering in 1981, and many years of runaway success, the brand eroded as several major stores cut back or dropped the line. In addition, the corporation diversified itself so much (Juicy, Lucky, Kate Spade, Ellen Tracy, Mexx, Dana Buchman, and Kensie, among other brands) that the Liz Claiborne branded lines became much smaller part of its overall volume. Eventually, the company started selling off many of its divisions. In 2010, Penney’s became the exclusive Liz Claiborne licensee, and the retailer bought the brand outright in October.
Since August, Claiborne has raised $471 million selling the Liz Claiborne and Monet brands to Penney’s, fragrance trademarks, a majority stake in the Mexx division, Dana Buchman, Kensie and Mac & Jac. Its debt load, which totaled $747 million at the end of the third quarter, was expected to be between $270 million and $290 million by yearend.
Looking ahead, McComb said he has no plans to make any more acquisitions. “First of all, it goes against the grain of everything I’ve espoused, which is unleashing growth in the vehicles we have. We really still see years and years of what I’ll call ‘pipeline within our product line’ today and whether it’s product categories, subbrands, and clearly top of the list is geographic businesses.”
So, even if something fabulous fell into his lap, the answer would be no, thanks.
“It’s easy to fall into that, but no. We have a defined capital spending philosophy, so even if something great came along, we’re not going to stray from our priorities. That’s what good management does. That’s not what our shareholders are looking for us to do,” said McComb.
He called all four of the remaining businesses “early stage” businesses. For example, he said the company has brought Kate Spade a long way in three to four years time “and it’s still early stage. Frankly, the same goes for Juicy and Lucky.” As reported in November, McComb said he believed the three brands together could ultimately grow into a more than $4.5 billion retail business globally. While he declined to put a time frame on that estimate, he sees geographic expansion and e-commerce as two significant drivers. “All three of our businesses in e-commerce have consistently outperformed their plans in 2011, and have a very strong base,” said McComb. He said Juicy and Kate Spade’s teams are considering e-commerce in Europe.
Among the company’s recent developments:
• “We’re coming off a tremendous year of double-digit comp-door growth at Lucky Brand,” said McComb, who expects to repeat that performance again with even deeper assortment innovations in denim. He noted that accessories are selling well, as is footwear. Lucky, which has about 179 stores, plans to open new headquarters in Los Angeles at the end of the month.
• He called this the year of LeAnn Nealz, president and chief creative officer at Juicy Couture, and her creative team. Her product is shipping into stores now and the division has “re-coutured” about a dozen of the stores. It has about 110 full-price and outlet stores. He said that this year, Juicy will open two to four new stores. He’s advised the team to “stay put and grow your dollars per square foot, and build your business back and prove the merits of the merchandising, design and marketing.” It’s not about door count yet. He said the company hopes to rebuild the wholesale Juicy Couture business, beginning this spring, but not at the same levels as before.
• Kate Spade, which currently has about 75 stores, expects to open more full-price and outlet stores, and is looking to significant growth in Asia. As reported, Kate Spade New York formed a joint venture in Mainland China with the E.Land Group. In addition, Kate Spade New York signed an agreement to reacquire from Globalluxe Ltd. its existing Kate Spade New York business in Mainland China in 2011, and its businesses in Southeast Asia in 2014. The joint venture, which will be known as Kate Spade China, is for an initial 10-year period and will begin around June 1. The venture will start with two freestanding stores and three shop-in-shops, with plans to grow to nearly 300 points of distribution by 2020.
Meantime, Claiborne continues to struggle financially, but there have been some bright spots.
Losses for the third quarter ended Oct. 1 widened to $214.6 million, or $2.27 a share, from $62.7 million, or 67 cents, a year earlier. Total sales for the three months fell 9.1 percent to $397.8 million from $437.5 million. Juicy Couture’s sales fell 7.2 percent to $137 million, as Lucky Brand’s sales rose 3 percent to $101 million and Kate Spade’s shot up 69 percent to $75 million.
McComb pointed out that Claiborne’s stock was up 62 percent in the second half of the year. Liz Claiborne closed Tuesday at $8.61, down 2 cents from Friday’s close.
While the company’s strategic focus is clearly centered on Juicy Couture, Kate Spade and Lucky Brand, there are a few other remaining businesses. The company continues to oversee the Claiborne brand’s relationship with QVC, although it doesn’t design, manufacture or market the Liz Claiborne New York line, and it has a small group called the Adelington Design Group which oversees the Monet and Liz Claiborne jewelry license with Penney’s. The retailer owns Claiborne and Monet, but licensed the names back to Claiborne for manufacturing. Claiborne also operates the brand, Lizwear, which sells to clubs such as Sam’s Club and Costco, and owns a minority stake, equal to 18.75 percent, in Mexx.
“We’re not just a new company in name, but the balance sheet is transformed,” said McComb.