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What Lies Ahead for Juicy Couture?

Juicy's ceo Paul Blum discusses what’s next after the sale to Authentic Brand Group during a presentation of its spring collection Tuesday in New York.

Spring looks from Juicy Couture.

NEW YORK — With his multichannel background and product obsession, Paul Blum’s mission was to reinvigorate the Juicy Couture business and lead turnaround efforts.

This story first appeared in the October 9, 2013 issue of WWD.  Subscribe Today.

“I’ve been here nine months and have focused on modernizing the business,” said Blum, chief executive officer, a day after the brand’s intellectual property assets were sold to Authentic Brands Group for $195 million. But Blum still has work to do.

The company introduced its spring collection, which will go into stores in December, Tuesday at Milk Studios here. “My responsibility as ceo was to keep the team focused on moving the business forward,” said Blum, who was previously ceo of Kenneth Cole Productions Inc. and David Yurman Inc.

For spring, the fashion looked back to the brand’s Los Angeles roots, offering deliveries inspired by Hollywood’s Chateau Marmont, the beaches of Malibu, Calif., and the streets of downtown Los Angeles, among others. There were tweed moto jackets with a rocker feel paired with skinny jeans or slouchy silk track pants, plenty of novelty print dresses in feminine or bohemian shapes, as well as a group of kitsch accessories that were created in collaboration with graffiti artist Baron Von Fancy, who sat in the driver’s seat of the vintage Porsche at the center of the collection space.

The company also launched a new division, Juicy Couture Sport, for spring, which has pieces that can be worn to the gym and out afterwards. The Sport line will retail from $108 to $138 for jackets; $32 to $58 for sports bras, tanks, T-shirts and sweatshirts, and $32 to $98 for bottoms. The line will hit stores at the end of December.

As part of the Authentic Brands deal, Fifth & Pacific Cos. Inc., Juicy’s parent, has entered into a short-term licensing agreement with ABG that runs through the end of 2014 and guarantees ABG a minimum royalty payment of $10 million. F&P will continue to operate Juicy retail stores through June. The plan is for ABG to find operating partners or licensees for Juicy.

The brand, which virtually exited the wholesale business a few years ago, has 71 full-price and 50 outlet stores in North America and another 174 stores internationally. Fifty percent of the business is done internationally. Last year, the company had sales of $498.6 million and adjusted earnings before interest, taxes, depreciation and amortization of $24.5 million.

Jamie Salter, ceo of ABG, said in a telephone interview his company is currently in negotiations with several interested parties to take a good portion of the U.S. retail stores. He said the international Juicy stores are licensed and are part of the agreement. The deal also includes North American licenses for categories such as swimwear, watches, eyewear, children’s wear, fragrance and tech accessories. Salter said now that ABG has signed the deal, it will be able to talk to certain Juicy employees. “We couldn’t talk to a lot of people until we committed to the purchase of the company. There are tons of talented people at the company. We plan on sitting down with a number of them,” he said. Asked if Blum would be going with the new operation, Salter said that would be the call of the new licensed partner.

Salter said that reentering the wholesale business would be a big part of Juicy’s strategy. “We’re very excited. Juicy Couture has got great global reach. It’s a cornerstone of ABG,” said Salter, whose portfolio includes Hart Schaffner Marx, Hickey Freeman, Judith Leiber, Prince Sport, Tapout and Marilyn Monroe.

According to Blum, Juicy Couture has found its footing with the Millennial customer. A recent Teen Vogue-Goldman Sachs survey revealed it was ranked number 11 in desirability, said Blum. “Our customer lives online,” said Blum, noting that the firm has 5.5 million social media fans. “The opportunity to market and communicate with that customer is so amazing,” he said. Blum described the Juicy Couture customer as an 18- to 25-year-old woman. “She is very digitally connected and fashion is very important to her. She’s inspired by Los Angeles,” he said. He noted that 15 to 20 percent of Juicy’s business is done internationally online.

Over the past year, Blum said the company has lowered prices by about 20 percent overall. Blum also sees key growth opportunities in the handbag and jewelry businesses, which are currently done in-house. Untapped categories for the brand include footwear and intimate apparel. In the sportswear category, Blum is intensifying its programs in tracksuits, jeans and dresses, which are selling well. The firm has six licensees in the categories of swimwear (Swimwear Anywhere), children’s wear (Tawil Associates), eyewear (Safilo), watches (Movado), fragrances (Elizabeth Arden) and tech accessories (Contour).

When asked whether Blum was hired with the intention of getting the business ready for a sale, William L. McComb, ceo of Fifth & Pacific, told WWD, “Paul was hired to grow the business. He accomplished a lot in nine months — including a proven restage of the outlet business, a smart entry into performance casualwear via Juicy Sport this spring and a meaningful reorganization of accessories. He also introduced pillar categories for apparel.

“That is where Paul spent his time — not on selling the brand. He was responsible for ensuring a successful step forward in 2014 in the event we decided not to sell. Ultimately, despite what we believe was a very successful series of initiatives and strong leadership of the team, we made the decision to sell for a more macro reason….The turnaround we were undertaking would present prolonged uncertainty and volatility to the company — which alternatively has the rare opportunity to drive the Kate Spade business through significant growth for years to come via even greater focus.”

Juicy Couture was founded by Pamela Skaist-Levy and Gela Nash-Taylor in 1996. The designers sold their profitable company, which was generating about $48 million in sales, to Liz Claiborne Inc. (now F&P) in 2003 for a reported $53 million, and the business exploded with freestanding stores, accessories, swimwear and fragrances, reaching sales of about $600 million in 2008.