Kay Koplovitz, chairman of Liz Claiborne Inc., signaled her support of the company’s direction under chief executive officer William McComb, who reassured shareholders Thursday that his restructuring efforts ultimately would lead to better times.
This story first appeared in the May 22, 2009 issue of WWD. Subscribe Today.
“We’ve had a lot of improvements,” Koplovitz told WWD after the company’s annual meeting, held in the showroom for the Isaac Mizrahi-designed Liz Claiborne New York line. “Our brands are focused. We’re very pleased with Isaac’s collection. The board is totally behind the direction and the management of the company.”
McComb, before handling the largely pro-forma business of the annual meeting, told shareholders the firm was repositioned and poised for improved results.
“To date, our performance has yet to reward shareholders, but we remain diligently focused on two goals — navigating the company through today’s treacherous markets and taking brand-right actions that strengthen the long-term saliency and earnings power of our portfolio,” said McComb.
The ceo has refocused the firm, setting up Juicy Couture, Kate Spade and Lucky Brand Jeans as independent business units, bringing in Mizrahi and cutting exclusive deals with retailers. But the stock, which closed down 3.2 percent at $4.28 Thursday, sunk as low as $1.46 in November as global markets fell and investors fretted over the company’s future. Claiborne negotiated some breathing room into its bank loans, but still has to contend with about $700 million in current liabilities on its balance sheet.
“Why should you believe in our company?” said McComb. “We own and operate great brands. They resonate and are relevant.…We certainly can sharpen price points and value propositions to improve performance, but the cultural relevance underlying all of our brands is very healthy. Juicy Couture, Lucky Brand Jeans and Kate Spade are all growing in editorial recognition and consumer loyalty.”
That hasn’t necessarily made for better sales, though broad weakness in consumer spending has made it hard to judge the relative strength of brands. First-quarter comparable-store sales fell 27 percent at Kate Spade, 22 percent at Juicy Couture and 18 percent at Lucky as the corporate net loss widened to $91.4 million, or 97 cents a diluted share, on a 28.8 percent net sales tumble to $779.7 million.
The ceo also said the turnarounds for the Liz Claiborne and Mexx brands were under way and that “profit margin expansion will happen.”
Investors controlling more than 78 million shares, or 82 percent of those outstanding, voted in person or by proxy at the meeting.
About 81 percent of the votes cast supported a nonbinding shareholder proposal to have the entire board stand for election each year. On this point, shareholders disagreed with the company, which recommended a continuation of three-year terms for directors and staggered elections for continuity’s sake.
In other business at the meeting, shareholders voted for the reelection of Bernard Aronson, Kenneth Gilman and Nancy Karch to the board; to ratify Deloitte & Touche as the firm’s auditor, and to remove the firm’s supermajority voting requirements, simplifying changes to the board.