NEW YORK — Outlining the company’s turnaround plans, Jerome A. Chazen, chairman and chief executive officer of Liz Claiborne Inc., told shareholders at the annual meeting here Thursday that they should see the “fruits of our labor” by 1995.
“We’ve had our share of difficulties, but we are in a rebuilding and re-engineering mode,” Chazen said, addressing the audience of about 80 gathered at the midtown offices of Chase Manhattan Bank. “We are bringing new people in place and redefining our products.”
The company, which has been in a profit slide over the past year, reported a 35.7 percent drop in earnings in this year’s first quarter, following a 42 percent drop in 1993. Chazen said that the company continues to be hurt by markdowns of excess inventory but said he expects to resolve those problems by the end of the second quarter.
“We’re seeing favorable response from retailers for fall for our sportswear division,” noted Chazen. While he did not have market share figures to cite, he said a recent NPD study showed a gain in department store market share for Claiborne’s $1.1 billion sportswear division, which accounts for half of the company’s sales.
Joining Chazen on the platform were Harvey Falk, vice chairman and president, and the newly appointed vice chairman and chief operating officer Paul R. Charron, formerly executive vice president of VF Corp., who came on board Monday.
When asked by a shareholder what his duties would be, Charron responded that for now “I am concentrating on listening to customers, suppliers, and defining what isn’t working and what is working.”
Chazen, who is 67, reiterated to reporters and analysts after the meeting that he has no plans to retire and would not talk about Charron as a possible successor. During the meeting, Chazen focused on the company’s plans to revitalize its sportswear division, which includes better delineation of its three lines — Collection, LizSport and LizWear — and improving its production cycle, with the help of consulting firm Kurt Salmon Associates. He disclosed that the sportswear division now will be responsible for overseeing its own production, which he said “would help simplify and reduce its production cycle.” Before, this had been handled as a centralized corporate function.
Meanwhile, Chazen noted, the company has enjoyed continued success with its bridge line, Dana Buchman. He said that Neiman Marcus is picking up the line for fall, and that Saks Fifth Avenue, which last year dropped the better-price Claiborne label sportswear line, is continuing to do “very well” with Dana Buchman. Sales of Dana Buchman last year rose to $90.2 million from $73.5 million in 1992, according to the firm’s annual report.
Chazen, in contrast, said business for the moderate-price Russ Togs labels the company acquired in 1992 and relaunched last year has been difficult.
“It’s a bigger market than what Liz served in the past. It takes a while to build production capability,” he said. “But it’s a real growth opportunity.”
The three labels — Villager, Crazy Horse and Russ — generated sales of $78.7 million in 1993, and in an exchange with an analyst after the session, Chazen acknowledged that this was about $20 million short of what Wall Street was expecting. He mentioned that Crazy Horse has been the most difficult area. Chazen would not say what he expected the lines to do this year.
On another point, Chazen noted that the company’s First Issue stores are not profitable.
He said, though, that experimentation last year with QVC with merchandise from the First Issue chain had been successful, and said that over the next few weeks, the company will be testing merchandise from the Elisabeth special-size line.
In the accessories area, Chazen said, the company will be moving forward to expand its concept shops of handbags and leather goods at department stores. The company will be adding 95 shops this year, totaling 208 by yearend.
Chazen fielded some five questions during the meeting, which lasted about an hour, and afterwards near the podium talked informally with analysts and reporters.
One of the more active questioners was Margaret B. Whitfield, an analyst at Hancock Institutional Equity Services, who gave her take on the Claiborne situation. “I’m glad there is new blood,” she told WWD after the meeting. “But I hope their efforts are not too late. Jones Apparel [with 1993 sales of $541.1 million, compared with Claibrone’s $2.2 billion] is a real threat to Claiborne’s market share, and they’re on the attack.”