NEW YORK — William L. McComb’s protracted and often painful effort to reinvent Liz Claiborne Inc. has produced a series of businesses that are bleeding money and struggling through turnarounds, and one breakout star that just might be the company’s saving grace: Kate Spade.

This story first appeared in the February 18, 2011 issue of WWD. Subscribe Today.

Claiborne’s loss for the fourth quarter ended Jan. 1 narrowed to $30.1 million, or 32 cents a diluted share, from $41.7 million, or 45 cents a year earlier, but McComb, chief executive officer since late 2006, lowered 2012 profit targets and served up a collection of bad news for Wall Street, sending shares down 7.2 percent to $5.

Adjusted earnings before interest, taxes, depreciation and amortization for 2012 are now expected to range from $180 million to $220 million, less than the goal established a year ago.

On a conference call with analysts, McComb said Kohl’s Corp. would drop Claiborne’s Axcess brand following the spring season, wiping out a profitable business with $70 million in sales. He said the brand would likely be replaced by Kohl’s new Jennifer Lopez and Marc Anthony offerings and that other retailers are looking at Axcess.

And Juicy Couture, once seen as the crown jewel of the New Liz Claiborne, saw December comparable-store sales fall 5 percent with the weakness projected to continue as the brand works off excess inventory.

But Kate Spade has come into its own and is moving into a central role at the firm.

The brand’s sales shot up 30.5 percent last year to $184.3 million, with retail sales of $666 a square foot. The brand has 44 stores and will get a big portion of the 30 to 35 new stores Claiborne plans to add this year.

“Kate Spade can no longer be viewed as too small to matter for our company,” McComb told WWD. “The business is very profitable and strong across all channels, all product categories and in all geographies.”

He described it as a “very Web-savvy” brand striving to connect retail and e-commerce.

Jim Chartier, an analyst at Monness, Crespi, Hardt & Co., said Kate Spade was “probably the most valuable piece of the business right now.” He pointed to accessories firm Vera Bradley Inc., which went public in October and is valued at about four-times sales.

Assuming sales this year of about $250 million at Kate Spade, Chartier said business could garner as much as $1 billion.

By contrast, the value of all of Claiborne’s stock and debts minus its cash — a baseline price to buy the whole company — is currently $1.23 billion.

For the full year, the net loss dropped to $251.5 million, or $2.67 a diluted share, from $305.7 million, or $3.26. Revenues fell 14.3 percent to $2.5 billion from $2.92 billion.

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