NEW YORK — Juicy Couture, the hot contemporary brand known for making velour tracksuits chic for everyone from soccer moms to celebrities, has become the latest brand to join the growing Liz Claiborne Inc. empire.

This story first appeared in the March 19, 2003 issue of WWD. Subscribe Today.

Liz Claiborne said Tuesday that it has agreed to purchase 100 percent of the stock of Travis Jeans Inc., which owns the assets of Juicy Couture. Based in Arleta, Calif., the six-year-old Juicy designs, markets and wholesales basics for women, men and children and had sales of about $47 million in 2002.

The acquisition marks the 31st brand in the Liz Claiborne portfolio — and the first since purchasing Ellen Tracy in September for $180 million. The company would not disclose the Juicy purchase price, but said it was in line with previous acquisition buys.

Analysts estimated that Liz Claiborne probably got a good deal for Juicy Couture, paying roughly 80 percent of the company’s sales — or $38 to $40 million.

The aggressive acquisition strategy Claiborne has employed in recent years has proven successful. In the fourth quarter of 2002, Liz Claiborne’s income rose 39.7 percent to $58 million. Sales in the quarter jumped 12.1 percent to $993.9 million, making it the company’s 28th consecutive quarter of sales growth. For the year, income was up 4 percent to $192.1 million, while sales rose 11.1 percent to $3.45 billion.

Paul Charron, chairman and chief executive officer of Liz Claiborne, said in a statement: “Juicy Couture is one of the strongest trending brands in the upscale contemporary and denim zones. With its appeal to a more fashion-conscious and affluent consumer, Juicy Couture adds another dimension to our portfolio, further broadening our ability to offer apparel and accessories across a wide range of consumer lifestyles and tastes.”

The acquisition will also help increase the company’s channel and geographic diversification through Juicy’s select specialty store and international distribution, Charron said, adding that there are “abundant brand extension opportunities in nonapparel categories, as well as company-owned retail stores, additional international distribution and licensing. We expect this transaction to be accretive to earnings per share by approximately 2 cents in 2003.”

Following Liz Claiborne’s acquisition approach of letting companies they buy run almost autonomously, Charron assured that Juicy Couture would be no different — and that co-founders Pamela Skaist-Levy and Gela Taylor would remain as co-presidents, ensuring the brand’s vision and focus remain true.

“While we will strengthen Juicy Couture with systems and business processes and by providing capital needed for growth, I want to emphasize that the unique identity of the brand will be retained and nurtured,” Charron said. “We have developed a proven methodology for doing this, as evidenced by our successful integration of similar privately held, designer-oriented companies like Lucky Brand, Sigrid Olsen, Laundry and most recently, Ellen Tracy.”

Over the past couple of years, celebrities such as Cameron Diaz, Jennifer Aniston, Britney Spears, Jennifer Lopez and Madonna have taken a liking to Juicy Couture’s signature velour tracksuits, opening the eyes of consumers who now want Juicy suits of their own. Predominantly targeting high-end specialty retailers like Scoop, Henri Bendel, Saks Fifth Avenue, Bloomingdale’s and Fred Segal, Juicy Couture will become even more visible with this acquisition.

“I just wrote the biggest order of my career with Juicy,” said Stefani Greenfield, owner of Scoop. “It continues to be my number-one business. As long as Pam and Gela stay involved, it will continue to be a great company. They are such a great talent. They have the potential to extend the brand into so many categories and I look forward to Juicy becoming a full lifestyle brand.”

“We’ve carried Juicy since the beginning and it is our best-performing resource in the store,” said Frank Doroff, executive vice president of Bloomingdale’s. “I think this is very positive for Pam and Gela to be creative.”

Taylor said: “This partnership will help set us free to be creative and do what we have been wanting to do with Juicy for so long. Pam and I are still in charge of everything creative and that’s the way Liz Claiborne wants it. This partnership is strictly financial.”

Taylor and Skaist-Levy said they plan to launch a series of products, such as a larger men’s line, fragrances, accessories and cosmetics, as well as open a few retail locations of their own.

“We are going to make Juicy the next big American brand,” Skaist-Levy said.

On a call en route to the Juicy offices in southern California, Angela Ahrendts, executive vice president of Liz Claiborne, called Juicy a “pure brand” because it has no licenses and said the company wants to take it to the next level and develop it into a “powerhouse lifestyle brand.”

“The most critical part is that Pam and Gela, the founders, will be running the show,” said Ahrendts, noting that the deal was finalized at about 2 a.m. Tuesday. “It’s their vision. The philosophy will not change, their current distribution strategies, etc. Everything will remain pure. We’re simply coming in as back-end operational partners and it’s their vision on the front end. We’ll free them up to focus on the brand and start immediately to put into place some back-end support, which they say they need, financial support, intellectual capital and analyzing their distribution facilities.”

Ahrendts scoffed at the thought that Juicy Couture might have had its moment in the Southern California sun, saying: “Not even close. Oh my gosh, because of the intense publicity they’ve received and the unbelievable celebrity following, we think their potential globally is huge. They currently do 15 percent of their business outside America, broken down to 8 percent in Europe, 5 percent in Canada, 2 percent in Asia.”

In addition, Ahrendts assured that Liz Claiborne has no intentions of overdistributing the brand either, adding: “Part of their cachet is distributing to the high-end stores. It’s a very different strategy. It’s much more like designer in the contemporary market. We do see opportunities in jewelry, accessories, handbags, as well as myriad potential licenses like swimwear. But one step at a time. We’re simply here to help them execute their ideas.”

Apparel consultant Emanuel Weintraub, said: “This adds a certain spice and newness to the cross-pollination to all that’s Liz. Jones seems to be on a different strategy, they’re buying big, big businesses. But Paul [Charron] is buying brands that have some cachet and tend to be a little upscale and he feels he can build into that upscale market. He demonstrated that with Sigrid Olsen, and has taken that and really moved it. Some small companies have wonderful ideas, but they can’t get the financial strength to execute them. Whether it’s new computer systems or opening something up in Europe or Japan, those things take funding.”

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