NORTH BERGEN, N.J. — Responding to dramatic developments in U.S. retailing, Liz Claiborne is set to launch exclusive moderate lines at key national chains this year, and create international “power brands” from its existing portfolio.
Paul Charron, chairman and chief executive officer, told WWD after the apparel giant’s annual meeting here Thursday that the firm would roll out six “midtier” brands this year at stores such as Sears, J.C. Penney and Kohl’s. These would be similar to the way Claiborne sells its Axcess brand at Kohl’s.
At the same time, Charron told shareholders at the company’s corporate headquarters here that the firm is embarking on a program of creating “power brands,” citing Juicy Couture, Mexx, Lucky Brand and Sigrid Olsen as among its cadre of 38 labels that have the potential to become “global, multichannel, multicategory brands that reach consumers when, where and how they shop.”
The power brand-building already has taken off with Juicy Couture, the tracksuit staple label purchased by Claiborne two years ago. Charron said the Juicy brand, which had sales of $47 million when it was purchased in March 2003, is now four times larger. Juicy’s first company-owned boutique in Las Vegas has broken sales-per-square-foot records, Charron said, noting plans for more Juicy stores in the near future.
Although the core Liz Claiborne brand has struggled, with sales falling 18.7 percent in 2004, Charron said it’s “the most fully developed of our power brands.”
“Products sold under the Liz Claiborne name have retail sales in excess of $2.3 billion…and are available in 19 product classifications ranging from sportswear and swimwear to flooring and luggage, and everything in between,” he said. “Liz Claiborne is sold in 34 countries around the world, including an exciting relaunch in Europe.”
Charron acknowledged the “not normal circumstances” in the retail sector, with Federated Department Stores’ planned acquisition of May Department Stores Co., the Sears-Kmart merger, Saks Inc.’s sale of its Proffitt’s and McRae’s divisions and J.C. Penney eyeing Carson Pirie Scott. This is good reason to pay more attention to Claiborne’s own stores, he said, and forecast they would account for 35 percent of the firm’s volume this year. The firm closed 2004 with 554 company-owned stores worldwide, and growth across all divisions.
Charron said the company continues to thrive in these “unpredictable times,” just closing its 36th consecutive quarter of sales growth with sales up 9.2 percent to $4.6 billion for the full year.
“Our balance sheet remains healthy, our cash flow strong, and in 2004, we delivered an 11.8 percent increase in diluted earnings per share,” he said.
The ceo said the company now has 30 brands sold outside the U.S., compared with 16 in 2000, with international sales representing 24 percent of total sales in 2004 versus 4 percent four years ago.
“We are looking carefully but prudently to China as a potential market for a number of our brands,” he said.
Matthew Rice, a campaign coordinator for the People for the Ethical Treatment of Animals, who also visited the Jones Apparel Group annual meeting on Wednesday, asked Claiborne to participate in a boycott of Australian wool because of the way the country’s farmers allegedly mistreat sheep during shearing and exporting.
Charron said the firm considered the issue to be serious and had sent a lengthy letter to the Australian wool organization demanding these conditions come to an end.
“I do not think the answer is to boycott, as that may lead to even worse conditions for the sheep,” said Charron, adding that the firm would join the boycott if no action is taken soon.