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Company Profile of Liz Claiborne
Company Profile of Liz Claiborne - May 11th, 2011
Liz Claiborne, Inc. (NYSE: LIZ) is a fashion company founded in 1976 in New York City that designs and markets a wide range of women's and men's apparel, accessories and fragrance products. In 2006, the company generated sales of nearly $5 billion. The company sells directly to customers throughout the world through 399 specialty retail formats, 625 concessions, 336 outlet and 13 e-commerce sites. Products marketed to men are labeled without the founder's first name, leaving the gender-neutral "Claiborne." The company's brands are available at more than 30,000 different retail locations throughout the world. As of 2006, Liz Claiborne employed more than 17,000 people worldwide and was ranked 440 in the Fortune 500 list. In the film The Corporation a $178 Liz Claiborne jacket, made in El Salvador, was said to realise 74 cents to the worker for every jacket made.
In 2007, Isaac Mizrahi ended a lucrative, years-long deal with Target to become the designer of Liz Claiborne New York, the revamped women's Liz Claiborne line, which was released in Spring 2009. Mizrahi had designed hundreds of successful shoes, women's clothes and bridal wear, and household items for Target.
Liz Claiborne announced that it had named Isaac Mizrahi to the position of Creative Director for the Liz Claiborne New York brand in 2008. His collection debuted in Spring 2009 with Macy’s and Dillard’s as its flagship carriers. One of the smaller stores to carry the line, Gottschalks, declared bankruptcy and was liquidated only weeks after Mizrahi's launch. Liz Claiborne outlet stores also carried the line. Later that year, it was announced that the Liz Claiborne New York line, designed by Mizrahi, would be sold on television shopping network, QVC. As of December 2009, the Liz Claiborne Web site was no longer available to make online purchases.
Designer John Bartlett was the creative director of Claiborne by John Bartlett, the new men's collection which launched in Spring 2009.
Liz Claiborne, Inc. (Liz Claiborne), incorporated in January 1976, designs and markets a portfolio of retail-based brands, including JUICY COUTURE, KATE SPADE, LUCKY BRAND and MEXX. The Company also has a group of department store-based brands with consumer franchises, including the LIZ CLAIBORNE and MONET families of brands, MAC & JAC, KENSIE and DANA BUCHMAN, and the licensed DKNY JEANS and DKNY ACTIVE brands. The Company operates in three segments: Domestic-Based Direct Brands segment, International-Based Direct Brands segment and Partnered Brands segment. As of January 1, 2011, the Company operated a total of 482 specialty retail stores under a range of Company brands, consisting of 291 retail stores within the United States and 191 retail stores outside of the United States (primarily in Western Europe and Canada).
As of January 1, 2011, the Company operated a total of 213 outlet stores under various Company owned and licensed brands, consisting of 117 outlet stores within the United States and 96 outlet stores outside of the United States (primarily in Western Europe and Canada). Outside of North America, the Company operates concession stores in select retail stores, which are either owned or leased by a third-party department store or specialty store retailer. As of January 1, 2011, the Company operated a total of 420 concession stores in Europe. During the fiscal year ended January 1, 2011, International sales represented 33.7% of its total revenues.
Domestic-Based Direct Brands segment
Domestic-Based Direct Brands segment consists of the specialty retail, outlet, wholesale apparel, wholesale non-apparel (including accessories, jewelry and handbags), e-commerce and licensing operations of its three domestic retail-based operating segments: JUICY COUTURE, KATE SPADE and LUCKY BRAND. The Company’s JUICY COUTURE brand offerswomen’s and children’s apparel, as well as accessories and jewelry under various JUICY COUTURE brands. JUICY COUTURE products are sold through wholly owned specialty retail and outlet stores, select upscale specialty retail stores and department stores throughout the United States, through a network of distributors and owned and licensed retail stores in Asia, Canada, Europe, South America and the Middle East, as well as through its JUICY COUTURE e-commerce Website.
The Company’s KATE SPADE brand offers fashion products (accessories, apparel and jewelry) for women and men under the KATE SPADE and JACK SPADE brands, respectively. These products are sold primarily in the United States through wholly owned specialty retail and outlet stores, select specialty retail and upscale department stores, through a network of distributors in Asia and through its KATE SPADE e-commerce Website, as well as through a joint venture in Japan. KATE SPADE’s product line includes handbags, small leather goods, fashion accessories, jewelry and apparel.
JACK SPADE products include briefcases, travel bags and small leather goods. The Company’s LUCKY BRAND offers women’s and men’s denim and casual sportswear, as well as accessories and jewelry, under various LUCKY BRAND brands. LUCKY BRAND products are available for sale at wholly owned specialty retail and outlet stores in the United States and Canada, select department and specialty stores and it’s LUCKY BRAND e-commerce Website.
International-Based Direct Brands segment
International-Based Direct Brands segment consists of the specialty retail, outlet, concession, wholesale apparel, wholesale non-apparel (including accessories, jewelry and handbags), e-commerce and licensing operations of MEXX Europe and MEXX Canada, its two international, retail-based operating segments. MEXX brand offers a range of men’s, women’s and children’s fashion apparel and accessories under the MEXX brand for sale outside of the United States, principally in Europe and Canada.
Partnered Brands segment
Partnered Brands segment consists of one operating segment, including the wholesale apparel, wholesale non-apparel, licensing, outlet, concession and e-commerce operations of its AXCESS, CLAIBORNE, DANA BUCHMAN, KENSIE, LIZ CLAIBORNE, LIZ CLAIBORNE NEW YORK, MAC & JAC, MARVELLA, MONET, TRIFARI and its licensed DKNY JEANS and DKNY ACTIVE brands, among others.
AXCESS is fashion-forward men’s and women’s apparel and accessories sold principally in Kohl’s Corporation (Kohl’s) department stores. LIZ CLAIBORNE and CLAIBORNE is merchandise in the product categories covered by the license agreement with J.C. Penney Corporation, Inc. and J.C. Penney Company, Inc. (collectively, JCPenney) is sold through JCPenney in the United States and Puerto Rico. LIZ CLAIBORNE NEW YORK, women’s career and casual sportswear and accessories, are available for sale through a license agreement on the QVC, Inc. (QVC) television network. MARVELLA, a jewelry line, is sold primarily in Target Corporation stores. MONET, a signature jewelry brand for women, is sold in department stores, as well as in its own outlet stores and online. TRIFARI, a signature jewelry brand for women, is sold primarily in mid-tier department stores.
DANA BUCHMAN is a collection of women’s sportswear, accessories, intimate apparel and footwear. Kohl’s is the retailer of the DANA BUCHMAN brand. The Company sources and distributes jewelry under the DANA BUCHMAN brand. KENSIE offers apparel for women primarily through select specialty and department stores in the United States and Canada. MAC & JAC offers apparel for women and men primarily through select specialty and department stores in the United States and Canada. DKNY ACTIVE offers junior’s, men’s and women’s activewear for sale at department stores and specialty stores in the Western Hemisphere. DKNY JEANS offers junior’s, men’s and women’s jeans and junior’s and women’s sportswear for sale at department stores and specialty stores in the Western Hemisphere.
The Company competes with Esprit, Zara, Marc O’Polo, S. Oliver, H&M, Tommy Hilfiger, InWear/Matinique, Street One, The Jones Group, Inc., The Warnaco Group, Inc., Polo Ralph Lauren Corporation, Marc Jacobs, JCrew, Pink, Coach, Diane von Furstenberg, Diesel, Guess, True Religion, 7 for all Mankind, Abercrombie & Fitch, Michael Kors and Tory Burch.
With $2.2 billion in sales and products in over 10,000 stores, Liz Claiborne was the largest women's apparel manufacturer in the world. But the company's fortunes dramatically shifted in 1993. For the first time in the company's history, sales fell for the core Liz Claiborne Collection, Lizsport, and Lizwear lines. Net income fell 42 percent for the year. Some $300 million worth of merchandise went unsold. Business as usual was not working anymore. "That's too bad, because the old life was pretty good. In its heyday, Claiborne was regarded as the smartest, most efficient apparel outfit around," wrote Laura Zinn in a May 1994 Business Week article. "'When people were hired away from Claiborne, their new employers thought they were getting some magic,' says one ex-executive. Between 1985 and 1991, sales and net income almost quadrupled."
Critics said Liz Claiborne apparel had gone stale since the departure of the founder. Saks Fifth Avenue dropped the Claiborne core sportswear lines in 1993, and the new mass market lines (Crazy Horse, Russ, and Villager) remained unprofitable. The company depended on just four department stores (Dillards, May, Macy's, and Federated) for nearly half of its sales. Profits fell to $83 million in 1994 from a peak of $223 million in 1991.
Paul R. Charron, who moved from VF Corp. to Liz Claiborne in 1994 and was appointed CEO in 1995, led a restructuring drive: 500 of the company's 8,000 employees were laid of in 1995 and the unprofitable First Issue chain was closed. Charron then implemented a three-year program to cut expenses by $100 million, reduce excess inventory by 40 percent, and shorten production and delivery cycles by 25 percent. A major investment in technology helped the company improve clothing design and track sales more closely.
"Now Liz Claiborne is playing catch-up with a vengeance. The company, which has extremely deep pockets, and no debt, is marketing smartly cut silk suits and cocktail dresses as well as basic blue jeans and khaki pants," wrote Jill Jordan Sieder in a February 1996 U.S. News & World Report article. "'They're changing in all the right ways in a very tough environment,' explains Jennifer Black Groves, a retail analyst at Black & Co. 'A few years ago, I would have called their clothes basic, boring, heavy on the polyester. ... [Now] the word 'dowdy' just isn't fair anymore."' With its image for fashion flair on the mend, Liz Claiborne rolled out a $25 million advertising campaign in early 1996. Print ads, super models, television commercials, and outdoor advertising dovetailed with an updated in-store marketing program. Charron, who was named chairman in May 1996, had also relaunched product lines, sold off units to licensors, and added new products. Veteran merchandiser Denise V. Seegal came on board as president in October 1996. For the first time since 1992, Liz Claiborne's largest unit, women's sportswear, registered sales increases on the year: up 10.8 percent to $1.23 billion. Dana Buchman's sales were boosted 38.5 percent to $188.7 million thanks to help from the Dana B. and Karan lines introduced in February 1996.
The announcement of a strategic licensing agreement with Donna Karan International Inc. in December 1997 marked the first time Liz Claiborne acted as a licensee rather than a licensor. The 15-year exclusive contract, under which Donna Karan would receive a minimum of $152 million in royalties, gave Liz Claiborne the right to source, distribute, and market DKNY Jeans and DKNY Active trademarks in the Western Hemisphere. Aided by cost reduction measures, operational improvements, and strong sales in core product areas, net sales for 1997 climbed to $2.41 billion and net income reached $185 million.
Trends for the Future
The special markets division, formed in 1996 to encompass the moderate and value-priced brands, marked its first profitable quarter in 1998. The relaunched First Issue line was being sold exclusively in Sears, while the Crazy Horse label was offered by J.C. Penney. The division, which also housed Russ, Emma James, and Villager lines, benefited from Charron's experience with VF--the company moved from department store to a mass merchant focus during his tenure there. Liz Claiborne placed these popular priced products in Wal-Mart and Kmart and regional department stores such as Kohl's and Mervyn's. Special market sales were $104 million in 1997 and expected to increase by 30 percent in 1998. With its DKNY licensing agreement in place, the company was banking on a variety of brands, from mass to bridge, to drive future growth.
Principal Subsidiaries: Claiborne Limited; Liz Claiborne Cosmetics, Inc.; Liz Claiborne Accessories, Inc.; Liz Claiborne Accessories-Sales, Inc.; Liz Claiborne Export, Inc.; Liz Claiborne Foreign Holdings, Inc.; Liz Claiborne International, Ltd. (Hong Kong); Liz Claiborne (Israel) Ltd.; Liz Claiborne (Italy) Inc.; L.C. Licensing, Inc.; Liz Claiborne Sales, Inc.; Liz Claiborne-Texas, Inc.; LCI Investment, Inc.; LCI Holding, Inc.; Liz Claiborne (Canada) Limited; Liz Claiborne, S.A.; L.C. Caribbean Holdings, Inc.; Liz Claiborne Shoes, Inc.; L.C. Service Company, Inc.; Liz Claiborne Europe; LCI-Claiborne Limited Partnership; Liz Claiborne do Brasil Ltda.; LC/QL Investments, Inc.; L.C. Dyeing, Inc.; L.C. Augusta, Inc.; Textiles Liz Claiborne Guatemala, S.A. : Liz Claiborne (Malaysia) SDN.BHD; Liz Claiborne B.V.; L.C. Special Markets, Inc.; Liz Claiborne Foreign Sales Corporation; Liz Claiborne Operations (Israel); Liz Claiborne Colombia Limitada; Liz Claiborne GmbH; Liz Claiborne De El Salvador., S. A., de C; L.C.I. Fragrances, Inc.; DB Newco, Inc.
Principal Divisions: Liz Claiborne--Apparel; Liz Claiborne--Non-Apparel; Liz Claiborne, Inc.--Additional Brands; DKNY; Special Markets; Liz Claiborne International; Liz Claiborne, Inc. Retail Group.
Market Cap (Mil.): $583.63
Shares Outstanding (Mil.): 94.59
Annual Dividend: --
Yield (%): --
LIZ Industry Sector
P/E (TTM): -- 18.83 18.17
EPS (TTM): 0.66 -- --
ROI: -33.61 12.45 1.56
ROE: -1,229.07 14.07 2.40
Sales: $2.41 billion (1997)
Stock Exchanges: New York
Ticker Symbol: LIZ
SICs: 2339 Women's & Misses' Outerwear, Not Elsewhere Classified; 2335 Women's & Misses' Dresses; 2389 Apparel & Accessories, Not Elsewhere Classified; 2329 Men's & Boys' Clothing, Not Elsewhere Classified; 2311 Mens & Boys Suits & Coats; 2844 Toilet Preparations; 2331 Women's & Misses' Blouses and Shirts; 2381 Fabric Dress & Work Gloves; 2211 Broadwoven Fabric Mills--Cotton; 3100 Leather & Leather Products: 2337 Women's & Misses' Suits and Coats; 2253 Knit Outerwear Mills; 5632 Women's Accessory and Specialty Stores; 3021 Rubber & Plastics Footwear; 3144 Women's Footwear Except Athletic
Name Age Since Current Position
Koplovitz, Kay 65 2007 Non - Executive Independent Chairman of the Board
McComb, William 48 2006 Chief Executive Officer, Director
Warren, Andrew 44 2007 Chief Financial Officer
Huber, Edgar 2011 Executive Vice President - Global Business Development
Rubino, Nicholas 49 2008 Senior Vice President, Chief Legal Officer, General Counsel, Corporate Secretary
Warner, Peter 49 2008 Senior Vice President - Global Sourcing and Operations
Machacek, Lisa 46 2010 Senior Vice President, Chief Human Resources Officer
Kopelman, Kenneth 59 1996 Director
Aronson, Bernard 64 1998 Independent Director
Karch, Nancy 63 2000 Independent Director
Fernandez, Raul 44 2000 Independent Director
Martinez, Arthur 71 2001 Independent Director
Gilman, Kenneth 64 2008 Independent Director
Toben, Doreen 60 2009 Independent Director
Benjamin, Lawrence 55 2011 Independent Director
New York, New York 10018
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