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Liz ClaiborneFifth & Pacific Companies

Liz Claiborne Inc / Fifth & Pacific Companies (US)

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Liz Claiborne was America's most successful female fashion designer during the 1980s and early 1990s. Building upon that platform, the company she founded acquired or launched a substantial portfolio of other labels, becoming one of the world's largest producers of multi-brand casual apparel, accessories, jewellery and cosmetics. However the rapid contraction of its traditional retail channel of department stores after 2000 led to a steady decline in sales. As a result, the group embarked in 2006 upon a dramatic and often difficult restructuring. It gutted its portfolio over the next few years, selling or closing all of its department store brands to focus on a small collection of specialty brands. The defining transformation was a deal to sell the Liz Claiborne brand family to JC Penney in 2011, after which it adopted the new name Fifth & Pacific Companies. Two years later, the group announced plans to sell two of its three remaining brands in order to focus solely on Kate Spade, prompting another change of name. Kate Spade was itself acquired in 2017 by Coach.


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History of Liz Claiborne Inc

Born in Belgium in 1929 to American parents, Elisabeth Claiborne moved back to the United States in 1939 at the start of the Second World War. Despite the opposition of her banker father she later dropped out of high school to study art in Europe and New Orleans, and in 1950 took first prize in a fashion design contest sponsored by Harper's Bazaar magazine. That won her a job as a junior designer with New York clothing manufacturer Jonathan Logan, where she spent the next 25 years. In the 1950s, she met and later married Art Ortenberg, previously an art director for fashion store Bonwit Teller. As the market for affordable designer fashion took off during the 1970s she left Jonathan Logan, and with Ortenberg and two other partners launched Liz Claiborne Inc to produce a line of signature women's sportswear and suits. Claiborne was arguably the first designer to target the fast-growing market of professional women looking for a more stylish alternative to the traditional business suit. The company expanded rapidly, and went public in 1981.

For much of the 1980s, Liz Claiborne Inc was the country's most profitable fashion business, as well as the biggest designer of women's apparel. A key element in its breakthrough was the decision to abandon the tradition of two collections a year favoured by most designers. Instead, Claiborne launched a new collection every two months, a move which created strong allies out of department stores which as a result were able to limit the inventory they were obliged to hold and made for a more attractive selling proposition for customers. Later the company diversified into menswear, kidswear and accessories.

Towards the end of the decade, however, the US fashion industry as a whole entered a period of crisis as a result of a series of misjudged looks that failed spectacularly to attract customers. In 1987, for example, industry observers championed the revival of the mini-skirt as a result of new designs coming out of Paris. Claiborne was one of many US designers who changed her designs in anticipation of this trend. Wall Street Journal fashion writer Teri Agins, in her book The End of Fashion, reported that Claiborne spent hundreds of thousands of dollars to shorten the hemlines of skirts already in production. Yet sales were dismal, and after years of rapid growth Claiborne experienced its first ever drop in profits. The company recovered quickly, joining the list of America's 500 biggest companies a year later, the first company started by a woman ever to achieve that goal. Also in 1988, the company launched its own chain of sportswear retail outlets under the First Issue banner. The first Liz Claiborne-branded stores opened in 1989.

Claiborne and Ortenberg retired from the company in 1989 and resigned as directors a few years later. Claiborne herself subsequently devoted herself to teaching as well as a number of wildlife and environmental charities until her death in June 2007.

The recession which swept through the industry in the early 1990s led to another sudden decline in performance in 1993. At least in part, this reflected the profound change which had taken place in the US retail landscape since the late 1980s. Traditional retail channels had now come under fierce competitive pressure from low price but stylish chain stores such as Gap and mass merchandisers led by Wal-Mart. Department stores, which were by far Claiborne's biggest customer base, were hardest hit and passed on the heat to their suppliers, forcing them to cut prices. Claiborne initially refused, losing retail space to rival designers, and profits plunged.

Paul Charron was recruited as CEO in 1994 and launched the company on a steady and successful process of diversification, adapting the company's core lines to the new retail environment, and bulking up the business with a serious of strong strategic acquisitions. The latter included Lucky Brand Dungarees, Laundry and Sigrid Olsen (in 1999), Monet (2000), Mexx (2001), Ellen Tracy (2002), and Juicy Couture and Enyce (2003).

However, all these brands suffered again in the recession of the second half of the 2000s. Paul Charron retired as chairman & CEO at the end of 2006, and his successor William McComb set out on a long and painful restructuring of the group, selling or discontinuing several of its more established but fast-fading fashion labels, and signing exclusive distribution deals for others with major department store chains. As a result, revenues plunged over that period from almost $5bn in 2006, to just over $1.5bn by 2012.

The core brand within the group was for years the Liz Claiborne fashion label. This was accompanied by other collections including upscale womenswear range Liz Claiborne New York and Claiborne menswear. Two diffusion lines, Liz & Co women's casual apparel and Concepts by Claiborne menswear, were introduced in 2006 for sale through JC Penney. However sales of the whole Claiborne fashion portfolio were already under intense pressure by then, falling from more than $1bn in the mid-1990s to around $200m by 2007. The introduction of the diffusion lines through Penney's served only to further alienate core stockist Macy's, which had already significantly cut its commitment to the brand.

The flagship Liz Claiborne brand was relaunched in 2008 with the appointment of new creative director Isaac Mizrahi. A star designer of the 1990s, Mizrahi's own fashion label had faltered in the the early 2000s but he successfully resurrected his career by producing a signature line discount retailer Target. He joined Claiborne when his contract with Target ended in 2007. However the shift away from the label's traditional look appeared to confuse and alienate some buyers without attracting a significant number of new customers. Despite the push given the main label under Mizrahi, sales were lacklustre compared to some of the JC Penney sidelines. As a result, the group took the decision to withdraw the Liz Claiborne line from other retailers in 2010 and sell it exclusively through Penney, replacing the two earlier diffusion lines. In a major break with the company's roots, manufacturing and marketing of the Liz Claiborne and Claiborne labels was taken over by Penney. The retailer agreed to buy the brand outright in 2011, as well as jewellery brand Monet, for $288m.

Exclusive rights to another Liz Claiborne spin-off, AXCESS, were sold to Kohl's stores in the 2000s, along with the Dana Buchman label, originally launched by a protege of Claiborne's in 1986. At the same time as the Liz Claiborne sale to Penney's, the company agreed to sell full ownership of Dana Buchman to Kohl's. The remaining Mac & Jac and Kensie labels were sold to brand management company Bluestar Alliance, and the group negotiated an early termination of its license to produce DKNY Jeans, sportswear and casual menswear. Prior to their sale, combined sales from all these "partnered brands" was $631m in 2010, down by more than a third on the year before, and a far cry from the $1bn or so that Liz Claiborne alone generated in the 1990s.

In Europe, the group had for several years owned retail chain Mexx, cast in the mould of H&M or Zara. That business was originally founded in the Netherlands in 1980 by entrepreneur Rattan Chadha as two separate brands, men's store Moustache and Emanuelle for women. The two were combined in 1986 under the Mexx name. Following acquisition by Liz Claiborne in 2001, Mexx expanded its network from around 100 stores to more than 350 outlets in Europe and Canada. However the US and UK markets proved more difficult than other territories and were discontinued. The last of Mexx's US outlets closed in 2007, and in 2008, the group announced the closure of all 60 stores in the UK. Instead, Mexx focused on growth markets in Continental Europe as well as Canada. However sales continued to fall, from well over $1bn in 2008 to $732m in 2010. In 2011, Liz Claiborne took the decision to quit that business too, selling control to private equity firm Gores Group for just $85m.

A large portfolio of almost 30 other brands were sold or discontinued during 2007 and 2008. Emma James, Intuitions, Tapemeasure and JH Collectibles were sold in 2007 to Hong Kong-based trading company Li & Fung, also the main global sourcing agent for Mexx. In early 2008, Laundry By Design and C&C California were sold to Perry Ellis International. Several other brands were merged, and the Sigrid Olsen label and its accompanying retail chain was shuttered. An expensive gamble on couture, through a 50% investment in the Narciso Rodriguez designer ready-to-wear business, was terminated at the end of 2008, and the ENYCE label was sold to hip hop entrepreneur Sean "Diddy" Combs. Licenses for the group's various fragrance and cosmetics products, including Juicy Couture and Lucky Brand, were sold to Elizabeth Arden.

Although most of the group's energy had been spent divesting its existing brands in the latter half of the 2000s, it had also found the time to add a few newer labels to its portfolio during the later 2000s. The Kate Spade business was acquired in 2007 for $59m. Kate Brosnahan was originally a fashion editor at Mademoiselle, and married Andy Spade in 1991. She launched her own handbag design business in 1993 under her married name; partner brand Jack Spade was entirely made-up, not named after a real person. The Spades sold their shares in 2007 to retailer Neiman Marcus; a year later the business was sold on to Liz Claiborne & Co. Kate and Andy Spade left the business following its acquisition. (Andy Spade went on to launch branding agency Partners & Spade. After several years as a fulltime mother, Kate Spade launched a new accessories business, Frances Valentine, in 2015. However it failed to generate the success of her original business. Tragically, Spade took her own life in 2018 at the age of just 55.)

The last of its department store brands were sold off in October 2011, and Liz Claiborne Inc adopted the new name of Fifth & Pacific Companies in May 2012, with a strategy to focus all its attention on its three remaining brands: Kate Spade, Juicy Couture and Lucky Brand. Yet while, Kate Spade continued to expand - sales jumped by an exceptional 48% in 2012 alone - its two sister brands still languished. They too were marked for sale in 2013. Sports-influenced Juicy Couture, best-known for velour tracksuits, was sold to Authentic Brands Group for $195m. A separate $225m deal was agreed with investment firm Leonard Green & Associates for designer denim company Lucky Brand Jeans.

Aside from the Kate Spade business, the sole remaining unit from the old Liz Caliborne company was Adelington Design Group, producing private label jewellery for JC Penney, Kohl's and other retailers under the Liz Claiborne and Monet brands. The slimmed-down group adopted the new name Liz Spade & Co in Feb 2014, with former Spade president Craig Leavitt replacing William McComb as group CEO. Revenues for the company's last full year as an independent company were $1.38bn, with net income of $154m. In 2017, the once-substantial business was itself acquired by Coach for $2.4bn as part of that label's own transformation into a multi-brand group.

Last full revision 30th November 2017

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