Claiborne and Penney: A Marriage Made in …
Last October when Liz Claiborne announced the brand had
entered into an exclusive deal to sell clothing, home and accessory lines at
J.C. Penney, leaving Macy’s behind, many thought it would probably be
a bigger win for the retailer than the brand. To that point, 49 percent of
respondents to a RetailWire poll
said the deal for Claiborne was "only fair" or "bad." Another
41 percent thought the deal was "good, not great" and only eight
percent thought it was "very good" for the brand.
Now, a report in The
Wall Street Journal questions whether the brand’s
management made a miscalculation that "could mark the final chapter in
the story of the 34-year-old Liz Claiborne."
Some question a series of
moves made by Liz Claiborne Inc. CEO William McComb including the deal with
Penney. Among these is the decision to move the Claiborne brand away from the
career apparel that made it so popular with baby boomers to more casual designs
the company hoped would connect with younger consumers.
Mr. McComb has also
been second-guessed for focusing on lines including Juicy Couture, Kate Spade,
Lucky Brand Jeans and Mexx at the perceived expense of the Claiborne brand.
Others see the high-profile and expensive hiring of Isaac Mizrahi to design
the Liz Claiborne brand as a decision lying somewhere between mixed results
While the Journal article includes an admission of "some
Mr. McComb, he is still confident of the direction he is taking the company
and the deal with Penney. Last October, he called the department store chain, "The
perfect partner to steward this brand properly and profitably, given their
financial wherewithal and their many strengths, including brand management,
multi-channel distribution and operations."
As to the profitability question,
Mr. McComb said the deal with Penney will turn Liz Claiborne from a money loser
to a brand that looks good in the black. A new lower-priced Liz & Co. line
is already a success with Penney’s shoppers.
Deborah Weinswig, an analyst at
Citigroup, believes the Claiborne brand can generate up to $400 million in
its first year at Penney. While the department store would not comment on the
point, it is looking to double sales within five years.
Arthur Martinez, a board member
at Liz Claiborne and former chief executive of Sears Roebuck & Co., is
among those who believe Mr. McComb has the company headed in the right direction.
"The strategy is exactly right and the board is fully in support of it," Mr.
Martinez told the Journal.
Discussion Questions: Do you think the
J.C. Penney deal could mark the final chapter of the Liz Claiborne brand or
is this the beginning of a bright new future for the business?