Claiborne and Penney: A Marriage Made in …

Discussion
Aug 17, 2010
George Anderson

By George Anderson

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
and disastrous.

While the Journal article includes an admission of "some
mistakes" by
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?

Please practice The RetailWire Golden Rule when submitting your comments.

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15 Comments on "Claiborne and Penney: A Marriage Made in …"


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Bob Phibbs
Guest
10 years 8 months ago

The final quote of the article says it all: “Mr. McComb says he’s now considering changing the company’s name. Liz Claiborne is ‘a misnomer strategically,’ he said.”

A company losing focus loses customers and settles for scraps when they could have had the whole dinner.

Nikki Baird
Guest
Nikki Baird
10 years 8 months ago
I haven’t looked at how the Claiborne brand is being executed in JC Penney in a long time. (Maybe that’s part of their problem.) When Claiborne first started developing exclusives for JCP, I thought the look was nice but the price was not — it always felt about 15-20% higher priced than other brands that JCP carried. If Macy’s was having a sale, you could get the “real” Claiborne for about the same price as the full price “knock-off” at JCP. But a lot has changed at the retailer since then, and it seems like they have learned a lot about managing brands (vs. managing products). What they’ve done with Sephora and with Ralph Lauren in their stores is executed very well, and I don’t think Claiborne’s CEO is too far off when he says that JCP is a great steward and can be a strong partner for an apparel brand. Whether Claiborne has made some risky decisions or not, the issue won’t be the partnership itself, it will be execution — the right look… Read more »
Len Lewis
Guest
Len Lewis
10 years 8 months ago

Problem is that Claiborne executives have been miscalculating the brand for years. Overexpansion killed them and Liz herself knew it. That’s why she had backed out of the business originally.

Frankly, the Penney partnership can only help sustain the label. I think the retailer is going to help them focus and innovate, not throw everything against the wall to see what sticks.

Roger Saunders
Guest
10 years 8 months ago

Seceding control of the Brand to JC Penney could lead to ‘house brand’ status for Claiborne. Not the best end result for their organization, but certainly an exit strategy–planned or otherwise.

This is still a winning strategy for Penney over the short term, next 3 years. Claiborne doesn’t carry the cachet they had in the ’70s/’80s, but it is still a recognizable brand, particularly with Penney’s more conservatively dressed customer base.

Based on the BIGresearch May Consumer Intentions & Actions (CIA) survey, which focused on Women’s Fashion, the Penney shopper indexes at 112 vs. the general population in their interest in “Familiar Labels” being important. At the same time, those consumers said that they were focused on “Value” and “Buying apparel on sale” most frequently.

Dick Seesel
Guest
10 years 8 months ago

It’s hard to agree with board member Arthur Martinez after looking at the succession of losing quarters, and the deflation in Liz’s stock price. While I agree that the exclusive with JCPenney is the best way to salvage the original Liz Claiborne brand, it will be a challenge for JCP to recapture its focus on a broad but well-targeted consumer.

The Claiborne team did face several challenges: Too many internal brands to manage, retail consolidation and big stores’ push for exclusives. But they did themselves no favors by mismanaging the core brand–and turned themselves from an apparel company into a licensing company in the process. Board members really ought to question their own due diligence over the past several years.

Doug Stephens
Guest
Doug Stephens
10 years 8 months ago

So if I understand this, the strategy is that one old, tired brand buys another old, tired brand and together they succeed?

With Sephora I felt Penney might be on the right track. Current, fashionable brands that could carry them closer to a younger (future) consumer. But Claiborne? (Scratching head….)

Stacey Silliman
Guest
Stacey Silliman
10 years 8 months ago

This is the beginning of the end for the Claiborne brand. The quality of the brand and its reputation have been on the line for the last several years anyway. It is sad that the outlet stores are closing but the last few visits to those stores were disappointing. One could never go in there and buy a nicely tailored suit as you could 10 years ago. You won’t be able to buy anything like that at JCPenney either.

Ed Rosenbaum
Guest
10 years 8 months ago

It is beginning to appear that the move of the Liz Claiborne line from Macy’s to Penney’s is another in an increasingly long line of decisions that have not been as successful as hoped. I can not see the change in image or branding and selling at Penney’s for more money is workable. Too many changes and too few results. The Liz Claiborne line at Macy’s was a draw. At Penney’s I don’t know? My guess is the Claiborne execs would like to have a mulligan on this shot at recovery.

While Macy’s is not in the same league as Nordstrom’s; it certainly holds more opportunity for a brand to succeed than the move to Penney’s has shown.

Jane Sarasohn-Kahn
Guest
10 years 8 months ago

I saw that Liz Claiborne private labeled a line for QVC launched 2 weeks ago: they offered a “special value” sweater at midnight which sold out during the day. The company may be able to bring value-branding to the masses through channeling ventures like QVC and JCPenney. This will bring a different demographic segment to them, but there is a fortune at the bottom of the pyramid, perhaps.

Carol Spieckerman
Guest
10 years 8 months ago

There are many moving parts in this story so I’ll take on one that has been largely overlooked. This isn’t about Liz Claiborne making a decision to go exclusive with Penney’s vs. hanging on to a dying Macy’s business, it is about a company realizing, perhaps too late, that the traditional manufacturing and inventory management model has been replaced by one that focuses on brand management and licensing.

Cherokee was a pioneer here; Iconix took it to the next level; Li & Fung is morphing into a hybrid; Payless and others, including Liz, are joining the party. Why is Bill McComb talking about changing the name of the company? Remember: Iconix started as “Candies” and Payless is now “Collective Brands.” LC Omnibrands anyone?

Ted Hurlbut
Guest
Ted Hurlbut
10 years 8 months ago

Your Mom’s Liz = Your Dad’s Oldsmobile…

…and we know what happened to your Dad’s Oldsmobile.

In a way, the Liz/Penney partnership makes all the sense in the world. At the end of any product/brand lifecycle, the goal is to harvest cash, after all.

Craig Sundstrom
Guest
10 years 8 months ago

I would raise Bob’s ante for most important quote from the article:” after founder Ms. Claiborne…retired in 1989, sales began a slow decline.” In short, LC appears to be one of many – most?- eponymous brands which can’t survive the departure of its founder…something like Chanel (or even JC Penney itself) is the exception, far more common is HoJo’s or even Alexander Stewart (and if the latter inspires a “who?”, my point exactly).

Bill Emerson
Guest
Bill Emerson
10 years 8 months ago

I think it was viewed as a “great strategic fit” when Lands’ End went to Sears. While JCP is certainly a much stronger retailer than Sears, the net effect is the same.

Liz, which began in the ’70s defining work and casual dresswear for a whole generation of Boomer women, will no doubt be a good addition to JCP’s labels. It is, however, the end of an icon.

Mark Johnson
Guest
Mark Johnson
10 years 8 months ago

Claiborne makes great products, nice mid-priced suits (in athletic cuts), yet maybe not a core fit for Penney’s?

Dione Lewis
Guest
Dione Lewis
10 years 8 months ago

Liz saw a decline in sales in my opinion when Issac M. became an exclusive designer. Issac M. did better in Target stores across the company. Issac wanted to raise its price point in many Target locations and it was unsuccessful in doing so.

Liz would do far better in 1 year at JCPenney than it would do in 4 years in Macy’s stores. Why? When you shop Liz in Macy’s it did not have much appeal to any age group, certainly missing its target audience. By having Liz in JCP there would be more foot traffic in stores and competition with customers who tend to shop Talbots. Has anyone taken a look at their new line?

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