Liz Claiborne announces fate of 4 brands, Prana to to be decided by end of Q1

Liz Claiborne Inc. (NYSE: LIZ) today provided an update on four brands which were put under strategic review as part of the Company's long-term growth plan.
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NEW YORK, Jan. 8 -- Liz Claiborne Inc. (NYSE: LIZ) today provided an update on four brands which were put under strategic review as part of the Company's long-term growth plan. The Company has reached a definitive agreement to sell Laundry By Design and C&C California; is closing Sigrid Olsen; and is retaining the Enyce brand. The first phase of the review, which involved seven other brands, was completed in October 2007.

Chief Executive Officer William L. McComb stated, "Today's announcement marks a significant step forward in the effort to hone our portfolio and better focus our resources on building fewer, more powerful brands. Throughout the process, each brand was comprehensively evaluated to determine how to best maximize the value for our shareholders, and we are pleased with the outcomes to date. The strategic reviews are an important part of the turnaround plan, along with aggressively managing costs, investing in marketing, developing best-in-class retail capabilities and innovating our supply chain. We have made great strides over the past several months in driving innovation throughout the organization and are on our way to becoming the brand-centric, design-driven, customer-focused organization that we envision for Liz Claiborne Inc."

Laundry By Design/C&C California

Liz Claiborne Inc. has entered into an agreement to sell Laundry By Design and C&C California to Perry Ellis International Inc. ("Perry Ellis") for approximately $37 million in cash subject to inventory adjustment, while Liz Claiborne Inc. will retain approximately $5 million in net working capital, excluding inventory. The transaction is expected to close in the first quarter of 2008. To ensure a smooth and orderly transition for retail partners, vendors and employees, Liz Claiborne Inc. has agreed to provide certain transition services to Perry Ellis.

Mr. McComb commented, "We're pleased with the tremendous interest these brands have generated and are confident that Perry Ellis is the right partner to drive success at both Laundry and C&C."

Sigrid Olsen

Following a comprehensive review of the options available the Company has decided to discontinue the Sigrid Olsen brand. The Company will exit its existing 54 Sigrid Olsen stores by mid-2008, however there is potential to redeploy up to a dozen specific locations for its Direct Brand businesses where appropriate. As a result of these closures, the Company expects to incur cash costs of approximately $17-$22 million.

Mr. McComb continued, "While we value the Sigrid Olsen trademark and will retain it, we were unable to identify a viable path forward for the brand at this time that would deliver the proper return for our shareholders. Because the Sigrid brand has been experiencing losses over the past several years, we expect the closure to be accretive to continuing operations in 2008. Additionally, we are pleased that we can utilize many of the great Sigrid store locations to propel our ongoing Direct Brands' store expansion."

Enyce

After a thorough analysis of the alternatives for Enyce, the Company concluded that the best way to maximize the value of this profitable brand is to retain and strengthen it. Enyce will be housed in the Company's Partnered Brands segment under the direction of Dave McTague, EVP of Partnered Brands, and will continue to be run by Carmine Petruzello, President of Enyce.

Mr. McComb said, "After reviewing all of our options, including specific offers from potential buyers, we made the decision to retain Enyce in our brand portfolio. This is a strong brand, with a loyal customer following and we look forward to working closely with the team to enhance its share of the urban contemporary market."

Mr. McTague said, "In 2008 we have plans to invest in Enyce through our advertising, e-commerce, pricing strategies and other aspects of the brand. Also, following the 2007 launch of the RSRV line at top specialty stores nationwide, we are excited about the planned expansion of this brand into better department stores this year."

Next Steps

The Company expects to incur significant non-recurring non-cash charges related to these announcements and is in the process of determining these charges.

Liz Claiborne Inc. expects to conclude the strategic review process and announce plans for the five remaining brands -- Dana Buchman, Ellen Tracy, Kensie, Mac & Jac, and prAna -- by the end of the first quarter of 2008.

About Liz Claiborne Inc.

Liz Claiborne Inc. designs and markets an extensive range of branded women's and men's apparel, accessories and fragrance products. Our diverse portfolio of quality brands -- available domestically and internationally via wholesale and retail channels -- consistently meets the widest range of consumers' fashion needs, from classic to contemporary, active to relaxed and denim to streetwear. For more information, visit http://www.lizclaiborneinc.com.

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