From WWD Issue 05/20/2011
Despite criticism from some shareholders, William L. McComb, chief executive officer of Liz Claiborne Inc., insisted the company was making progress on several fronts at the firm’s annual shareholders’ meeting Thursday morning.
“The fruits of our labors in restructuring the company have begun to show in a few meaningful areas,” McComb told shareholders, who gathered at the company’s 1441 Broadway headquarters. He cited the relaunch of the Liz Claiborne brand as an exclusive line for J.C. Penney Co. Inc. “It’s already proven to be profitable,” he said, and Penney’s has committed floor space and marketing to the brand. “The Liz Claiborne franchise is well on its way to achieve [Myron E.] ‘Mike’ Ullman’s [Penney’s chairman and chief executive officer] $1 billion sales goal,” said McComb, during the 20-minute meeting.
Based on channel, product and cost initiatives, McComb said he expects the partnered brands’ portfolio to be profitable in 2011. McComb said the Dana Buchman license with Kohl’s Corp. “is larger and more profitable than the previous rendition” of the Dana Buchman brand in 2006 in traditional higher-end department stores. He also noted that Claiborne has completely overhauled the Kate Spade business, which five years ago was a struggling brand “unable to execute.”
“The results are very strong. [Kate Spade] is an extremely profitable and high-growth business, with seemingly unlimited global potential,” said McComb of the brand, which generated $184.3 million in sales last year. Late Wednesday, Kate Spade said it had formed a major venture in Mainland China with the E. Land Group, with plans to grow to nearly 300 points of distribution by 2020.
As for some of the problem areas, he said, “the acceleration at Lucky Brand has been bumpier.” He pointed out that in the past year, the company has made major strides, and the brand is experiencing “solid, positive comp-door growth in our retail stores since mid-January,” a trend he expects to continue throughout the year.
He then addressed Juicy Couture, which is the company’s most profitable brand. Now predominantly a retail-based business domestically, he said the brand is in the midst of refreshing the product, marketing and stores. “We’re undergoing the same kind of internal transformation now with Juicy that we implemented two years ago at Kate Spade, and we could not have found a better person, LeAnn Nealz, our new creative director, to lead the charge.”
Finally, McComb turned to Mexx Europe. Although the retail division is still losing money and is undergoing major restructuring, he said through the fall, the wholesale division will have posted a full year of double-digit increases in bookings. “We continue to pursue our goal of break-even operating profit for the global brand by the end of 2012, and our ability to achieve this goal will significantly impact the total profit picture of the corporation,” he said.
For the year, Claiborne narrowed its loss to $251.5 million from $305.7 million. Revenues dropped 14.3 percent to $2.5 billion from $2.92 billion.
As part of the agenda, one stockholder, Kenneth Steiner, proposed shareholder action by written consent, in lieu of a meeting. Steiner took the opportunity to air some complaints about the company. He said Claiborne has seven directors who have been there since before 2006 and are “overseeing the disastrous collapse of the company.” He said “sales are way down, the company has had three losses in a row, and even the first quarter was a very poor one.
“We have extreme overcompensation of you, the ceo, making millions and millions of dollars, while shareholders like I have lost over 90 percent on this stock. That’s ridiculous,” said Steiner. “The stock has completely collapsed. Someone has to be held accountable, but the directors don’t want to hold themselves accountable, nor the ceo. It’s now the shareholders’ responsibility to do so,” said Steiner. Although the company did not support the proposal, it was passed.
During the question-and-answer period, one shareholder said she was in the Juicy Couture store on Madison Avenue and “it’s just blah now. There’s nothing special about it. The clothing, the colors...”
McComb said the store is largely focused on Bird, an elevated brand targeting the 35- to 45-year-old woman. She then asked why Juicy got rid of its founders, Pamela Skaist-Levy and Gela Nash-Taylor, and McComb said their contract had ended. “That was always planned. They were owners and they moved onto other things.”
