Liz Claiborne Whittles Down to Three Brands; or Four, Including Tim Gunn

Liz Claiborne Inc. hasn’t turned a profit since 2006 so it’s no surprise that the company finally reached a tipping point of sorts and decided to massively shake things up. In the last of five deals that are focused on the company ending up with only its higher-priced brands, Claiborne sold off its namesake brand as well as the Monet brand to J.C. Penney Co. on Nov. 2nd.

Liz Claiborne CEO William McComb stated, "We are very proud of the value we have unlocked from our Partnered Brands group. What remains of that segment is a private brand jewelry design and development group that will continue to serve J. C. Penney, via our exclusive license for the Liz Claiborne and Monet brand jewelry lines. It will also continue to market Trifari and Marvella, as well as serve Kohl's with a license for Dana Buchman jewelry. Our jewelry capability is a profitable niche that was worth retaining, and will add to our earnings profile."

McComb continued: "With this announcement, the company has completed the last in a series of five transactions that in total have raised $471 million, allowing the company to meaningfully de-leverage and transform its balance sheet — while creating a portfolio focused on growth. ...We are now focused on our three global lifestyle brands — Juicy Couture, kate spade and Lucky Brand — and seeing the high growth and high margin opportunities they offer come to fruition as well."

By selling Liz Claiborne New York and Monet, Claiborne picked up $288 million, which includes a "$20 million advance in exchange for developing exclusive brands for J.C. Penney." On the same day, the company also closed a deal to sell its Mexx business to a joint venture led by the private equity firm The Gores Group. It still appears involved in the DKNY Jeans label for Donna Karan.

Claiborne has been keeping its bankers and board busy indeed. But now someone in the marketing department needs to get busy because with the sale of the namesake brand Liz Claiborne, the company needs to come up with a new moniker, AP notes. (Anything but LuckyJuicyKate Inc.!)

Another brand the company is hanging on to: Project Runway fixture Tim Gunn, who was hired as the company's chief creative officer in 2007, and spent the weekend in Annapolis, MD, judging a Lucky Brand fashion show.

McComb, meanwhile, explained more of his (and the board's) thinking to the High Low blog:

JC Penney is a great home for the Liz Claiborne brand. What we did smartly and carefully from ‘07 until now is build a partnership with JC Penney, and the Liz Claiborne brand became a square peg in a square hole – a brand that had superpower brand status executed with a partner that wanted it and wanted to make a big home for it. This move created a whole new momentum for the brand.

Now we are selling the brand to JC Penney, and we got more value for it than it was worth 3 years ago. Plus we put it in the hands of a partner that says it will soon be doing over $1 billion again in retail. I am pleased to say we kept our focus on the Liz Claiborne brand—and we established an incredible new home for it. So while I’m thrilled for the future of the brands that represent high growth for our shareholders, let me add we also found the perfect exit for the brand that started it all.

Companies aren’t supposed to go the way of the horse and buggy. They are supposed to reinvent–redeploying strengths and capabilities from a legacy business into new ones. That’s what we have done here. The Liz business gave us people, real estate, and category expertise that have helped the growth brands in a big way.