Fifth & Pacific Companies (formerly Liz Claiborne), a department store mainstay long accustomed to dressing middle-class women for success, has cleaned out its closet. The women's and men's apparel and accessories firm sold its namesake Liz Claiborne brand to J.C. Penney, as well as other brands, to focus on a trio of upscale brands: kate spade, Juicy Couture, and Lucky. The move follows plummeting sales as a result of the downturn in the economy, declining department store sales, and changing consumer tastes. Its clothing is sold in department stores and in about 345 specialty stores and 135 outlets in North America and Europe. The company changed its name to Fifth & Pacific in 2012 to reflect its new focus.
Fifth & Pacific Companies rings up about 95% of its sales in the US. Of the company's approximately 345 retail stores, 295 are in the US. Overseas the retailer has stores in Canada, Japan, and several countries in Europe. Kate Spade has a significant retail presence in Asia, and a growing footprint in Europe and South America.
The company's three premium global brands -- Juicy Couture, Lucky Brand, and kate spade -- each contribute roughly about a third of sales. The firm's Adelington Design Group (ADG) brings in the rest. ADG designs and markets private-label brand jewelry (including the legacy Liz Claiborne, Monet, and Dana Buchman brands) for department store operator J.C. Penney and Kohl's. ADG also holds the exclusive license to make and sell jewelry under the Kensie and Trifari brands, and a royalty-free license for the Liz Claiborne New York brand, sold exclusively by home-shopping-giant QVC. It also distributes Lizwear brand apparel through warehouse club stores.
Juicy Couture, Lucky Brand, and kate spade each operate specialty shops and outlet stores in the US and abroad, and have online incarnations. They also distribute their apparel and accessories to department stores and operate concessions inside stores operated by other retailers.
Sales and Marketing
Fifth & Pacific's marketing strategy spans direct mail, in-store events, and Internet marketing, including social media. The company spent $61 million on advertising, marketing, and promotions in 2012, up significantly from $49 million in 2011.
Fifth & Pacific's sales declined by about 1% in 2012 versus 2011, and the company was unprofitable. While the company posted a loss of $74.5 million, it has made significant progress trimming its losses over the past four years, having lost more than $950 million in 2008. Increasing sales and gross profits at the company's Kate Spade and Lucky Brands segments have helped whittled down the loss.
The decline in sales in 2012 was due to brands that have either been licensed or exited. Looking at the performance of its core portfolio, kate spade posted a 48% jump in sales, due primarily to the addition of new stores abroad, while Lucky Brand's sales increased 10%. The laggard was Juicy Couture, which posted a 6% decline in sales in 2012 versus the prior year. Sales overseas climbed by nearly a third, while domestic sales fell 2%.
Fifth & Pacific is hoping that a more high-end direct distribution focus will help it revive its business, which has continued to decline despite restructurings, store closings, the hiring of high-profile names in the fashion industry (including Tim Gunn and Isaac Mizrahi), and other ultimately unsuccessful measures. Going forward, Fifth & Pacific will be much less reliant on other retailers, such as department stores, for sales. Looking to reduce its substantial debt, the cash-strapped company in October 2011 agreed to sell the worldwide rights for its iconic namesake Liz Claiborne family of brands -- about 10 in all, and the fashion-jewelry brand Monet -- to department store operator J.C. Penney for about $288 million. (Penney had been the exclusive licensee for all Liz Claiborne and Claiborne-branded merchandise in the US and Puerto Rico since August 2010.) Simultaneously, it completed the sale of its Dana Buchman brand to Kohl's and sold its Kensie brands to Bluestar Alliance for $40 million. Also, it shed its Mexx business to The Gores Group, a private equity firm, for $85 million and an 18.75% stake in the joint venture.
Wellington Management Co. owns about 10% of Fifth & Pacific's shares.