Liz Claiborne to cut jobs, considers selling brands
NEW YORK – Liz Claiborne Inc. plans to cut 600 to 800 jobs and is considering whether to sell 16 brands in an effort to cut costs and focus on profitable fashion lines.
Under the restructuring plan announced Wednesday, the apparel designer and marketer expects to save $100 million in 2008 and an additional $90 million over the following two years.
It plans to cut 600 to 800 jobs, or 7 percent to 9 percent of its non-retail based global work force, including cutting senior positions.
The brands under review account for about $800 million of its projected annual sales of $5 billion.
“We are at a turning point,” CEO William L. McComb said at an investor conference. “Everything we do will be centered on one key principle: building powerful brands.”
The company will separate its brands into two operating segments.
Its retail-based direct-brand segment, which the company said should generate about $2.2 billion in revenue in 2007, includes Juicy Couture, Kate Spade, Lucky Brand Jeans and Mexx brands.
McComb intends to focus on those four brands and expects they will account for $3 billion in sales by 2010 as the company expands its marketing effort and adds stores in the United States and abroad.
The second segment will be its wholesale-based partnered brand group that includes its Liz Claiborne brands, DKNY Jeans group, Monet brands and its cosmetics brands. The company expects its partnered brands to have about $2.8 billion in revenue, including $800 million in revenue from brands under strategic review.
Liz Claiborne said it is reviewing its strategic alternatives, which include selling, discontinuing or licensing, for the brands C&C California, Dana Buchman, Ellen Tracy, Emma James, Enyce, First Issue, Intuitions, J.H. Collectibles, Kensie, Laundry by Design, Mac & Jac, prAna, Sigrid Olsen, Stamp 10, Tapemeasure and Tint.
The company’s shares rose 25 cents to $37.48 in morning trading.
Only two weeks ago, company founder Liz Claiborne died at age 78 after a long illness. She had launched her label with her husband, Art Ortenberg, and two partners in 1976 and took the company public in 1981. Liz Claiborne and Ortenberg retired from the day-to-day operations in 1989.
In fiscal 2007, the company expects adjusted earnings of between $1.90 and $2 a share, compared with a previous forecast of $1.90 to $2.05 a share, with adjusted net sales expected to be flat to down in the low-single digits from last year.
Analysts are expecting a profit of $2.06 a share for the year, according to a Thomson Financial poll.
The guidance excludes 6 cents in costs in the first quarter and 14 cents to 16 cents in costs related to the restructuring. Guidance also excludes any additional costs or additional income or expenses related to its strategic review of its brands.
In 2008, the company expects adjusted earnings between $2.35 and $2.50 a share on revenue of $4.2 billion to $4.3 billion. Analysts expect a profit of $2.34 a share on revenue of $5.12 billion.