In the Money: Fifth & Pacific shifts Juicy Couture fashion focus
Fifth & Pacific has no plans to take the struggling Juicy Couture brand downmarket as part of efforts to turnaround the business, and instead says it will focus on its own stores and productivity.
When asked if he would consider taking the brand out of higher end retailers and into mid-tier department stores, Fifth & Pacific CEO William McComb told investors last week: "The flat-out answer to your question is no. We're not desperate. We're not going to do that. We're going to build the business back through our own stores and productivity."
He also described the brand's performance in Asia and the Middle East as "very healthy and growing", recording a 25% increase during the fourth quarter of last year.
However, the Juicy Couture business has been struggling overall, with the brand blamed for dragging down Fifth & Pacific's fourth quarter results, which plummeted 75% to US$57m over the quarter ended 29 December. Sales rose 8.8% over the period to $487m, which it largely attributed to growth at the Kate Spade label.
Juicy saw sales decline 4% over the quarter and were down 2% on a like-for-like basis.
Speaking to investors on Thursday (21 February), McComb said that the range has been skewed "too much to the fashion component of the assortment", whereas this ought to be around the top 20% of the line.
"It's like making a meal of of hollandaise sauce," he said
Average retail price per unit in the second half of the year was up 28% on the same period of the prior year.
McComb said that between 2008 and 2010 there was no new fashion component, where now, the company has incorporated every single relevant trend - which has led to it getting a lot of attention from key influencers like fashion editors and bloggers.
However, for the brand to be successful, McComb said there needs to be an increase in "the amount of goods that are on folded tables," for instance.
This, said CFO, COO and EVP George Carrara, will mean that for autumn/holiday 2013 there will be "more compelling" opening price points as well as a greater penetration of denim.
"We've been experiencing an out performance in the sales-to-stock ratio of denim, and we're also leaving a little bit of open-to-buy on the table for our handbag assortments. So we plan to chase that in season," said Carrara.
McComb added that there will also be an increase in the proportion of graphic T-shirts and more separates in the tracksuit line.
Speaking about the priorities for recently appointed Juicy Couture CEO Paul Blum, McComb said: "I think that he is organising the team in such a way as to be a lot more focused, now that we've nailed the top end of the pyramid, on the middle and the bottom of the pyramid and waking up the opportunity in outlet."
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Fifth & Pacific Companies remains "on track" to hit its fiscal 2013 targets despite recording another large loss in the second quarter of the year, according to its CEO....
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