Blog: Liz Claiborne splits in two
Leonie Barrie | 25 June 2007
Liz Claiborne has made no secret of the fact it’s reviewing its operations, and the company reorganisation announced last week is perhaps a taste of what’s to come when the full appraisal is completed next month. The decision to split into two segments – a retail-based division and a wholesale-based division – is also a hint at how CEO William L McComb might be hoping transform Liz Claiborne’s business model seven months after taking control at the helm.
The split seems to shake out the company’s desirable and undesirable holdings: its investment-worthy “power brands” like Juicy Couture, Lucky Brand and Sigrid Olsen versus the apparently less-desirable group that includes the company’s namesake label, Dana Buchman, Ellen Tracy, and DKNY Jeans and DKNY Active.
Liz Claiborne has been in the doldrums for six quarters of declining earnings, with the latest first-quarter profit posted in May dropping 65% as a result of department store consolidation and order cut backs on its poorer performing apparel lines. A clearer vision of the company’s structure is expected to be revealed at its Investor’s Day meeting on 11 July. Not only is the future of the more than 40 brands that make up the company’s portfolio likely to be outlined in more detail, but much-rumoured measures like job cuts and other cost-control initiatives could well be announced.
But it’s important to remember that any turnaround plan won’t have an immediate impact on the bottom line, and will certainly take time to implement – with an acceleration in earnings still likely to be a number of years away.
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