Liz Claiborne Inc. (LIZ) said J.C. Penney Co. (JCP) will be the
exclusive department-store outlet for two namesake brands in the
U.S., while QVC, the cable shopping network, will handle
distribution of the apparel maker's New York brand.
The news sent the apparel maker's beaten-down shares up 15%
premarket to $5.96. The stock through Wednesday had doubled this
year, but remained down 62% from same period a year earlier as Liz
Claiborne restructured its operations amid slumping demand.
The company has been undergoing a monthlong review that had
spurred speculation about whether any of its units may be sold.
Turnaround firm Alvarez & Marsal was brought in by the
debt-heavy apparel retailer at the behest of its banks to assess
how Liz Claiborne can improve working capital.
In August, Liz Claiborne's credit ratings were cut deeper into
junk territory by Moody's Investors Service because of the
company's second-quarter results and weak outlook for the second
half. Liz Claiborne's seventh-straight quarterly loss was a wider
than a year earlier on falling revenue and flat margins, as it
unveiled sweeping restructuring strokes to save $100 million.
J.C. Penney will exclusively carry the Liz Claiborne and
Claiborne brands starting in August. The pact has a term up to 10
years, and after five years J.C. Penney has the option to buy
license trademarks. In return, Liz Claiborne will get design
service fees, royalties and a percent, plus guaranteed minimums in
gross-profit sharing. Liz Claiborne is retaining its marketing and
distribution rights internationally.
QVC, a multimedia retailer known for its home-shopping
television channel, next fall will start to offer Liz Claiborne's
New York brand, a collaboration with famous designer Isaac Mizrahi.
Mizrahi will design the line of premium clothes, accessories and
home products, and QVC will merchandise and source the product.
Liz Claiborne has been trying with little success to rebuild its
brands, some of which were struggling before the recession. The
company has cut jobs and streamlined operations as it contends with
lower buying by consumers and less inventory stocking by department
stores.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com