Liz Claiborne to sell several brands, change name

October 12, 2011 - 8:50 AM

NEW YORK (AP) — Talk about a makeover. Financially struggling Liz Claiborne Inc. is selling its namesake brand and several others and says a name change is in the works.

The company, which hasn't had an annual profit since 2006, said Wednesday that it will concentrate on brands that draw in high-end shoppers — Juicy Couture, Lucky Brand and kate spade — as it works to reduce its debt.

The company said its name change will reflect that emphasis. It hasn't picked a new name yet.

Wall Street applauded the plans. Its shares climbed $1.31, or 26 percent, to $6.41 in morning trading.

"Over the past few years, we have worked diligently to turn this into a more efficient, dynamic, brand-centric, retail-based company, and today marks the culmination of these efforts," CEO William McComb said in a statement.

The moves come as low- and middle-income shoppers in the U.S. are still pulling back on their spending, but wealthier consumers are spending on luxury. Upscale retailers such as Tiffany & Co. and Nordstrom Inc. have reported strong performances this year thanks to luxury goods.

Liz Claiborne hopes that a more high-end focus will turn around its business. Its last annual profit was five years ago and its annual revenue has dropped 50 percent from 2006 to 2010.

Liz Claiborne said it will sell the domestic and international trademark rights for its Liz Claiborne brands and the U.S. and Puerto Rico trademark rights for the Monet jewelry brand to department store operator J.C. Penney Co. for about $288 million. The Liz Claiborne brands include Liz Claiborne, Claiborne, Liz, Liz & Co., Concepts by Claiborne, LC, Elizabeth, LizGolf, LizSport, Liz Claiborne New York (LCNY) and Lizwear brands.

It is also selling the Kensie brands — which includes Kensie, Kensiegirl and Mac & Jac — to Bluestar Alliance and has completed the sale of its Dana Buchman brand to Kohl's Corp, with both transactions bringing in proceeds of about $40 million.

Liz Claiborne expects to generate about $328 million from its sales of the Liz Claiborne and other brands, which includes $308 million in sale proceeds. It anticipates using its proceeds to lower debt further.

McComb said that the company expects 2011 net debt of $270 million to $290 million after closing on its transactions. Liz Claiborne anticipates closing on the sale of its Liz Claiborne, Monet and Kensie brands in the fourth quarter.

In addition, Liz Claiborne is ending its DKNY Jeans and DKNY Active license with Donna Karan International one year early. The license will terminate at the end of the year.