Plano,TX—JCPenney today said it plans to purchase the Liz Claiborne brands from Liz Claiborne Inc. for $267.5 million. The deal is expected to close in 30 days, giving Liz Claiborne Inc. a major boost in reducing its debt load which has worried investors.
JCPenney already is exclusive licensee for all Liz Claiborne and Claiborne branded merchandise in the United States since August 2010, part of a 10-year agreement with Liz Claiborne’s parent that gave the department store an option to buy. JCPenney said it accelerated the purchase as Liz Claiborne Inc. is looking for ways to improve its financial situation.
Under the terms of the agreement, JCPenney will acquire the worldwide rights and intellectual property for the entire Liz Claiborne brand portfolio, including Liz Claiborne, Claiborne, Liz, Liz & Co., Concepts by Claiborne, LC,Elizabeth, LizGolf, LizSport, Liz Claiborne New York (LCNY) and Lizwear brands. Additionally, JCPenney said it expects to retain the Liz Claiborne design team.
Liz Claiborne Inc.: Sales to Generate $328 Million
Liz Claiborne Inc. also sold its Kensie brands, including Kensie, Kensiegirl and Mac & Jac to Bluestar Alliance and completed the sale of its Dana Buchman brand to Kohl’s Corp. this week for an estimated $40 million.
The sales of its Liz Claiborne brands is just the latest in a series of divestitures Liz Claiborne Inc. has made in recent months to help its ailing finances.
The company, which hasn’t posted a profit since 2006, now plans to focus on its specialty brands including Juicy Couture, Lucky Brand and kate spade new york. Liz Claiborne already has sold its Curve and other fragrance brands to Elizabeth Arden and its Mexx business in a joint venture led by The Gores Group. And in a move to cut fixed distribution costs, the company closed an Ohio distribution center and signed a deal with sourcing giant Li & Fung Ltd. to deliver goods to its stores and wholesale business. Liz Claiborne Inc. plans to end this year its DKNY Jeans and DKNY Active license with Donna Karan International one year early.
“Over the past few years, we have worked diligently to turn this into a more efficient, dynamic, brand-centric, retail-based company,” William McComb, Liz Claiborne Inc.’s ceo, told analysts. “Today marks the culmination of these efforts.”
McComb said that Liz Claiborne Inc. could generate about $328 million from its sales and would be resizing its corporate infrastructure as a result, including changing its corporate name to reflect its more streamlined company focusing on higher end brands.
The divestitures will help reduce the more than $548 million in long-term debt the company reported at the end of its second quarter. McComb said that the company expects 2011 net debt of $270 million to $290 million after closing on its transactions.