The company that currently owns Lucky Jeans and Juicy Couture brands has dropped from some 40 brands to three, but it has found dropping from three to one has become an even bigger challenge.
Earlier this year, the brand owner, Fifth & Pacific Cos., which was formerly known as Liz Claiborne, put both brands up for sale. Chief Executive William McComb has been trying to get the company down to size so it can focus on Kate Spade, which many refer to as its powerhouse brand.
Private-equity firm Advent International was close to purchasing Lucky, but near the end of the deal, talks broke down. Advent has not had contact with the company in a little over a month, according to reports. Other potential bidders are now reportedly interested in the brands, the media indicates. Fifth & Pacific’s stock fell 2% last Thursday, falling to $24.32 as the company held on to two brands it wants to get rid of.
Lucky is well known for its high quality denim products, but brightly colored track suits helped Juicy Couture land on the scene. When track suits lost popularity, the company failed to produce another blockbuster product to help it regain its status. Lucky has continued to fare well, but bidders have been concerned about its productivity, according to media reports. During the summer, Fifth & Pacific held an auction for Lucky, which drew in corporate and private-equity buyers, and after two rounds of bids, Advent signed an agreement to enter into exclusive discussions.
After questions arose, Advent revisited its original offer and came back with a lower one, then Fifth & Pacific rebuffed that offer in August. The company had dozens of brands and $5 billion in annual sales when McComb took over as CEO back in 2006. Now, seven years later, the company has three brands and sales of about $1.5 billion each year.
During the second quarter, the company reported a loss of $43 million, but sales increased 13% from the year before. Sales for Lucky fell $109 million, or 2.4% for that period. Juicy Couture saw an 11% decline to $94 million during that same timeframe. Kate Spade sales saved the company, increasing 65% during the quarter, reaching $167 million.
A new owner could possibly revitalize the Lucky Brand. The denim wear from the company remains popular today, and with the right leadership it could climb back to the top of the ladder. The same goes for Juicy Couture. A new product that is as popular as the brightly colored track suits could help it get back to the top of the fashion realm.
In the meantime, analysts say Fifth & Pacific should enjoy the success of Kate Spade and run with it, as it is the company’s hope to a more profitable future.
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