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Reshaping Claiborne: Liz Faces Challenges Selling Off 16 Brands

After a decade of frenzied acquisitions, Liz Claiborne Inc. is having a garage sale of many of its brands.

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"Once you say the brands are for sale, people aren't going to be knocking down your door to pay top price," Stephens said. "Today you have to have strong brands in strong channels. Moderate, urban and classic bridge, all are weak markets that they are exiting."

Andrew Jassin, managing director of the New York consulting firm Jassin O'Rourke Group, said he expects some of these transactions to come to fruition a month to six months from now. Conversely, he added, if there's insufficient interest, Claiborne will know within 90 days.

Jassin said he has clients that are looking at several brands — some of the several dozen firms that McComb said have already approached Claiborne.

"They may not make the grade for McCombs' business model, but that doesn't make the brands not work for other buyers," Jassin said.

For analysts and industry consultants, the 16 companies under review tend to fall into four baskets:

- Brands with name recognition and a clear niche — Enyce, Prana, Sigrid Olsen, Ellen Tracy, Dana Buchman and Laundry by Design — could be bought by vendors or retailers to get higher margins as private label. Citigroup analyst Kate McShane predicts those brands will likely sell for slightly less than one times revenue.

- Smaller labels C&C California, Mac & Jac and Kenzie have the contemporary channel to their advantage, but did not gain scale at Claiborne.

- Lower profile, lower-end brands like Emma James and Tapemeasure could be discontinued given the softness of the moderate market.

- The retailer-exclusive moderate brands, which include Stamp 10 for Kohl's, Tint for J.C. Penney, Intuition for Dillard's and First Issue for Sears, are more likely to be licensed to the respective retailers than sold.

Buyers will have to have a strategic side because the brands will need back-end support, but that does not limit the buying field to traditional manufacturers. Claiborne is providing retention incentives to keep talent at these brands not only during the review process but also through a continuity period with a new owner should the brand be divested. McComb declined to detail the incentives, besides saying, "They are funded appropriately."

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