WSJ: Claiborne Seeks a New Look --- Company Hangs Hopes On Isaac Mizrahi's Vision

Yay. Good news in fashion today. I heart Isaac. Read on:

Claiborne Seeks a New Look --- Company Hangs Hopes On Isaac Mizrahi's Vision Of Its Namesake Brand
By Rachel Dodes
21 August 2008
The Wall Street Journal

In an art gallery in New York's trendy Meatpacking district, celebrity designer Isaac Mizrahi recently quietly gave retailers a glimpse of his vision for rejuvenating the Liz Claiborne label. The occasion was a preview of the shoes, handbags and jewelry that will accompany his spring 2009 apparel line, which is still under wraps.
The collection includes modern styles like cork-covered high heels and oversize tote bags in soft neutrals, metallics and bright colors, according to two people who were there. The designs also incorporate an updated Liz Claiborne logo.
Liz Claiborne Inc., which hired Mr. Mizrahi as creative director earlier this year, is betting Mr. Mizrahi's star power will give its namesake label some sex appeal, or "mojo," as Chief Executive William L. McComb puts it. The flamboyant Mr. Mizrahi, after all, became a household name by designing a "cheap chic" line for Target Corp. that helped cement the retailer's reputation for selling stylish but inexpensive clothes.
Liz Claiborne, the company, has a lot riding on Mr. Mizrahi's efforts. The Liz Claiborne women's brand, long its cash cow, has been fading for years. As recently as 2000, it generated $1.2 billion of the company's $3.1 billion in sales that year and more than half its profit, according to people familiar with the business. Today, the brand rings up sales of about half as much and barely breaks even.
The company's fortunes nevertheless are tied more closely to the label than they have been in years. Since his arrival in late 2006, Mr. McComb, a former Johnson & Johnson executive, has sold, licensed or discontinued more than a dozen labels, including Dana Buchman, Ellen Tracy and Sigrid Olsen. In the process, he reversed the strategy of his predecessor, Paul Charron, who snapped up niche brands to spur growth and reduce the company's reliance on the Liz Claiborne label.
The relaunch with designs by Isaac Mizrahi "is the single most important issue" facing the company, Goldman Sachs analyst Benjamin Rowbotham said in a recent research report.
Mr. Mizrahi's collection, which will hit stores in February, has been shrouded in secrecy. He will unveil the line at a presentation for retailers in September. In an unusual step, the company is inviting only members of the media who agree not to write about the collection until Jan. 1, when Mr. Mizrahi is allowed to discuss it. Though his design agreement with Target has ended, Mr. Mizrahi is barred from speaking publicly about his Liz Claiborne designs until next year, because "it would be terribly confusing" for him to promote them while selling a different line at Target, a spokesman for the discount chain says.
The Liz Claiborne relaunch comes as retailers are cutting back on orders in response to the consumer spending slump. Department stores, the brand's only distribution channel, have been consolidating, pushing their own private-label brands and inking exclusive deals with designers in efforts to distinguish themselves from their competitors.
Women now are also used to mixing labels instead of buying an entire look like the color-coordinated Liz Claiborne separates that millions of baby boomers wore in the 1980s. Dave McTague, Claiborne's executive vice president of "partnered brands" -- those distributed mainly through department stores -- acknowledges in an interview that wowing the consumer these days "is so hard it's almost defeatist."
The new initiative also comes at a rough time for the company. In 4 p.m. New York Stock Exchange trading Wednesday, its stock was up 20 cents, or 1.3%, at $14.98. That's down about 58% from its 52-week high last October, compared with a drop of about 29% over the same period for the Dow Jones Wilshire U.S. Clothing and Accessories index. Last week, Claiborne cut its 2008 earnings guidance for the second time this year and disclosed that it had amended the terms of its credit facility to help it maintain adequate liquidity in the capital-intensive third quarter.
There has been high turnover in the executive ranks as Mr. McComb has reorganized the company. He slashed the number of senior positions and made some unconventional hires. They include Mr. McTague, a former Nike Inc. executive who ran its Converse apparel division, a significantly smaller business than the one he now oversees, and Tim Gunn, a co-host of Bravo's "Project Runway" reality show, who was brought in as chief creative officer.
To gather intelligence about the Claiborne consumer, Mr. Gunn toured 16 U.S. cities this spring, hosting fashion shows in department stores. The Liz Claiborne displays he saw were loaded with "dumb tops and bottoms" and were missing key styles and sizes, he says, adding: "I thought to myself, 'Where is the fashion?'"
Since his arrival at Claiborne earlier this year, Mr. Mizrahi has been given an unusual amount of control over the label that the late designer Liz Claiborne introduced in the 1970s and oversaw until her retirement in 1989. Working with a team of about 25 designers at his own Chelsea studio, instead of at Claiborne's headquarters in New York's Garment District, he can design whatever styles he wants, in whatever colors he chooses, so long as he sticks to cost guidelines, people close to the company say. Mr. Mizrahi is even helping determine the "line architecture" -- the number of shirts, pants, skirts and other garments in the collection. Such decisions are typically made solely by merchandising executives.
"If [Mr. Mizrahi] does the same thing with ready-to-wear as he did with the accessories, they could become a ferocious competitor again," says Anthony J. Buccina, vice chairman and president of merchandising at Bon-Ton Stores Inc., a regional chain.
Mr. McTague says "the beauty of Isaac" is that he connects with a wide range of customers. "There are 60-year-old women who are smoking hot, and 28-year-old moms who have kids and want to feel feminine and sexy but who are a size 16," he says. ". . . This woman has a list of desires, and we want to meet those desires."