NEW YORK – One week after reporting sharply lower profits resulting principally from weakness in its moderate brands, Liz Claiborne Inc. has taken its first tentative steps into the luxury market by acquiring a 50% stake in the name and trademark of Narciso Rodriguez.
Claiborne said it had entered into “a multi-faceted partnership” with the designer and would form a new company to market his name worldwide. He will serve as creative director of the new venture.
The price of the transaction wasn’t disclosed by Claiborne, but The New York Times reported it to be $12 million.
William McComb, chief executive officer of Claiborne, commented that the firm foresees “abundant brand extension opportunities in non-apparel and licensing categories, as well as increased international distribution. Further, we see potential in the direct-to-consumer channel on a worldwide basis.”
Rodriguez has a worldwide licensing relationship for fragrances with Beaute Prestige International.
McComb called the transaction “a totally different kind of deal than those we have done in the past. Unlike acquisitions of fully scaled businesses, here we are affiliating with one of the world’s finest designers to organically build a broad business in a growing and profitable category that we do not currently operate in – the luxury designer segment – that is sold in productive and partnership oriented upscale retailers.
“The chance to work with Narciso to significantly grow his business while retaining his unique vision of timeless elegance was right in line with our commitment to outstanding designers and design excellence,” McComb continued. “We were compelled to seize on this opportunity now.”
Rodriguez, who attained instant celebrity when he designed the silk dress Carolyn Bessette wore when she wed John F. Kennedy Jr. in 1996, is a graduate of the Parson’s School of Design with two CFDA women’s wear design awards won in consecutive years and distribution in stores including Barneys New York, Bergdorf Goodman, Neiman Marcus and Saks Fifth Avenue.
Although Rodriguez has been one of the darlings of the fashion press, his business has failed to gain the same critical mass as his publicity scrapbook and, according to most reports, been hounded by a lack of cash for most of its ten-year existence.
In a sense, Rodriguez is the second fashion celebrity plucked from the ranks of Parson’s by McComb in his eventful six-month tenure as Claiborne’s CEO. In February, Claiborne appointed Tim Gunn, host of TV’s Project Runway and chair of its department of fashion design since 2000, to the new post of chief creative officer of the corporation.
Rodriguez said, “Collaborating with Liz Claiborne will enable me to focus on my work and all of its possibilities. Bill McComb and his team have a clear understanding of my vision and are committed to help me realize my dreams.”
Just last week, Claiborne reported that its first-quarter profits contracted 66% as it battled weak reorders and scaled-back orders for fall merchandise.
During his term at Claiborne’s helm, now-retired CEO Paul Charron aggressively transformed Liz Claiborne into one of the premier brand portfolio operators in the US apparel industry. Acquisitions included Enyce, Juicy Couture, Sigrid Olsen, Mexx, Laundry by Shelli Segal and Lucky Brand.