It looks like Liz Claiborne may have made the wrong move by parting ways with a designer whose label they bought just last year.
If Liz Claiborne hadn’t sold off its stake in the Rodriguez Narciso label, Michelle Obama’s choice of dresses may have sent a stimulus check to tanking clothier Liz Claiborne. Obama, who seems set to become the most stylishly iconic first lady since Jackie Kennedy, stepped out last night in a dress made by a designer whose label was half-owned by Liz Claiborne until the two companies parted ways last month. And as Heard on The Street reported this morning, that appearance in front of millions Americans is likely to give the designer a hefty boost.
Shares of Liz Claiborne are down almost 50 per cent in the last month, suffering from the expected consumer pull-back. Last week, Chief Executive William McComb talked down fourth quarter estimates, saying, “We began to see real changes in spending patterns in our stores in September, and we saw our department store partners dramatically increase promotional activity at the same time. Traffic in malls and street locations is off in every region, including Europe.”
The first lady’s dress was designed by Narciso Rodríguez, who sold 50% of his label to Liz Claiborne last year. That deal fell apart, and was finally terminated in October of this year. Although Liz Claiborne is better known for the Juicy Couture, Lucky Brand and Kate Spade brands, a quick ramping up of Rodriguez’s production and distrubution could have helped the company capture a larger share of the shrinking consumer spending pie. Now they’ll be on the sidelines.
How big of the boost could they have expected? “Mrs. Obama’s appearance in Mr. Rodriguez’s dress will likely give a boost to the designer. Chicago-based designer Maria Pinto, for example, says she’s seen retail orders increase 45% within the last 12 months due in part to Mrs. Obama making key campaign appearances in her dresses,” Heard on the Street writes.
Of course, it’s not clear that Rodriguez are capable of executing on this opportunity. The largest institutional holders of LIZ, Fidelity and Lazard, however, are probably wringing their hands and dialling up contacts in management right now.
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