Liz Claiborne’s


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Liz Claiborne’s

  1. 1. Jeff Gaetani Sheri Vella Mandi Marcino Eric Defazio Dan Reid
  2. 3. Liz Claiborne’s Company Profile
  3. 4. Profile <ul><li>Liz Claiborne is a designer and #1 marketer of women's apparel in the US </li></ul><ul><li>They also sell men’s apparel, jewelry, cosmetics, shoes, sunglasses, home furnishings, watches, and fragrances </li></ul><ul><li>They have a multibrand portfolio strategy - it sells clothing in all price ranges </li></ul><ul><li>Brands: Liz Claiborne, Liz & Co., LizSport, LizWear, Elisabeth, Claiborne, Dana Buchman, and Emma James </li></ul>
  4. 5. Profile Continued <ul><li>Liz Claiborne sells most goods in department stores </li></ul><ul><li>Operate in 195 specialty and outlet stores </li></ul><ul><li>The company sells its products in the U.S. and in more than 60 other countries </li></ul><ul><li>Liz Claiborne does not make any of its products, contracts work out </li></ul><ul><li>Main manufacturers are in Asia and Central America </li></ul>
  5. 6. Main Strategic Issue
  6. 7. Strategic Issue(s) <ul><li>How should Liz Claiborne refocus their product line and marketing strategy to obtain the industry position they once held? </li></ul><ul><li>Other issues: </li></ul><ul><ul><li>Should Liz Claiborne incorporate a downscoping strategy because over diversified? </li></ul></ul><ul><ul><li>How will Liz Claiborne Inc. fill the void left in strategic leadership from the absence of Liz Claiborne, her husband, and Jay Margolis? </li></ul></ul>
  7. 8. SWOT Analysis
  8. 9. Strengths <ul><li>Marketing </li></ul><ul><li>Technology </li></ul><ul><ul><li>SURF </li></ul></ul><ul><li>Distribution </li></ul><ul><li>Social Responsibility </li></ul><ul><ul><li>Women’s Work & Liz Claiborne Foundation </li></ul></ul>
  9. 10. Weaknesses <ul><li>Economic conditions </li></ul><ul><ul><li>profitability of retailers </li></ul></ul><ul><li>Management’s focus </li></ul>
  10. 11. Opportunities <ul><li>Global expansion </li></ul><ul><li>Product development </li></ul>
  11. 12. Threats <ul><li>Shoppers shift </li></ul><ul><ul><li>shopping malls to specialty stores/boutiques </li></ul></ul><ul><li>Department stores bankruptcies </li></ul>
  12. 13. External Environment Analysis
  13. 14. Demographic <ul><li>Working women at all price points </li></ul><ul><ul><li>Elisabeth line for “forgotten women” </li></ul></ul><ul><ul><li>Petite women </li></ul></ul><ul><li>Conservative men and young men </li></ul><ul><li>Children’s line (1984-1987) </li></ul>The General Environment:
  14. 15. Economic <ul><li>Customers more demanding and adamant about paying less </li></ul><ul><li>Sales affected because consumers sensitive to inflation rates </li></ul><ul><li>Manufacturing done overseas, economic instability an issue </li></ul>The General Environment:
  15. 16. Political/Legal <ul><li>Government control of competition </li></ul><ul><li>Political risk and instability a factor of Third World countries </li></ul><ul><li>Provides labeling with content and care instructions </li></ul><ul><ul><li>high cost </li></ul></ul>The General Environment:
  16. 17. Sociocultural <ul><li>Committed to the welfare of women </li></ul><ul><li>Women Work </li></ul><ul><ul><li>develops and funds programs designed to heighten awareness of women and their families about domestic violence and work/family conflicts </li></ul></ul><ul><li>Liz Claiborne Foundation </li></ul><ul><ul><li>assists social welfare programs </li></ul></ul>The General Environment:
  17. 18. Technological <ul><li>SURF (Systems Updated Retail Feedback) </li></ul><ul><ul><li>Allows quick response </li></ul></ul><ul><li>Constantly changing/upgrading </li></ul><ul><ul><li>high cost associated </li></ul></ul>The General Environment:
  18. 19. Global <ul><li>International product </li></ul><ul><ul><li>affected by recessions </li></ul></ul><ul><ul><li>subject to cultural trends </li></ul></ul><ul><li>Already popular in Canada and England </li></ul><ul><ul><li>dress like us </li></ul></ul>The General Environment:
  19. 20. The Industry Environment <ul><li>The fashion industry is highly competitive and is located in the maturing stage of the industry life cycle </li></ul><ul><li>Hardly any threat of new entrants </li></ul><ul><li>Large economies of scale: </li></ul><ul><ul><li>Do to decrease in retailers, decrease in access to distribution channels, and an increase in need for financial resources </li></ul></ul>
  20. 21. Industry Environment Analysis Continued <ul><li>Intense rivalry between Liz Claiborne and its major competitors </li></ul><ul><li>All firms competing to be first company to release what would be the future trends in fashion </li></ul><ul><li>Competition also intense because firms are competing in same retailer’s stores </li></ul>
  21. 22. Industry Environment Analysis Continued <ul><li>Trying to predict future trends make this industry very risky </li></ul><ul><li>Firms need to predict what consumer would like a year ahead of time </li></ul><ul><li>Buyers having all the power </li></ul><ul><ul><li>The consumers dictate the sale of the goods and as long as style suits their tastes the consumer will pay a premium price for the designer clothing </li></ul></ul>
  22. 23. The Competitor Environment <ul><li>Highly competitive and constantly changing </li></ul><ul><li>Liz Claiborne’s competitive advantage of versatility and diverse markets </li></ul><ul><li>Competitors: </li></ul><ul><ul><li>Jones of New York </li></ul></ul><ul><ul><li>Evan Piccone </li></ul></ul><ul><ul><li>Chaus </li></ul></ul><ul><ul><li>JH Collectibles </li></ul></ul>
  23. 24. Internal Environment Analysis
  24. 25. Resources
  25. 26. Reputation <ul><li>Described by Working Woman Magazine as “the wizard of the working woman’s wardrobe.” </li></ul><ul><li>Proven by increased sales </li></ul><ul><li>Provides quality products at affordable prices </li></ul>
  26. 27. Human Resources <ul><li>Liz Claiborne (1976 - 1989) </li></ul><ul><ul><li>superior design knowledge, innovative thinker </li></ul></ul><ul><li>Arthur Ortenberg (1976 - 1989) </li></ul><ul><ul><li>expert in business administration </li></ul></ul><ul><li>Jay Margolis (1989 - 1993) </li></ul><ul><ul><li>Vice Chair & VP of Women’s Sportswear, core division and most profitable </li></ul></ul>
  27. 28. Capabilities Capabilities Capabilities Capabilities
  28. 29. Distribution <ul><li>Liz Claiborne distributes mostly through Department Stores </li></ul><ul><li>Liz Claiborne opened First Issue, retail, and outlet stores </li></ul><ul><ul><li>eliminate threat of competition </li></ul></ul>
  29. 30. Marketing <ul><li>Liz Claiborne markets its merchandise as outfits instead of separates </li></ul><ul><li>Have six seasonal lines </li></ul><ul><li>To market product outside U.S. - tailor strategies specifically for each country </li></ul>
  30. 31. Innovation <ul><li>Design Skill - design mix-and-match coordinates that can be variously combined </li></ul><ul><li>Modern classic rather than trendy </li></ul><ul><li>Designed with practicality, style, and longevity in mind </li></ul><ul><li>Goal is customer confidence </li></ul>
  31. 32. Core Competencies
  32. 33. Brand Name <ul><li>“ Liz Claiborne” symbolizes quality </li></ul><ul><li>Outfits more women than any other designer </li></ul><ul><li>Diversity of logo </li></ul>
  33. 34. Marketing <ul><li>Leader in outfit marketing </li></ul><ul><li>Market cultural tailored clothing in boutique style shops </li></ul><ul><li>Strategic action of ignoring standard for option of six seasonal lines </li></ul>
  34. 35. Technology <ul><li>SURF (System Updated Retail Feedback)- provides weekly reports on sales trends nationwide </li></ul><ul><li>Enables management to make long-term and short-term fashion plans </li></ul>
  35. 36. Distribution <ul><li>Distributes through high quality, reputable department stores (Filenes, Bloomingdale’s, Lord & Taylor, and Macy’s) </li></ul><ul><li>Operation of Company-owned stores act as laboratories </li></ul><ul><li>Outlet stores located a distance away from department and retail stores to preserve brand name </li></ul>
  36. 37. Financial Analysis
  37. 38. Ratio Analysis <ul><li>The following is a financial analysis of profitability, liquidity, debt management, activity and shareholders return ratios </li></ul><ul><li>Data is from 1993, 1997, the industry, and the market </li></ul><ul><li>* Textile - Apparel Clothing </li></ul><ul><li>** 8,000 Publicly Traded Companies </li></ul>
  38. 39. <ul><li>Profitability ratios show the combined effects of liquidity, asset management, and debt management on operating results. </li></ul><ul><ul><li>Return on assets measures the amount earned on each dollar invested in assets </li></ul></ul><ul><ul><li>The net profit margin represents the amount of each dollar of revenue that results in net income Liz Claiborne Industry* Market** 1993 1997 1997 1997 </li></ul></ul><ul><ul><li>Return on Assets 10.3% 13.3% 7.8% 2.5% </li></ul></ul><ul><ul><li>Net Profit Margin 5.8% 7.7% 5.3% 5.7% </li></ul></ul>Profitability
  39. 40. <ul><li>Liquidity ratios measure the risk level and ability of a firm to meet its current obligations. </li></ul><ul><ul><li>The quick ratio measures the company’s ability to pay its short-term obligations </li></ul></ul><ul><ul><li>Liz Claiborne Industry* Market** </li></ul></ul><ul><li>1993 1997 1997 1997 </li></ul><ul><li>Quick Ratio 2.2 1.3 1.1 0.8 </li></ul>Liquidity
  40. 41. <ul><li>Debt management ratios measure the extent to which a firm is using financial leverage and the degree of safety afforded to creditors. </li></ul><ul><ul><li>The debt-to-equity ratio shows borrowed funds versus funds provided by shareholders. A higher proportion of debt to equity, the more risky a firm is. </li></ul></ul><ul><li>Liz Claiborne Industry* Market** 1993 1997 1997 1997 </li></ul><ul><li>Debt-to-Equity 0.26 0.00 0.36 1.20 </li></ul>Debt Management
  41. 42. <ul><li>Activity ratios describe the relationship between the firm’s level of operations and the assets needed to sustain the activity. </li></ul><ul><ul><li>The asset turnover ratio measures how efficiently a company uses its assets to generate sales </li></ul></ul><ul><li>Liz Claiborne Industry* Market** </li></ul><ul><li>1993 1997 1997 1997 </li></ul><ul><li>Asset Turnover 1.8 1.8 1.5 0.5 </li></ul>Activity
  42. 43. <ul><li>Shareholders return ratios relate the firm’s stock price to its earnings and book value per share, thus giving management an indication of what investors think of the company’s past performance and future prospects. </li></ul><ul><ul><li>The dividends per share are the amount of profits allocated to each individual share of stock </li></ul></ul><ul><ul><li>The dividend payout ratio shows the amount of dividends paid out as a percentage of profits </li></ul></ul><ul><li>Liz Claiborne Industry* Market** 1993 1997 1997 1997 </li></ul><ul><li>Dividends Per Share $0.44 $0.45 $0.21 $0.55 </li></ul><ul><li>Dividend Payout Ratio 28% 17% 16% 38% </li></ul>Shareholders Return
  43. 44. Growth Rates <ul><li>Liz Claiborne has grown btwn 1993-1997 </li></ul><ul><li>Current 12-month revenue growth rate is 8.8%, industry growth rate is 8.6% </li></ul><ul><li>Current 12-month net income growth rate is 18.6%, industry growth rate is 38.9% </li></ul><ul><li>The 36-month revenue growth rate is 4.0%, industry growth rate is 8.2% </li></ul><ul><li>The 36-month net income growth rate is 29.8%, the industry growth rate is 20.6% </li></ul>
  44. 45. Stock Graph
  45. 46. Courses Of Action
  46. 47. Action Recommended <ul><li>Liz Claiborne should form and install a market development strategy </li></ul><ul><ul><li>International marketing currently weak and growth opportunity abroad highest potential </li></ul></ul><ul><li>They should implement a product development strategy </li></ul><ul><ul><li>expand men’s lines and enhance accessory lines </li></ul></ul><ul><li>Continue with horizontal integration </li></ul><ul><ul><li>In 1992 made strategic acquisitions to expand product offerings & distribution </li></ul></ul>
  47. 48. An Update Of Liz Claiborne, Inc.
  48. 49. Company News Releases <ul><li>2/28/97 Acquired JH Collectibles trademark </li></ul><ul><li>7/22/97 Reached Agreement to license Outerwear with the Levy Group </li></ul><ul><li>8/8/97 Gaetano Sallorenzo named president of Liz Claiborne Europe </li></ul><ul><li>9/3/97 Bruce Revman named National Sales Manager of Lizgolf </li></ul><ul><li>9/10/97 Along with JCPenney announced launch of Crazy Horse label </li></ul><ul><li>2/24/98 Reached agreement to license Claiborne Boys with Fishman and Tobin </li></ul><ul><li>3/31/98 Launched JH Collectibles </li></ul>
  49. 50. Product Improvement <ul><li>Developed vendor certification process to improve quality levels at reduced cost </li></ul><ul><li>Added value with enhanced fabrics, trims and buttons </li></ul><ul><li>Increased product differentiation </li></ul><ul><ul><li>Lycra®, Tencel®, and washable rayon </li></ul></ul>
  50. 51. New Products <ul><li>Introduced Carefree™ Linen, Carefree™ Cotton, Carefree™ Khaki </li></ul><ul><li>Premiered Liz & Lycra® co-branding initiative with leggings, stirrups, and flat front pants </li></ul><ul><li>Classic Fit denim jean </li></ul><ul><li>Curve fragrance for men and women </li></ul><ul><li>Elisabeth/Liz & Co. casual knitwear for plus-size consumer </li></ul><ul><li>Men’s Sport line with performance fabrics </li></ul><ul><ul><li>rubber, microfiber, Lycra® spandex </li></ul></ul>
  51. 52. Expanded Brand Portfolio <ul><li>Dana B. & Karen “bridge” casual dressing </li></ul><ul><li>Emma James at moderate price points for department stores </li></ul><ul><li>Villager at popular price points for regional department stores </li></ul><ul><li>Budget-priced Russ line for Wal-Mart and other mass merchandisers </li></ul><ul><li>Value-priced First Issues for Sears </li></ul><ul><li>Relaunched Studio as sophisticated business casual line </li></ul>
  52. 53. LizFirst <ul><li>Accelerated company-wide transformation </li></ul><ul><li>Reduced costs and expenses by more than $67 million over two years </li></ul><ul><li>Excess inventories for an average season reduced by more than 50% </li></ul><ul><li>Reduced cycle time of components of major business processes by up to 30% </li></ul><ul><li>Completed conversion of First Issue specialty stores to Elisabeth, Liz Claiborne, and Claiborne for Men stores </li></ul>
  53. 54. LizEdge <ul><li>Provided selling floor merchandising services for 50% of our retail volume to enhance visual appeal, outfit presentation and multiple-item sales </li></ul><ul><li>Implemented Liz & Learn, a training and motivational program for 170 department store sales associates </li></ul><ul><li>Staged over 400 traffic-building fashion shows, dress-down Friday clinics, and pack-and-travel seminars, resulting in 43% average same-day sales increases </li></ul>
  54. 55. LizView <ul><li>Installed 176 shops in 97 branches --- 214,071 sq.. ft. of selling space --- creating high visible Liz Claiborne signature look, higher per-square foot productivity and increased net presence </li></ul><ul><li>Double-digit sales increases reported in most stores </li></ul><ul><li>Added 150 in-store shops for Leather Co. handbags </li></ul><ul><li>Expanded Claiborne selling floor impact with 100 new shops </li></ul><ul><li>Launched in-store graphics program to create visual connection with national ads </li></ul>
  55. 56. Advertising <ul><li>Initiated national advertising campaign </li></ul><ul><li>Ran more than 300 ads in 26 different fashion and lifestyle publications </li></ul><ul><li>Signed Nikki Taylor as international signature model </li></ul><ul><li>Contracted for world’s largest outdoor advertising structure --- Times Square --- through year-end 1999 </li></ul>
  56. 57. Technology <ul><li>Enhanced consistency of design specifications via Animated Images systems </li></ul><ul><li>Implemented electronic pre-lining with key accounts </li></ul><ul><li>Instituted LizCADalyst, a networking technology permitting global transfer of textile and design information </li></ul><ul><li>Expanded LizRim retail inventory management system to more than 900 stores </li></ul><ul><ul><li>average 30% sales increases on 15% inventory reduction </li></ul></ul><ul><ul><li>goods now replenished in average 7 days compared to 21 days previously </li></ul></ul>
  57. 58. Management <ul><li>Recruited Denise Seegal as Company President </li></ul><ul><li>Restructured divisional management along Career, Casual, and Special Sizes lines </li></ul><ul><li>Implemented organizational development activities through Associate Involvement </li></ul><ul><li>Program and “Joining the Transformation” workshops </li></ul><ul><li>Reformed Moderate Division as Special Market Division focused on alternative distribution and price points </li></ul>
  58. 59. International <ul><li>Expanded account base to include retailers in Germany and Spain </li></ul><ul><li>Developed cross-divisional product assortments to address European lifestyles </li></ul><ul><li>Created special casual line for the United Kingdom based on cross-divisional product assortment </li></ul>
  59. 60. Thank You
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