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October 13, 2011

Liz Claiborne Sells Off Brand Naming to JCPenney

JCPenney.jpgIn a remarkable move yesterday, Liz Claiborne Inc. decided to sell off its namesake brand to J. C. Penney Company, Inc.

The company is also selling off a bundle of other brands to Kohl's Corporation and Bluestar Alliance, in deals over the next thirty days that will bring in $308 million in proceeds.

Ironically, the company started by fashion legend Liz Claiborne in 1976 now has to find a new name. The remaining brands under its umbrella are Kate Spade, Lucky Brands and Juicy Couture. Liz Claiborne Inc. now has twelve months to rename itself.

Included in the sale to JCPenney are other lines such as Claiborne, Liz, and Liz and Co. JCPenney sees this as a real growth opportunity, having already secured a sole licensing deal with the company before the sale.

Liz Claiborne has been traditionally fairly profitable for JCPenney, while Liz Claiborne Incorporated has faced massive debt. This sale seems to be a win-win situation for both, driving up the stock price of Liz Claiborne Inc. significantly this week.

As Forbes puts it, "talk about a fashion makeover."

Liz Claiborne Inc. has not had an annual profit since 2006 as consumers shop for even lower end brands. Liz Claiborne Inc. is now staying at the high-end of fashion with brands that are priced for the relatively well-heeled consumer. For instance, Lucky Brand jeans sell for about $99 while the Kate Spade handbag will set you back $300 on average.

Liz Claiborne was arguably the first mainstream designer to provide working women with sensible, good-looking apparel for the office. She founded the company in 1976 and by 1988 it had a whopping one third of the American women's upscale sportswear market. In 1986, it made the Fortune 500 list with retail sales of $1.2 billion. This was the first company founded by a woman that made this coveted list.


It is, arguably, the ultimate midrange brand name. This means that it will work well in the JCPenney line where it can be managed alongside a stable of other brands.

The name itself has an enduring appeal, sort of like that of Coco Chanel. However, unlike Chanel, Liz Claiborne is synonymous with middle-class dressing, and today's middle-class woman has a great deal more choice than her counterpart did thirty years ago.

I just have to wonder what Liz Claiborne herself would say. Also, I have to wonder what the new company will be called.

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Posted by William Lozito at October 13, 2011 8:10 AM
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