Liz Claiborne is seeking to divest 16 of its 36 brands in an effort to simplify its corporate structure and to reduce overall expenses. The company has been suffering from a down-turn in department store sales. One of the brands Claiborne reportedly plans to divest is prAna, which it acquired in November of 2005 for roughly $50 million, after all performance-based pay-outs related to the acquisition.
The 16 brands that Claiborne will try to sell, license out or possibly discontinue include prAna, Mac & Jac, Kensie, Intuitions, C&C California, Enyce, Laundry, Tint, Stamp10, First Issue, and J.H. Collectibles. These brands are expected to generate 2007 sales of approximately $800 million.
LIZ CEO William L. McComb stated, “These brands have loyal consumer followings and valuable distribution, represent meaningful growth opportunities and can excel with the right partners and necessary investment. They also have strong management teams that will be incented to continue growing and developing them concurrent with the review process. The company expects to announce the results of its strategic review and formal plans for these brands by the second quarter of 2008.”
The sale is part of a larger restructuring effort implemented by McComb, who took over as CEO in October of 2006. prAna was reportedly realizing about $30 million in revenue per year before the acquisition and has grown in the double-digits ever since. This growth would put the company in the $40 million to $45 million range. If prAna fetches a similar multiple to what LIZ paid in 2005, it could sell for up to $75 million.
Wall Street has been speculating about potential bidders for the brand, and several interesting candidates have been mentioned, including VF Corp., Kellwood, NexCen Brands (the parent company to The Athletes Foot), Iconix Brand Group (parent company to Mossimo, Danskin and Gotcha) and Macys. There are also suggestions that Patagonia could make a good fit and Timberland may take a second look at the brand.
