NEW YORK — Liz Claiborne Inc. has streamlined its operations and, as a result, will eliminate 500 positions within the company and reevaluate about 20 retail locations.
Paul Charron, chairman and chief executive officer of the $4.6 billion firm, said the moves will help the company to be more efficient in managing its current portfolio and allow for more growth opportunities.
The reduction of 500 employees, or 4 percent of Claiborne’s global workforce, will come from the more senior levels of the organization. The company also intends to streamline select distribution facilities and office space as well as close or repurpose approximately 20 retail locations.
“It’s never an easy thing to let people go; allowing people to leave you who have worked very hard for this company is extremely difficult and painful,” Charron said. “But we will do everything we possibly can to ease their transition. We will do the right thing.”
Charron said most of the people will be told of their termination within the next two weeks.
As a result of the initiative, brands and operations will be grouped according to consumer offerings and channels, rather than by brand, as the company is currently run. Brands will have their own key brand-specific functions, such as design, merchandising and marketing, while benefiting from shared functions within each grouping, such as planning, sales, sourcing and consumer research.
“We live in a world that is constantly changing, so decisions that were made in the past are not necessarily ensuring our future,” Charron explained. “I realized that we are not as responsive as we can be, so these changes are a necessity in order for us to align the business with our customers’ needs.”
Charron said that, with the changing retail environment, the company must free up dollars in order to invest in the brands in the portfolio and allow for more acquisitions. The Claiborne portfolio now holds 45 brands.
The company expects the realignment to yield annual gross cost savings of $60 million to $65 million starting in 2007, with $30 million to $35 million of cost savings anticipated this year. These cost savings are before increased investment in marketing and in-store support for high-potential growth brands, including Juicy Couture, Lucky Brand and Sigrid Olsen, as well as targeted brands such as Liz Claiborne. The company expects to take charges related to this initiative totaling approximately $60 million, the majority of which will occur in the first half of this year. Approximately $6 million of those charges are expected to be noncash.
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As part of the realignment, Pamela Thomas-Graham, group president, has responsibility for overseeing apparel for the better and moderate department stores, including brands such as Liz Claiborne, Sigrid Olsen, Emma James, JH Collectibles and the recently acquired Mac & Jac, Kenzie and Kenziegirl brands, among others.
Susan Kellogg, group president, is overseeing apparel for the bridge and contemporary lines, including Juicy Couture, Ellen Tracy, Dana Buchman, Laundry by Shelli Segal and the recently acquired Prana.
Susan Davidson, group president, has responsibility for overseeing apparel for Lucky Brand, DKNY Jeans and DKNY Active and C&C California, in addition to all brand offerings in accessories and cosmetics.
Karen Murray, group president, is overseeing apparel for Claiborne (men’s) and Enyce, as well as for men’s and women’s midtier brands for Kohl’s, Sears and J.C. Penney. She also will oversee all of the company’s international businesses in the Western Hemisphere and its licensing business.
Each group president reports to Trudy Sullivan, president of the company.
The firm is conducting a search for an executive to oversee its direct-to-consumer operations.