NEW YORK — J.C. Penney is putting its horse out to pasture and getting behind a new Liz.
In its continuing drive to reinvent its stores, the retailer has teamed up with Liz Claiborne Inc. in an exclusive deal to launch Liz & Co. for women and Concepts by Claiborne for men throughout Penney’s stores, catalogues and online.
The two brands will replace Penney’s exclusive Crazy Horse moderate line, which Claiborne has been manufacturing for the retailer since 1998.
As part of Claiborne’s segmentation strategy, the names of the new lines will reflect their status as derivatives of the Liz Claiborne brand.
“There’s much broader appeal with a Liz & Co. name, and it’s much more relevant than a name like Crazy Horse,” said Karen Murray, group president of men’s wear, midtier, international alliances and licensing at Liz Claiborne Inc. “Crazy Horse was always a derivative brand of Liz Claiborne, but we are repositioning it with a more relevant label, name and look to make that clear. I just believe a name like Liz & Co. is more applicable to become a full lifestyle brand with a full range of apparel and accessories.”
For spring 2007, the Liz & Co. casual line will be sold exclusively in all 1,021 Penney’s stores, catalogues and online at jcp.com. Concepts by Claiborne will kick off in half of Penney’s stores, as well as the catalogue and online.
Liz & Co. is a line of sportswear, handbags, jewelry and accessories. Its male counterpart will feature casual sportswear as well as suits, suit separates, dress pants, dress shirts, neckwear, belts and outerwear. Claiborne declined to give volume projections for the new enterprise, but J.C. Penney does $1.2 billion in retail with its Arizona Jeans brand.
“As we continue to refine our merchandise assortments, we see a big opportunity to further expand our traditional and modern lifestyle segments,” Ken Hicks, Penney’s president and chief merchandising officer, said in a statement. “Liz & Co. and Concepts by Claiborne reflect the quality and value our customers have come to expect from J.C. Penney and will further reinforce us as a key shopping destination for exclusive and private brands.”
Exclusivity appears to be the name of the game at Penney’s. Earlier this week, it opened its first Sephora shops-in-stores, marking a return to the beauty channel. Penney’s also has an exclusive deal with Claiborne for the retailer’s new denim brand, Tint.
Claiborne, the $4.85 billion manufacturing giant, also manufactures exclusive, moderate lines with several of Penney’s competitors. Sears, Roebuck & Co. has First Issue, while Kohl’s has Villager, Axcess and Stamp 10, a denim-based brand launched this year.
Unlike those brands, Liz & Co. is a secondary line of the company’s flagship Liz Claiborne brand, which underwent a design makeover this year for its 30th anniversary with a new designer and marketing campaign that tripled its spending. The better sportswear brand, which represents about $1.1 billion in annual sales, or 24 percent of the company’s volume, hired Richard Ostell as creative director in March 2005. Ostell hails from a design background, working for Nicole Farhi and partnering in London fashion house Flyte Ostell, and aims to bring a higher aesthetic to the brand.
Liz & Co. will have a separate design team and staff. It will be more casual than its primary collection and will be priced about 25 percent less than the Liz Claiborne brand, which wholesales from $25 to $100.
“It’s all part of a segmentation strategy that Liz Claiborne has had, which we believe is beneficial not only to us but also to both the department stores and to Penney’s,” said Murray. “We are trying to do both at one time — upgrade the Liz Claiborne brand so it is a more special line, and have a Liz brand in Penney’s, as well. There are clear differences in what we are bringing to both.”
Liz & Co. is not a new brand. In its previous life, it was one of four Liz Claiborne subbrands sold in department stores. But the company discontinued the line in 2004, as it consolidated its collection, Liz & Co., Lizsport and Lizwear subbrands into one master Liz Claiborne brand label for marketing purposes.
Moderate brands made up 11 percent, or about $533.5 million, of Liz Claiborne’s 46-brand portfolio in 2005. While contemporary acquisitions like Juicy Couture and Lucky Brand Jeans grab the company’s buzz, the moderate market quietly contributes to the company’s bottom line.
“The core of our business strategy at Liz Claiborne Inc. is to offer a diverse portfolio of quality brands that meets the widest range of consumers’ fashion needs,” Trudy Sullivan, president of Liz Claiborne Inc., said in a statement. “The new Liz & Co. and Concepts by Claiborne lines are designed to address the style and value preferences of J. C. Penney customers.”
As moderate lines are losing real estate in department stores, midtier retail chains are giving the moderate customer a home. Penney’s stores generate sales of $221 a square foot, up 23 percent from five years ago, Robert B. Cavanaugh, executive vice president and chief financial officer, said in April at a conference for Wall Street analysts at company headquarters in Plano, Tex.
And the retailer is taking advantage of this by earmarking about $3 billion to build 150 stores and renovate more than 200 others as part of its accelerated growth strategy. Today, Penney’s opened 20 stores across the country.
“There is a growing demand for J.C. Penney stores in markets across the country. We are addressing this by launching the most aggressive store-opening program in more than 25 years, which will allow us to offer our customers even more access to style and quality at smart prices,” said Myron E. Ullman 3rd, chairman and chief executive officer of Penney’s.
The expansion comes as Penney’s, which had sales of $18.7 billion last year, makes an aggressive push to capture mid-tier market share from its rivals on several fronts by targeting consumer lifestyles. In addition to cultivating exclusive brands like Liz & Co., the retailer has created a new traditional career line for women called East 5th, enhanced its Internet presence with a goal of $2 billion in sales and established more private brands.
Nearly 90 percent of Penney’s new stores to be built over the next three years are off-mall freestanding units, including 17 of the 20 stores that are opening today. Many are in smaller communities with populations under 100,000. Penney’s has pinpointed at least 400 underserved or unserved markets where it plans to open stores, although executives declined to identify all the locations. The goal is to have at least 75 percent of the chain’s stores renovated or new by 2009.
“It could be a win-win for both companies because J. C. Penney is on a quest for the moment to evolve into the shopping destination for Middle America,” Catherine Sadler, president of New York marketing firm Catherine Sadler Group, said of the Claiborne deal. “J.C. Penney is attempting to do for the midtier market what Target did for the mass market. They are finding exclusive, unique brands to differentiate themselves, and this is a great match.”