California Apparel News

Paul Charron is on a winning streak, and West Coast apparel brands are driving his success.

The consumer-savvy chairman and chief executive officer of Liz Claiborne Inc., who transformed the 28-year-old women’s apparel company into a $4.2 billion fashion industry powerhouse, is celebrating his 10th year at the helm of New York’s most recognizable big-name clothing company.

Under Charron’s direction, the apparel giant has expanded its holdings from four core brands to 36 labels, including the license for DKNY apparel. Today, Liz Claiborne’s offerings cover a wide range of consumer tastes—from better women’s and men’s apparel to young contemporary apparel, denim and streetwear.

A self-described “student of consumer behavior,” Charron watched as West Coast casual fashion trends began to grow.

West Coast apparel labels— including better casual denim maker Lucky Brand Dungarees, contemporary women’s apparel line Laundry by Shelli Segal, and men’s and women’s California-chic apparel label Juicy Couture—caught the attention of Liz Claiborne. Acquiring those brands gave Liz Claiborne a level playing field with competitors such as the VF Corp. and the Jones Apparel Group Inc.

Liz Claiborne acted first, purchasing Lucky Brand Dungarees from Gene Montesano and Barry Perlman in 1999. The Jones Apparel Group followed Claiborne’s example in 2002, when it acquired West Coast–based juniors denim label LEI. The VF Corp., through its Nautica acquisition in July 2003, inherited Los Angeles label Earl Jean.

Brien Rowe, managing director of The Sage Group LLC, a mergers and acquisitions firm in Los Angeles that specializes in branded apparel, arranged the sale of Juicy Couture to Liz Claiborne. Rowe predicts Liz Claiborne will continue its growth streak by acquiring more West Coast brands.

“Wall Street demands that the large, publicly traded apparel companies deliver growth rates in the teens,” he explained. “It is difficult for these companies to do that with their existing brands alone. The only way they can grow at that rate is by acquisition.

Investing in the West Coast lifestyle has paid off for Liz Claiborne. In a little more than a year, Juicy Couture has grown from a sexy sweats and T-shirt line to one quietly projecting sales of $200 million.

Diverse distribution channels have allowed Liz Claiborne to stay on top during tough retail times. The company has seen steady sales increases for the past 33 consecutive quarters. Its net profits rose 21 percent in 2003 to $279.7 million. This kind of track record has made 61-year-old Charron one of the apparel industry’s top executives.

Charron, who grew up in Louisville, Ky., earned his bachelor’s degree from the University of Notre Dame before he joined the military and served in Vietnam. After he was discharged, he earned a master’s degree in business administration from Harvard University and went on to become a brand manager at Procter & Gamble. Prior to joining Liz Claiborne, he served as the executive vice president of the VF Corp. for six years.

California Apparel News Manufacturing Editor Claudia Figueroa recently caught up with Charron to discuss life at Liz Claiborne.

Congratulations on your 10-year anniversary at Liz Claiborne.

It’s the longest I’ve been somewhere in my life. I came to Liz Claiborne as vice chairman and chief operating officer and member of the board on May 9, 1994. Then a year later, I was promoted to chief executive officer.

How has Liz Claiborne evolved since then?

The first thing I did was implement a strategic review process to determine what we wanted to be when we grew up. And then, essentially, we changed everything. We kept the culture and the values, and we contemporized the company with management practices, including a multi-brand portfolio, contemporary technology and cost reduction, among other strategies that were successfully being applied in other industries. Basically, we changed everything except [our] culture and values. At the time, we offered four core brands: Liz Claiborne, Elisabeth, Dana Buchman and Claiborne Men’s. Today we’re [at] 36.

What are some of the risks you’ve taken with Liz Claiborne, and what was the outcome?

One major step for the company was to diversify its portfolio, therefore lessening its dependence on the core Liz Claiborne brand.

We don’t think it’s less important, but one brand can’t be all things to all people. Our balanced portfolio strategy provides the flexibility to adapt quickly and profitably to the inherent unpredictability of the fashion industry.

How do you balance the opportunities for growing the company with the ongoing needs of your core brand?

We invest our money where we generate the best return. We know that we need to keep the brand vibrant while reaching out to new consumers. It’s been a clear and stated objective for the company to grow through a combination of acquisition and internal brand growth. We buy some brands, such as Juicy Couture and Enyce, and we build other brands, like Realities, Crazy Horse and Axcess. We’ve stated that our acquisition priorities are in specialty retail, accessories, menswear and international businesses. Two of our nine acquisitions have been companies outside of the U.S.—Mexx and Mexx Canada—and now we’re introducing Lucky Brand denim to European consumers via our first Lucky Brand store in Antwerp, Belgium, this fall. Our thrust in Europe will be both wholesale and retail [with] this brand.

How do you prioritize the growth of Liz Claiborne’s portfolio and products from a market-share position?

We prioritize via five growth strategies: to build our business in U.S. department stores; to build our business at more moderate price points with retailers like Kohl’s; to build our specialty store business at retailers like The Buckle and Pacific Sunwear and in our own stores; and to increase our international presence, including [our presence in] Mexico, Canada and Europe. And our final area of focus is in conceptually sound businesses that happen to be small and could profit from the unique capabilities that we can provide. For example, Lucky Brand Dungarees had seven flagships when we bought it in 1999, and since then it has grown to 81. We’re aiming to open another 10 stores this year, one at The Forum Shops in Las Vegas in October. We’re doing the same with Juicy Couture, which is opening its first store, also in Las Vegas, this October.

How does Liz Claiborne identify and track up-and-coming brands that would be appropriate for acquisition?

We focus all the time on what’s going on in our marketplace, from Neiman Marcus and Saks to Wal-Mart. So we always try to be on top of everything. At any point in time, we’re evaluating 10 to 12 potential acquisitions. Some of them will bear fruit, and some of them won’t. I’m a marketer and student of consumer behavior, which means I listen all the time. I listen to my daughter, and I listen to her friends. They help me see what’s hot. We certainly have an interest in reaching out and adding young consumers like my daughter, and we do that with our diverse brand portfolio.

How do West Coast labels such as Lucky Brand, Laundry and Juicy Couture fit into the company’s brand portfolio?

They make us younger and more hip. A lot of what is happening in fashion is driven by what is happening in Los Angeles. These brands take us to new and exciting places. I also think it’s notable that the companies’ owners continue to be very involved in their brands.

What have you learned after 10 years at Liz Claiborne?

I’ve learned two things. There’s no substitute for IQ. You can’t teach smarts. And, the second thing I learned is that we don’t do any of this alone. Our business is a function of high-quality people operating in a coordinated and collaborative way.

How do you plan to celebrate your anniversary?

By making my 11th year more successful than the previous 10 years.

Besides that ...

My wife and I will spend time with our children. I try not to take this job home every night.