How does one sell a tracksuit empire without a time machine? Fifth & Pacific (FNP), formerly known as Liz Claiborne, is trying to find out. It has put on the block its Juicy Couture brand, as well as its Lucky denim line, according to the Wall Street Journal.
Lucky appears to be a growing business, but any buyer of Juicy, a brand built on the velour-clad bottoms of late-1990s pop stars, is likely to require a discount. Although Fifth & Pacific has updated the line to include skinny jeans, cocktail dresses, and old-fashioned swimsuits, Juicy’s revenue is down 18 percent since 2008. Major department stores started dropping the line as early as 2010, according to Women’s Wear Daily.
But Fifth & Pacific got in relatively early, snapping up Juicy in the spring of 2003. At the time, Juicy was a nine-year-old firm with fans in Madonna and Jennifer Lopez, and it had yet to open a stand-alone store. Its annual sales were about $47 million, according to regulatory filings. All told, Fifth & Pacific (then still known as Liz Claiborne) paid $226 million for the company over a five-year period.
Fifth & Pacific isn’t consistent in breaking out profit by brand, but by its peak in 2008, Juicy was massive, booking $605 million in sales at almost 100 stores. And as recently as 2011, it was posting a 12 percent profit margin. If Fifth & Pacific had similarly plump margins during Juicy’s peak years and kept its financial house in order otherwise, it could have handily recouped its original investment.
Meanwhile, Juicy co-founders Pamela Skaist-Levy and Gela Nash-Taylor have moved on to more fashionable things. They have a new brand—Skaist-Taylor—about which Racked.com asked, “If you were the kind of gal who wore a Juicy Couture jumpsuit 10 years ago, what would you wear now?” Knee-high, tongueless, open-toed, lace-up sandal boots, maybe, and why not?
Fifth & Pacific has been looking for a buyer in Asia, where Juicy might have kept more cachet than it did in the U.S., according to Reuters. A retail wizard with a touch for turnarounds could also be a good fit. Either way, the trick will be shedding the brand without a massive write-down.
The other winner in this deal looks like Kate Spade, which would be Fifth & Third’s sole remaining brand if it sells Juicy and Lucky. Its mod style—a far cry from Juicy’s plush glam—is resonating with buyers. Kate Spade’s annual revenue has more than doubled in two years to $462 million, and its profit margin hovers around 21 percent. Juicy indeed.