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The Fall of the House of Juicy

No brand before or after it captured the zeitgeist quite like Juicy Couture. So why did the brand, a business with almost $500 million in annual revenue, sell this autumn in a $195 million cash deal to a licensing group better known for working with brands like Marilyn Monroe and Elvis Presley?
Juicy Couture A/W 2013 Campaign | Source: Juicy Couture
  • Lauren Sherman

NEW YORK, United States — November 8th was a sad day for Juicy Couture fans. "Juicy Couture stores will be changed to Kate Spade! bring back @skaisttaylor please!" shouted @lilitmanukyan via Twitter. "End of an era," remarked @sonja14.

Indeed it was. Just a month earlier, Fifth and Pacific Companies (the public company formerly known as Liz Claiborne Inc) sold Juicy Couture to Authentic Brands Group (ABG), a licensing company, in a cash deal worth $195 million. ABG, which also owns the licensees of the estate of Elvis Presley, Marilyn Monroe, Judith Leiber, Hickey Freeman and others, quickly inked a deal with discount retailer Kohl’s to sell Juicy Couture-branded product beginning in the autumn of 2014.

With more than 1,146 stores across the United States and 2012 annual sales topping $18.8 billion, Kohl's is nothing to sniff at, despite its apparent lack of fashion credentials. Along with one-off designer collaborations with the likes of Narciso Rodriguez and Derek Lam, the store sells celebrity collections by Jennifer Lopez and Lauren Conrad, as well as Vera Wang's diffusion line, Simply by Vera Wang.

But unlike the aforementioned designer labels with whom the store is partnering, going forward, Juicy Couture will be available only at Kohl's — at least for now. In recent years, the brand had been entirely dropped by Lord & Taylor, Bergdorf Goodman and cut back significantly at Saks Fifth Avenue, Nordstrom and Neiman Marcus.

To win some of these accounts back, Nick Woodhouse, chief marketing officer of ABG, revealed to BoF that the company is currently working to develop a contemporary-priced line that is being called the “international collection” which will be sold abroad via the brand’s many licensing partners, but also at wholesale in the US. “The phone hasn’t stopped ringing,” Woodhouse said of international companies eager to sell Juicy Couture products. Woodhouse declined to divulge the name of the designer for the new collection.

Yet it’s still all a far cry from 2003, when Juicy Couture founders Pamela Skaist-Levy and Gela Nash-Taylor sold the company to Liz Claiborne Inc for $53.1 million.

Established in 1997, Juicy Couture hit its stride just as celebrity-heavy weeklies — particularly US Weekly, Life & Style and InTouch — were gaining traction in the US market. Suddenly, celebrities were being photographed more frequently off the red carpet than on it: during coffee runs, at the dog park, off-loading groceries into their SUVs. And they were often wearing Juicy Couture's classic tracksuit, rendered in velour or terry cloth.

"We knew it was something big when all of the stylists and celebrities started calling us," recalled Nash-Taylor. "Madonna wore a tracksuit embroidered with 'Madge.'" Britney Spears, Victoria Beckham and Paris Hilton were also fans.

"It was revolutionary at the time," said Booth Moore, fashion critic of the Los Angeles Times and co-writer, with Skaist-Levy and Nash-Taylor, of The Glitter Plan: How We Started Juicy Couture for $200 and Turned It into a Global Brand, set to be released in May 2014. "There were a lot of factors: the rise of celebrity culture and the rise of celebrity magazines were two of the biggest. People started looking at celebrity paparazzi photographs for style tips. Pam and Gela were smart because they gave a lot of clothes away to celebs. That's a common marketing tactic now, but it wasn't then."

Juicy Couture tracksuits became the Uggs of activewear. Skaist-Levy and Nash-Taylor were able to transform a sloppy and un-fashionable style into a must-have. “It helped that they were comfortable and that the fit was great,” Moore said. Plus, they came in a rainbow of colours, most notably several shades of pink. Women would often pair them with Uggs for school runs, and Manolo Blahniks for dinner in Beverly Hills. “It was about marketing the lifestyle of Los Angeles and Hollywood.”

The company also emerged at a time when the contemporary fashion market was still new, before Marc by Marc Jacobs had even launched. (The contemporary market is now estimated to be worth more than $5 billion a year, in the United States alone.) While Juicy's tracksuits were not cheap, at almost $200 each, they weren't expensive either. "They played an incredibly big role in the rise of accessible luxury," Moore said. "They paved the way for Alexander Wang, Phillip Lim and Tory Burch."

Skaist-Levy and Nash-Taylor say they sold the rapidly growing Juicy to Liz Claiborne because they had to. "Paul Charron and Angela Ahrendts did what we couldn't do," Nash-Taylor said of the company's then-CEO and group president, respectively. The duo worked alongside the Liz Claiborne executives to meet consumer demand, opening stores and launching what is now a $250 million fragrance business. "The synergy was perfect," Nash-Taylor continued. "They loved us and we loved them. We're very close to them still."

By the time current Fifth & Pacific chief executive Bill McComb was installed in 2006, Juicy Couture was a “big, big machine,” Skaist-Levy said. By 2007, Juicy Couture’s net sales were $493.8 million, a 49 percent increase from 2006. The brand had expanded into multiple categories, including jeans and jewellery, and made an extremely successful foray into fragrance with Elizabeth Arden. But “big is the killer of cool,” she added. “And the new management were just not into founders.”

Indeed, while McComb and the brands energetic founders have their own ways of saying it, it’s clear that they were not on the same wavelength. Nash-Taylor and Skaist-Levy feel they were not allowed to let the brand evolve design-wise, even though many years had passed since bedazzled velour had been seen as more glamorous than gauche.

“We wanted to feed it with new ideas, stay current,” Nash-Taylor said. McComb points to a lack of continuity. “Pam and Gela worked on the highly creative parts of the business and primarily touched the apparel,” he said. “At the Liz Claiborne complex, designers were working on other products. There were different groups doing different things, and I saw that as a risk for the brand equity.”

The founders of Juicy Couture departed in 2010, 13 years after its launch. “As Paul and Angela would say, ‘You sold your business, it’s not yours anymore,’” Nash-Taylor said. “But we felt like it was ours. That was the difficult part. We thought we would be with Juicy forever.”

After riding out their non-compete clauses, the duo launched contemporary label Skaist-Taylor in 2012, which is currently sold by retail heavyweights like Neiman Marcus and Net-a-Porter. For Spring 2014, they decided to rename the brand Pam and Gela, and focus on the upscale activewear they became so well known for in the first place. “We realised, yet again, that there was a void in the market,” Skaist-Levy said. “Yes, you can get Lululemon, but that isn’t the same thing.” Pam and Gela will be sold at more than 150 retailers across the country come spring.

As for Juicy Couture, McComb, who spent 14 years at Johnson & Johnson before succeeding Charron, says that, coming to Liz Clairborne, his strategy was to “place a few big bets,” shedding most of the company’s underperforming licenses and focusing on just a few. The odds, initially, were very much in Juicy Couture’s favour. “When I walked in, Juicy was shooting itself out of a cannon, it was growing so fast; arguably, a little too fast,” McComb said. “The market research on that brand is still some of the most extraordinary research I’ve ever seen. There’s a phenomenal level of awareness, affection and affinity. We could have sold bubble bath and it would have flown out of the stores.”

But McComb says the global recession got in the way. The largest part of the Juicy Couture business was department stores, which were arguably hit the hardest. “When we pulled out of department stores, it was very disruptive,” he said. In 2009, Juicy Couture’s net sales were $539.9 million, a 10.7 percent decrease from 2008. By 2012, they had dropped further to $498.6 million.

What’s more, the contemporary market had evolved dramatically over 10 years. No longer simply a place for t-shirts, jeans and a few knit dresses, contemporary customers were looking for high fashion  design at made-in-Asia prices. Even French fashion house Carven relaunched as a contemporary label, bringing a high fashion aesthetic to what was once the casual floor of the department store. Alexander Wang, Phillip Lim, Theory and others added more complicated pieces to their collections.

Suddenly, wild card Kate Spade New York was Fifth and Pacific’s shining star. Its own 2012 sales were $461.9 million, a 47.6 percent increase from 2011. “Kate Spade was tiny, so pulling out of department stores didn’t have as much of an impact,” McComb said. “Juicy can be a $2 billion to $2.5 billion business on the path that we were going. Lucky Brand jeans [also owned by Fifth & Pacific] over a billion. But Kate [Spade] can be a $4 billion to $5 billion business,” said McComb. “We live in a world where resource constraints are real. Do we divide the resources? That’s not what Wall Street is looking for. Kate Spade has proven that it has the longest runway. And that’s really what drove [the sale].”

McComb started shopping Juicy Couture around earlier this year. There were even rumours that Skaist-Levy and Nash-Taylor might buy it back with the help of a private-equity partner. “That story got sort of convoluted,” Nash-Taylor said. “People were calling us in a crazy way, and they all asked if they bought it, would we come back? We would have loved to have gotten it back, there’s no doubt.”

But instead, Fifth and Pacific sold to Authentic Brands Group. And just last week, persistent rumours that Lucky Brand jeans is on the block for $250 million surfaced yet again. “Philosophically, do we want to focus more resources on [Kate Spade]? Yes,” McComb conceded. “Someday, does it make a lot of sense for them to be separate? Yes. But that could be next week, or next year. Anything is possible.”

So what’s next for Juicy Couture?

Woodhouse is confident the company can become the $2.5 billion business to which McComb alluded. “We want to evolve the brand, while still maintaining its roots of whimsy and fun,” said Woodhouse. “It has the potential to have a very, very large global footprint.”

Its former owners agree. McComb says he’s still “bullish” on the brand. “It’s tough, but we want Juicy to live on and have great success,” Nash-Taylor said.

“Viva la Juicy,” Skaist-Levy added.

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