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Last Wednesday, Liz Claiborne (LIZ) announced numerous transactions that not only generated $328M in cash to drastically reduce debt, but most importantly, greatly reduced the complexity of the brand focus ending years of transforming the company.

The press release highlights just how complex the structure remained even after years of selling off brands. LIZ sold the namesake brand Liz Claiborne and Monet to JCPenny (NYSE:JCP), Dana Buchman to Kohl's (NYSE:KSS), terminated a license for DKNY, and sold three more minor brands to Bluestar Alliance. This was on top of the joint venture for MEXX and the Elizabeth Arden transaction recently announced . It also doesn't include numerous other brands sold off over the last 3-4 years of streamlining the focus of the company.

Even after all these transactions, LIZ maintained international rights here, jewelry rights for a couple of brands here and there, and a trademark over there. So much for a completely streamlined structure.

Wow! All these deals for brands and licenses that the typical investor didn't even know existed. Clearly these brands provided zero benefit to the company and just left it bloated with debt.

The company is now left with three premium global lifestyle brands -- Juicy Couture, Lucky Brands, and kate spade. The preliminary guidance for September comps is very encouraging, with kate spade up a whopping 114% and Lucky up 24%. The disappointing brand remains Juicy Couture, with comps down 5%.

After these deals are completed in the fourth quarter, LIZ will reduce debt to a more manageable $280M, greatly reducing the capital structure.

Adjusted EBITDA for 2012 is estimated at $140M, or roughly 65% above the 2011 pro forma numbers. A sign of the growth opportunities going forward.

So what valuation do the remaining brands deserve? This will be the great question going forward. Below is a summary of the brands from the Q2 report:

Juicy Couture

Net sales were $117 million, a 4.7% increase compared to 2010, primarily driven by increases in outlet and e-commerce, partially offset by decreases in wholesale apparel and non-apparel. Store counts and key operating metrics are as follows:

We ended the quarter with 79 specialty retail stores, 49 outlet stores and 5 concessions, reflecting the net addition over the last 12 months of 11 specialty retail stores, 14 outlet stores and 5 concessions;

Average retail square footage in the second quarter was approximately 420 thousand square feet, a 27.3% increase compared to 2010;

Sales per square foot for comparable stores for the latest twelve months were $720; and Comparable direct to consumer sales (inclusive of e-commerce and concessions) were flat in the second quarter of 2011. Until September 2010, the Juicy Couture website was operated by a third party, and our sales to that third party were reflected as wholesale sales. E-commerce comparable sales calculations were based on the retail sales data provided by the third party operator.


Lucky Brand

Net sales were $97 million, a 12.5% increase compared to 2010, primarily driven by increases in specialty retail, wholesale apparel and outlet, partially offset by a decrease in wholesale non-apparel. Store counts and key operating metrics are as follows:

We ended the quarter with 180 specialty retail stores and 40 outlet stores, reflecting the net closure over the last 12 months of 10 specialty retail stores;

Average retail square footage in the second quarter was approximately 563 thousand square feet, a 3.2% decrease compared to 2010;

Sales per square foot for comparable stores for the latest twelve months were $391; and Comparable direct to consumer sales (inclusive of e-commerce) increased 21.5% in the second quarter of 2011.

kate spade

Net sales were $68 million, a 63.8% increase compared to 2010, driven by increases in e-commerce, specialty retail, outlet, wholesale non-apparel and wholesale apparel. Store counts and key operating metrics are as follows:

... ended the quarter with 44 specialty retail stores and 29 outlet stores, reflecting the net addition over the last 12 months of 5 specialty retail stores;

Average retail square footage in the second quarter was approximately 143 thousand square feet, a 2.8% increase compared to 2010;

Sales per square foot for comparable stores for the latest twelve months were $801; and

Comparable direct to consumer sales (inclusive of e-commerce) increased 77.1% in the second quarter of 2011.

From these numbers, all of the brands have limited store bases. In fact, kate spade only increased store space by 2.8%, clearly indicating that the company hasn't had the money and time to focus on building these brands correctly.

As far as a new name, how about Juicy spade, Lucky spade, or even Couture spade? Considering the struggles with Juicy, I'd probably go with Lucky spade. Let's hope this focus on the top brands will be lucky for stockholders.

Source: Liz Claiborne Transformation Complete: A Look At What's Left