Liz Claiborne finds new owner for global Mexx business
Sept 2 - Liz Claiborne Inc said it would sell its money losing international Mexx business to a joint venture with Gores Group LLC, allowing the women's clothing maker to cut down on debt and focus on its core brands.
Shares of the company rose 12 percent in morning trade on the New York Stock Exchange.
"One word on this: finally," said Wall Street Strategies analyst Brian Sozzi.
"The Mexx business has been the black sheep of the Liz Claiborne portfolio for some time ... the fact that they were able to get anything for the brand underscores the work that has been done to reposition it and clean up the store base profile," Sozzi said.
Liz Claiborne will sell the unit and get an 18.75 percent stake in the joint venture, plus $25 million in cash. The joint venture will also assume $60 million of debt.
Liz Claiborne bought Mexx in May 2001 for about $264 million, as part of an effort to diversify its portfolio -- a strategy it has stepped back on over the past few years as it works to realign its business model and become profitable.
The New York-based company has not seen a profit since 2006.
In July, the company said it was considering roping in an investor to take a majority interest in its international Mexx business.
"We've brought the Mexx European business to the early stages of a true turnaround. But there is more to be done, and in uncertain times and true market volatility, de-risking became essential," Liz Claiborne Chief Executive William McComb said in a statement.
McComb also said the deal will do away with a forecasted loss of about $25 million before interest, taxes, depreciation and amortization associated with the global Mexx business.
Last month, Liz Claiborne said it would sell the trademarks on some of its perfumes, including Curve, to Elizabeth Arden Inc in part to lower the size of its debt.
The company -- which owns Juicy Couture, kate spade, Lucky Brand and Mexx -- has sold, licensed, or closed a bunch of underperforming wholesale brands in recent years to switch its attention to brands in its own retail stores.
The global Mexx business, which had sales of $730 million last year, will continue to be led by Thomas Grote as chief executive.
The deal is expected to close in the fourth quarter.
Shares of the company were up 10 percent at $5.59 in late morning trade on Friday on the New York Stock Exchange.
(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Viraj Nair and Gopakumar Warrier)
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