Claiborne Fragrance Business News : Elizabeth Arden, Inc. and Liz Claiborne Inc. Enter Into Licensing Agreement
Beauty Article Posted May 30, 2008

  

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Elizabeth Arden, Inc. and Liz Claiborne Inc.recently announced that they have entered into an exclusive long-term global licensing agreement for the manufacture, distribution and marketing of the Liz Claiborne fragrance brands.

The Liz Claiborne fragrance portfolio consists of many well-known and highly-ranked products, including the Juicy Couture, Usher, Curve by Liz Claiborne, Lucky Brand and the Liz, Realities, Bora Bora and Mambo fragrances.

"This is a very strategic transaction for both companies," said E. Scott Beattie, Chairman, President and Chief Executive Officer of Elizabeth Arden, Inc. "We have worked closely together through our existing distribution relationship and are very familiar with the Liz Claiborne fragrance portfolio. Specifically, this transaction will allow us to (i) benefit from improved market share and productivity in our North American fragrance business, (ii) gain efficiencies from a larger fragrance business, particularly within our supply chain, logistics and sales organizations, (iii) increase gross margins by converting existing mass customer sales from a distribution margin to an owned/licensed margin and (iv) provide additional sales volume to our fast-growing international business. We look forward to working collaboratively with the Liz Claiborne brand teams to continue Liz Claiborne's success with respect to the marketing and brand development of these distinctive fragrance brands."

William L. McComb, Chief Executive Officer of Liz Claiborne Inc., said, "Fragrance is an important equity enhancing category for our brands. For us to maximize profitability in this business going forward, however, we would have to make significant changes to how it is operated. Doing that right now would distract us from other initiatives currently underway that are core to our strategy. Through this partnership with Elizabeth Arden, we can continue to successfully develop and market brand enhancing fragrances in a more capital efficient manner, leveraging our strength in brand building with Arden's expertise in developing and growing fragrance businesses. This is another example of how diligently we are pursuing our strategy. We expect this transaction to have a positive impact on our 2008 cash flows and to have no impact on 2008 projected adjusted EPS and operating margin. Looking forward to 2009 and beyond, we expect the impact of the royalty income from this transaction to be accretive to both EPS and operating margin."

Elizabeth Arden expects this transaction to contribute to both net sales and earnings growth in fiscal 2009. Elizabeth Arden expects to incur advertising and marketing expenses paid by Liz Claiborne and other transaction related expenses during the fourth quarter of fiscal 2008 and the first half of fiscal 2009. Additionally, Elizabeth Arden expects its gross margins to be impacted in the fourth quarter of fiscal 2008 and through the first half of fiscal 2009 by the sale of Liz Claiborne inventory that Elizabeth Arden acquired prior to the effective date as a distributor. After including the full impact of these costs, Elizabeth Arden expects this transaction to be accretive to earnings in the first half of fiscal 2009. Elizabeth Arden will provide further discussion and guidance for fiscal 2009 during its fourth quarter fiscal year 2008 conference call in August 2008.

The effectiveness of the licensing agreement is subject to satisfaction of certain conditions, including satisfaction of the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Terms of the agreement were not disclosed.

Elizabeth Arden: Skincare. Color. PREVAGE. Fragrances (Red Door, 5th Avenue, Green Tea, Mediterranean, Provocative Woman). Fragrance Portfolio: Elizabeth Taylor. Mariah Carey. Britney Spears. Hilary Duff. Danielle Steele. Alberta Ferretti. Alfred Sung. Badgley Mischka. Bob Mackie. GANT. Geoffrey Beene. Halston. Nanette Lepore. Rocawear. Giorgio of Beverly Hills. Daytona 500(r). HUMMER(r). PS Fine Cologne.

About Liz Claiborne: Liz Claiborne Inc. designs and markets a global portfolio of retail-based premium brands including Kate Spade, Juicy Couture, Lucky Brand and Mexx. Liz Claiborne Inc. also has a refined group of department store-based brands with strong consumer franchises including the Liz Claiborne and Monet families of brands, Enyce, Kensie, Mac & Jac, Narciso Rodriguez and the licensed DKNY Jeans Group. Liz Claiborne Inc. also offers cosmetics & fragrances. For more information visit www.lizclaiborneinc.com.

 

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