Fifth and Pacific: Address for a Fashionable Portfolio of Companies

Fifth and Pacific may be one of the newer names in the women’s fashion, but the company behind it has a long history. The company is the survivor of the reorganized Liz Claiborne, a brand name long synonymous with women’s fashion. However, the Claiborne started to struggle in the middle of the last decade and was not able to turn around. The company’s flagship brand had a middle market approach that could not be sustained as its target customers looked for less expensive apparel.

The reborn company focused on the high-end, most profitable brands that were still in the portfolio. These included Juicy Couture, Lucky Brand, and Kate Spade. Along with the profitability, the top end of the market is more recession-proof as customers in this category continue to have disposable income. Nonetheless, reducing the company’s exposure to different parts of the market may prove risky in the long run. If one of the remaining brands falls out of fashion, the company will have less of a portfolio to fall back on.

The three remaining brands all have great reputations among the fashionable set. Lucky Brands Jeans sell for about $100 dollars. Kate Spade handbags start at about $100. This would make them a little pricey, but more accessible than Coach or Louis Vuitton. Juicy Couture makes apparel, jewelry, handbags, perfume, and accessories for everyday wear. This includes signature items like colorful sweat suits and charm bracelets.

Of the three brands left, Juicy is having the most trouble recovering and may end up on the trading block. Overall, however, Wall Street has applauded the reorganization. The price is up four-fold in the last two years. The financials are mixed. Income was still negative at the end of 2012, however losses had been cut in half. Cash flow from operations has also turned positive. However, the company will need to improve flat revenues if it hopes to continue its positive trajectory.