By Steve Penhollow

In June 2014, many shoppers were shocked to learn that Juicy Couture, the brand that made it safe to love tracksuits, would be closing all of its brick-and-mortar stores in North America by the end of the month.

Fifth and Pacific Companies, the former owners of Juicy, had sold the brand to the licensing behemoth Authentic Brand Group in fall 2013. Authentic Brand Group didn’t acquire the actual stores (which is to say, the spaces in which the stores would no longer reside). It acquired just the brand — the idea of what Juicy Couture was, is and could become.

“I think the tougher question for brands like Juicy is
‘What does it take to be a young adult brand these days?’”

“The brand isn’t much more than the logo, really,” Paula Rosenblum, retail analyst for Miami-based Retail Systems Research, told me in an email.

Rosenblum, who writes a blog for Forbes magazine and was No.6 on a list of the “Top 50 Retail Influencers” by the point-of-sale software provider Vend, wrote: “The seller still holds all the leases. And what they do with those leases is between them and the landlords. They cannot just walk away from them, because you can only do that in the event of a bankruptcy.”

What Fifth and Pacific Companies, which changed its name to Kate Spade & Company in February 2014, apparently plans to do with the spaces that formerly housed Juicy Couture locations is turn them into Kate Spade stores.

According to Rosenblum, the sale of the Juicy Couture brand came down to a differentiation between “short (and) long lifecycle products.” She wrote, “In effect, Fifth and Pacific has decided that the entire JC brand was short lifecycle.”

Rosenblum’s colleague Nikki Baird (also interviewed by email) said the former Fifth and Pacific “is one of many companies that own multiple individual brands.”

“They often invest in a broad array of brands, or some of them invest in brands that are like each other — you can find companies that hold only street wear [sic] brands, for example,” she wrote. “But they may be in various stages of maturity.”

Baird described the typical brand journey at a company like Fifth and Pacific this way: “There’s some guy making leather sneakers in Los Angeles who only produces about 200 pairs of shoes per season, and they get snapped up by celebrities buying from Neiman Marcus or Saks. … If that guy wants to go huge, he’s not going to be able to stay at just 200 pairs of shoes two times per year, even if he is getting $1,000 per pair. A company like Fifth & Pacific would be able to bring someone like that to the broader market — lower price points, but making a lot more money.

“Overall, it strikes me as a weird way to run a company,
but that’s just one woman’s opinion.”

“But then it follows a typical fashion hype cycle — it’s a hot brand when only celebrities can get it. Then everyone can get it. Everyone does, but then ‘everyone’ has it and it’s no longer cool. Time to sell the brand off to someone who can live for years milking a low price point/low margin fashion business that at least has brand recognition. To me, that sounds like the Juicy story.”

Baird has a designation for what Juicy Couture is going through: “the portfolio approach to managing brands.”

“It reminds me of how restaurant companies like Brinker do it,” she wrote. “They know there is a natural lifecycle to the brand, and they know enough to get out right before (or right after) it peaks. And there are plenty of portfolio companies that are good at picking up ‘peaked’ brands and riding them until the sun sets.”

Rosenblum said Authentic Brand Group will now set about rebuilding the Juicy Couture brand as it sees fit: “Apparently that’s what Authentic Brands does. Its CEO was formerly with Hilco, which is a liquidation firm. The buyer has no stores; [it] is purely a wholesale play.”

A spokesperson for Authentic Brand Group told Voguethat Juicy Couture will be reincarnated as a chain of boutiques tentatively named World of Juicy.

“The new stores will be in key, high-traffic locations and will truly encompass the ‘world of Juicy,’” the spokesperson said. “The new U.S. stores are part of a broader brand strategy that also includes the growth of our Juicy Couture Black Label collection internationally, as well as prestige fragrance collections in key retail locations. All of our plans are consistent with the premium image of Juicy Couture globally.”

Juicy Couture–branded products will also be sold at Kohl’s stores, according to an article in the Orange County Register.

A spokesperson for Authentic Brand Group told Vogue that Juicy Couture will be reincarnated as a chain of boutiques tentatively named World of Juicy.

Rosenblum said it’s her hunch that Authentic Brand Group outsources “design to someone in the Far East (probably Li and Fung, but maybe someone else) and then sell[s] it as their own. That part is pretty common.”

“Overall, it strikes me as a weird way to run a company,” Rosenblum said, referring to Fifth and Pacific Companies’ quick unloading of Juicy Couture, “but that’s just one woman’s opinion.

“Neither business model is particularly appealing to me,” she said, “but it obviously serves some purpose for both the buyer and the seller. Don’t forget, there’s a lot of precedent here. Some brands that have failed as retailers and then resurfaced as either web-only or wholesale brands: Linens ’n Things, CompUSA, Sharper Image … to name a few.”

Baird said the real story here is bigger than one brand: “I think the tougher question for brands like Juicy is ‘What does it take to be a young adult brand these days?’ Because clearly almost all of them are hurting — American Eagle; A&F; Hollister closed; I’m not sure how Urban Outfitters has fared lately. To me, Juicy might be more part of that story than an individual brand story.”

Steve Penhollow
Writer/Editor
BMDG

Video/Photos: YouTube, minnimei.blogspot.com, passhionforfashion.blogspot.com and dropdeadkawai.com