Liz Claiborne Goes for Young Look With Lucky

Baby boomer outfitter Liz Claiborne Inc. said Friday it is acquiring Vernon-based Lucky Brand Dungarees Inc., the sassy denim company that Claiborne hopes will extend the company’s reach into the lucrative younger market.

The latest acquisition, for an undisclosed price, comes on top of a two-year buying spree aimed at broadening the company’s offerings into every major age category. It also bolsters Liz Claiborne’s denim holdings, an arena in which the moderate-priced women’s apparel maker has not seriously competed under its namesake brand.

“Lucky is really the X generation and Y generation, and they are one of the key experts in denim,” said Claiborne President Denise V. Seegal. “Not only are they good at what they do, but the consumer is voting yes.”

Lucky, with a name that came from a soy sauce packet, began with partners Gene Montesano and Barry Perlman. Montesano, a Los Angeles denim veteran, has said the jeans’ trademark red Lucky You label stitched into the fly was prompted by the slips of paper in fortune cookies.

After incorporating Lucky in 1992, the company added the labels Triple XXX and juniors line Hot Pink, all of which combined had $60 million in sales in 1998, up from about $44 million in 1997.

Claiborne’s previous acquisitions include the January 1998 purchase of licenses for DKNY jeans and active wear, another foray into the young adult market. The company also bought the license for DKNY juniors, which it plans to launch next spring. Also in 1998, it was licensed to produce men’s and women’s fragrances for teen shoe brand Candie’s.

Earlier this year, it bought 85% of Segrets Inc. Segrets’ Sigrid Olsen brand targets women from 34 to 55 years old. Although it appeals to roughly the same age group as Claiborne’s target, the Sigrid Olsen line is sold in specialty stores, whereas the namesake Liz Claiborne line is primarily sold in department stores.

Those purchases come on top of a 1992 move into the value arena, when the company purchased the trademarks for Villager, a brand sold at moderate-priced stores including Mervyn’s; Russ, sold at Wal-Mart; and Crazy Horse, a top-performing brand for JCPenney department stores.

“[Chief executive] Paul Charron has really built this company as a portfolio brand, like a Procter & Gamble,” said analyst Jennifer Black of Black & Co. in Portland, Ore. “He’s very much positioned himself to be in every channel of distribution, to be everywhere the consumer wants to shop.”

Friday’s announcement sets the stage for the company to deepen its penetration with a segment of the market to which many retailers would like access: teens and people in their 20s, a growing, increasingly affluent group.

What’s more, analysts said, it continues to expand the presence of the company’s lines beyond department stores to specialty store chains.

More than half of Lucky’s wares are sold in juniors mall store The Buckle, said Seegal of Claiborne. The next largest buyer is Nordstrom, which sells the clothes in its juniors department, Brass Plum.

“I think it’s a terrific acquisition for them--it’s not a huge acquisition, but it fits very well,” said Leslie McCall, an analyst with Brown Bros. Harriman in New York. “They want to leverage what they do well, the design, sourcing and distribution portions of the business. The best way to grow is to do it across a variety of brands.”

Claiborne executives said they intend to keep and take advantage of Lucky’s current management team. On the table also, they said, is a dramatic expansion of Lucky’s nine retail stores, a number Claiborne expects to triple in the next couple of years.

And in addition to further developing Lucky’s popular Web site, a Claiborne executive said the company also plans to exploit the recognition of the smaller company’s name overseas.

“It’s one of those few names that translates--from China to Europe, everyone knows the word ‘lucky,’ ” said Angela Ahrendts, a Liz Claiborne vice president.

Sales at Liz Claiborne were up 6.8% for the first quarter to $700.8 million, but with a net income drop of 2.6% to $44.7 million. Those sales were largely a result of the company’s special markets group, including its newer acquisitions, plus-size Elisabeth line and men’s and women’s casual sportswear. Sales for the company’s career lines were softer.