Liz Claiborne, Inc. owns numerous well-established fashion brands. Things being what they are, they've been divesting some recently (the brands "of a certain age" seem to be the first to go). But I was surprised to learn that, rather than sell Sigrid Olsen, a line with a passionate following, they opted to shut it down -- dispensing with many employees, including Ms. Olsen herself.
What evidence says "Buy this little brand"? Ensuring the health and survival of a small line of business within a mega-corp has always interested me. I know what it's like to manage a small unit that was swallowed up by a multibillion-dollar corporation (in my particular case, the founders left as soon as the ink was dry on the deal, leaving me to navigate the most extreme example of culture clash I've ever witnessed). During the acquisition phase, Mega Corp. management is gung-ho about the possibilities of putting its financial muscle behind a tender, young brand. But rarely -- even if it blows past the revenue forecasts -- can a small unit generate big enough numbers to keep their attention for long. (In my case, our division was misunderstood, mistreated, and eventually sold for a loss -- destroying several $75K+ jobs, and causing lots of bitterness over what had happened to our stellar products.)
The fate of Olsen's business was even more grim: According to the New York Times, the brand had peak sales of about $100 million, so she could not understand "why the sputtering Liz Claiborne conglomerate, which had entertained offers for Ms. Olsen’s label and others, had not chosen just to sell it."
The evidence shows that most of these acquisitions are doomed to fail. What evidence do they use to continue justifying these deals? I suppose when a big corp loses its ability to grow organically, they're left with little choice but to go on a buying binge. In Sigrid Olsen's case, the evidence might have cautioned against Liz Claiborne's aggressive plans for the brand: They alienated "many of the small-town stores that helped make her popular in the first place" by introducing Olsen's line in major department stores. Then they became unprofitable after spending big on dozens of Sigrid Olsen stores. I still don't understand why they wouldn't simply sell the brand, rather than mothball it.
Isaac Mizrahi has been tasked with finding a new direction for Liz Claiborne. He's good, but that's not gonna be easy.
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