Request-Mercury

8/7/2019 Request-Mercury

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Investor Presentation

October 8, 2009


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Big News

JCPenney to become theexclusive department store

destination for the Liz

Claiborne and Claiborne brands

in the United States and Puerto

Rico

LIZ CLAIBORNE INC. UNVEILS MAJOR NEW DISTRIBUTION

STRATEGY FOR THE LIZ CLAIBORNE BRAND FRANCHISE

Liz Claiborne New York, designed by

Isaac Mizrahi, to exit the departmentstore channel and move to QVC

Aftertwo

verysuccessful

yearspart

nering

withJCPe

nney,we

decideditwastim

eto

takeitto

thenextle

vel.

-William

L.McComb

,LizClaib

orneInc.C

EO


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Partnered Brands: Key Goals

Stabilize sales decline

Segment financial goals emphasize capital efficiency, profitability, andconsistencyversus sales growth alone

Rewrite the operating model to create win/win

Leverage and benefit from the strengths of respective partners

Establish new models that align goals around achieving mutual growth

and profitability

Reduce channel conflict


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Partnered Brands: Key Events

February 2007

February 2009

February 2009

at JCPenney

by Isaac Mizrahi

at Kohls


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JCPenney Deal Terms

JCP becomes exclusive department store partner in U.S. and Puerto Rico for

all categories of Liz Claiborne, Liz & Co., Claiborne and Concepts by

Claiborne labels

Year 1 begins 8/1/2010; up to a 10 year term with purchase option for

brand rights in the U.S. upon receipt of certain consents after year five

LCI to design and co-merchandise, JCP to co-merchandise, source,

plan/allocate, distribute and market

LCI will receive a licensing fee as a % of sales plus gross profit sharing with

guaranteed annual minimum royalties


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Building on Liz & Co Success at JCP

Strong Performance at RetailConsistent Growth since Launch

Doors

CURRENT

Liz & Co 1,091 doors

Concepts 944 doors

CURRENT

Liz & Co Concepts

Missy Tailored Clothing

Petite Sportswear

Woman Big & Tall

Outerwear Outerwear

Intimates Accessories

Sleepwear Furnishings

Handbags Underwear

Jewelry

Sunglasses

Luggage

Liz & Co. and Concepts by Claiborne are

perfect examples of how offering the right

designer branded merchandise to customerssupports and further differentiates JCPenney as

the department store destination.

Ken Hicks, President & Chief Merchandising Officer

Analyst Meeting 4/17/2007

We have a strong brand, Liz & Co. from LizClaiborne so were able to give our

customer great value, great style, and great

quality

Ken Hicks, President & Chief Merchandising Officer

Sanford Bernstein Conference 5/27/09

The Liz & Co. introduction's gone very, very

well -- above our expectation.

Mike Ullman, CEO

Q1 Earnings Call 5/15/2008

Categories


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Wherever customers were shopping for the Liz

Claiborne brand, they were loyal to the brand, and

would be willing to shop elsewhere in order to

acquire it.

JCPenney Research Highlights

Within the womens clothing category, Liz

Claiborne is known almost universally among

consumers. The next most mentioned brand did

not experience even half the awareness level as

Liz Claiborne.

Almost two-thirds of consumers have

purchased womens apparel from the Liz

Claiborne family of brands, with over a

third of consumers having done so in thepast year. Collectively, the Liz Claiborne

family of brands is the most purchasedbrand of womens clothing.

Our r esearch shows t hat t he Liz Claiborne brand is perf ect ly al igned wi t h ourcust omers and our abi l i t y t o execute t he brand s expansion successfully.

We see t his brand exclusivi t y as another way t o grow our cust omer base and t akemarket share f rom our compet i t ors.

Source : JCP Propriet a ry Research.


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JCPenney: The Right Partner for Liz Claiborne

Brand Management Multi-Channel Distribution

Strong brand marketers Sephora drawingimportant consumer

Demographic profile well aligned with LizClaiborne consumer

Significant marketing spend JCP Rewardsincreases visits

Clear messaging on everyday value and price

reassurance

Operations Financial

Highly functional, process driven retailerwith strong systems

Over 50 years of direct sourcingexperience and long supplier relationships

Leading edge proprietary technologyresults in improved merchandise flow andcycle time reduction

Inventory flow expertise

Investing growth capital sound capitalallocation choices

Solid financial / capital structure

Focus on reducing costs with processimprovements

Dominant mall presence

Growing off-mall presence

(currently 126 locations; 80-90% of newstores in this format)

jcp.com leadership and innovation accelerated investment in digital platform

Nations largest general merchandise

catalog business

Source : JCP Web site.


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QVC has rights to use LCNY brand with Isaac Mizrahi as creativedirector on any apparel, accessories, or home category

LCNY product at QVC will have higher-end styling and quality

Multi-year agreement beginning August 2010 with renewal rights

LCI receives royalty on net sales with guaranteed annual minimumroyalties

QVC and Isaac Mizrahi design, merchandise and source; LCI provides

brand management oversight

QVC Deal Terms


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Engaging, differentiated format allows Isaac Mizrahi to showcase the

brand

Leading global, multimedia retailer with approximately $7 billion in sales

Currently reaches 167 million homes worldwide

Research shows that customer profile is well aligned with LCNYcustomer

QVC.com - $1.6 billion in sales and growing at a double-digit rate

Offers differentiated customer value proposition

Loyal customer base with 88% retention rate

QVC: A Showcase for Isaac and LCNY


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LCI will continue to operate the 93 LCNY outlet stores, featuring LCNYproduct

LCI retains the rights to market and distribute LCNY , Liz Claiborne, Liz &Co., Claiborne and Concepts by Claiborne labels outside of the U.S. andPuerto Rico

LCNY Outlets & International

LCNY Key International Markets

Spain

Mexico

Canada

LCNY Outlets


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QVC, LCNY Outlets& International

JCPenney Kohls

Macys, Dillards,Bon-Ton & Belk


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Old New

Substantial Benefits to LCI

Challenging revenue and earnings model

Significant working capital commitment andinventory risk

Extensive support staff

Financial volatility from upfront discounts,end of season markdowns, and returns withno downside protection

Highly incompatible distribution strategy dueto channel conflict

Predictable revenue and earnings model withprojected significant year 1 swing toprofitability

Receive % of retail sales Gross profit sharing at JCP Guaranteed minimums

Capital efficiencies: leverage key strengths ofpartners, JCP & QVC will merchandise and

source the product and own the inventory

Limited support staff (LCI will only design andco-merchandise at JCP & LCI will only providebrand management oversight at QVC)

Partnership aligns incentives to maximizegross profit, with minimums that provide LCIdownside earnings protection

Strength of being a proprietary brand JCP & QVC represent distinct and

exclusive channels of distribution


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Financial Impact

We expect the adjusted P&L for the Liz Claiborne wholesale brand

franchise to shift from a meaningful loss in 2009 to a targeted adjusted

operating profit in 2010

The shift from a traditional wholesale model will lower annualized net

sales on a pro-forma basis by approximately $300 million replaced by

royalty revenue

Accelerates achieving adjusted operating margin target for Partnered

Brands of 6-8%

Balance sheet and cash flow benefits

Cash flow positive deal due to significant shift to profitability, minimal

working capital requirements and no capital expenditures

Significant reduction in working capital reduces financing

requirements


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Appendix


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Disclaimer Statements contained in this presentation (or incorporated by reference into this presentation), in future filings by

us with the Securities and Exchange Commission (the SEC), in our press releases, and in oral statements made

by, or with the approval of, our authorized personnel, that relate to the Companys future performance or future

events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements

are indicated by words or phrases such as intend, anticipate, plan, estimate, project, expect, we

believe, we are optimistic that we can, current visibility indicates that we forecast or currently envisions

and similar phrases. Forward-looking statements include statements regarding, among other items:

(a) our ability to continue to have the liquidity necessary, through cash flows from operations and availability

under our amended and extended credit facility, which may be adversely impacted by a number of factors,

including the level of our operating cash flows, our ability to maintain established levels of availability under, and

to comply with the financial and other covenants included in our amended and extended credit facility and the

borrowing base requirement in our amended and extended credit facility that limits the amount of borrowings we

may make based on a formula of, among other things, eligible accounts receivable and inventory;

(b) general economic conditions in the United States, Europe and other parts of the world;

(c) lower levels of consumer confidence, consumer spending and purchases of discretionary items, including

fashion apparel and related products, such as ours;

(d) continued restrictions in the credit and capital markets, which would impair our ability to access additional

sources of liquidity, if needed;

(e) changes in the cost of raw materials, labor, advertising and transportation;

(f) our dependence on a limited number of large U.S. department store customers, and the risk of consolidations,

restructurings, bankruptcies, changes in our brand relationships and other ownership changes in the retail industry

and financial difficulties at our larger department store customers;

(g) our ability to successfully implement our long-term strategic plans;

(h) our ability to affect a turnaround of our MEXX Europe business;


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Disclaimer (continued)

(i) our ability to respond to constantly changing consumer demands and tastes and fashion trends, across

multiple product lines, shopping channels and geographies; our ability to attract and retain talented, highly

qualified executives, and maintain satisfactory relationships with our employees, both union and non-union;

(j) our ability to adequately establish, defend and protect our trademarks and other proprietary rights;

(k) our ability to successfully develop or acquire new product lines or enter new markets or product categories,and risks related to such new lines, markets or categories;

(l) risks associated with the implementation of the licensing arrangements with JC Penney Corporation, Inc. and

QVC discussed in this presentation including, without limitation, our ability to efficiently change our

operational model and infrastructure as a result of such licensing arrangements, our ability to continue a good

working relationship with those licensees and possible changes in our other brand relationships or relationships

with other retailers as a result;

(m) the impact of the highly competitive nature of the markets within which we operate, both within the

United States and abroad;

(n) our reliance on independent foreign manufacturers, including the risk of their failure to comply with safety

standards or our policies regarding labor practices;

(p) risks associated with our agreement with Li & Fung, which results in a single foreign buying agent for

substantially all of our products; (q) our international operations are subject to a variety of legal, regulatory, political and economic risks,

including risks relating to the importation and exportation of product;

(r) our ability to adapt to and compete effectively in the current quota environment in which general quota has

expired on apparel products but political activity seeking to re-impose quota has been initiated or threatened;

and

(s) our exposure to domestic and foreign currency fluctuations.


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Disclaimer (continued)

The forward-looking statements are based on current expectations only and are not guarantees of future

performance, and are subject to certain risks, uncertainties and assumptions, including those described in

Item 1A. Risk Factors in our Quarterly Report filed on Form 10-Q, dated August 12, 2009 as well as in our

2008 Annual Report on Form 10-K. The Company may change its intentions, beliefs or expectations at any time

and without notice, based upon any change in the Companys assumptions or otherwise. Should one or more of

these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may

vary materially from those anticipated, estimated or projected. In addition, some factors are beyond our

control. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a

result of new information, future events or otherwise.

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