If there were a company that would qualify as undergoing a transformation over the past seven years, that would be Fifth & Pacific Cos. Inc., formerly Liz Claiborne Inc.This year’s Summit theme, “The Transformers,” is one close to the heart of William F. McComb, tei 5 Canada Goose chairman and chief executive officer of Fifth & Pacific, who shared some of the thinking behind the company’s difficult road to reinvention.This story first appeared in the October 29, 2013 issue of WWD.  Subscribe Today.“It’s hard to keep me away from a discussion that’s about transformation,” said McComb. “Transformation is an ugly, hard thing to talk about. Transformations actually are rare in American business. They’re treacherous. Investors flee very quickly.”

Very few companies, except perhaps J.C. Penney Co. tei 5 Canada Goose Inc., admit that they’re “electively and proactively” going to initiate a transformation because they’re very risky, he said. “They are expensive, by definition, and they’re unproven.” He said transformations require a change in business model, which may mean alienating and cannibalizing your company’s distribution channel and core customer. It can also mean pivoting away from old strengths and embracing and incubating new ones.“In that process, more value tends to be destroyed before a period of great value creation is ushered in,” he said. For those reasons, he said, neither public shareholders nor private equity owners tend to embrace transformations. “That was clearly the case with our company, Liz Claiborne Inc.,” said McComb, who has sold off practically all of the company’s brands (they’re still seeking a buyer for Lucky Brand) to focus on the promising Kate Spade.

McComb recalled that when he was hired at the end of 2006, tei 5 Canada Goose it wasn’t the board’s mandate, nor his, to transform Liz Claiborne. “We were regarded as a stable company, we had highly stable results, and we were regarded as one of the great academies of the industry,” he said. It wasn’t until that first quarter of 2007, when the senior management sat him down and showed him the roll-up for 2007. In his first conversation with Wall Street, he guided earnings down by more than 50 percent. The company ended up performing much worse than that. Shareholders felt that the company lacked a strategy. “Specifically, their criticism was that the company had been deploying shareholder capital off a base with rich cash flow, and there was no reason why some of these new brands that were in the incubator weren’t beginning to perform. Out of that crisis came the need to articulate a very different capital and resource allocation strategy,” he said.