Liz Claiborne (pg. 2)

McComb's solution to the Macy's problem was to pluck Mizrahi from Target last winter. At Target the designer had gained a national following for his fashion-at-a-price collections. The new Liz line that Mizrahi would create would not be offered to J.C. Penney, Kohl's, or other cut-price chains, ensuring that Macy's and a few regional stores would have unique merchandise. Within an hour of announcing that he had signed Mizrahi, McComb received a congratulatory phone call from Lundgren. Calls from other major retailers followed. One told him: "You just threw a Hail Mary pass, and you might have saved the game."

Mizrahi, for his part, has thrown himself into the project by channeling Claiborne herself. He calls himself Isaac Lizrahi and Miz Claiborne. When the new line was unveiled in August, the response was enthusiastic. "I'd wear these clothes, and I normally wear Dolce & Gabbana," says Jennifer Black, an independent research analyst. But retailers are in no mood to make big, unproven bets at the moment, so a surge in orders is unlikely. Still, Claiborne could score a win simply by selling more items at full price. Deep discounts have reduced margins to nearly zero, compared with double digits for competitors. "We're going for quality sales, not quantity," McComb says.

Macy's is only one piece of the puzzle. Claiborne's future also hangs on McComb's ability to keep the star brands flourishing. Of the four brands that were supposed to drive the company's future growth, sales have stalled at all but Juicy Couture. Lucky has lost ground to other premium denim brands, Kate Spade is struggling to become the next Coach, and Mexx is going through a painful repositioning in Europe. Same-store sales for the first nine months of 2008 are down 9.2% at Mexx, 7.3% at Kate Spade, and 1.3% at Lucky. "For this company to work," says Marvin Traub, the former CEO of Bloomingdale's who now runs a consulting firm, "they need to achieve success beyond Juicy."

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On a cold, blustery day in May, about two dozen employees gathered at Claiborne's North Bergen, N.J., headquarters for a town-hall-style meeting that McComb hosts to transmit his vision to the rank and file. On this particular day the anxiety was palpable as the CEO looked around the table and asked, "How is business?" Business, his managers told him, was not good.

McComb was blunt in his assessment of Claiborne's problems, likening the company to the IBM of fashion: great at sales and distribution, but lousy at design. "Our brands were like ATM machines, and we kept withdrawing equity," McComb told the group, referring to the company's atrophied department store labels. It was a message that not everyone wanted to hear. Many of the employees had been fiercely loyal to McComb's predecessor, Paul Charron, a former Navy lieutenant who ran the company with military-like precision. During Charron's tenure, beginning in 1995, Claiborne acquired 30 brands and more than doubled sales to $5 billion, taking the company far from its humble beginnings in 1976, when the designer Liz Claiborne (who died last year at 78) and her husband set out to dress working women. Claiborne's stock price during Charron's reign returned 430%, making it one of the best-performing investments on Seventh Avenue.

A decade later Charron's strategy was out of gas. "Acquisitions got costlier," says Bernard Aronson, a director. Brands weren't getting the operational or marketing support they needed to thrive. The flagship Liz Claiborne brand, for instance, has shriveled to an estimated $750 million in sales from more than $1 billion a few years ago.

McComb, who had no prior retail experience save for a stint in a Lazarus shoe department in 1985, was brought in as a change agent, and, indeed, he is the polar opposite of his predecessor. Where Charron was measured and reserved, McComb is almost hyper at times. He has been known to leap out of his seat and run around during meetings. "Paul is like a father figure; Bill is more like a friend," says Gela Nash-Taylor, a Juicy Couture founder.

McComb drew on his experiences in pharmaceuticals. At J&J he had earned a reputation as a marketing whiz. He repositioned Tylenol as fast acting and focused Motrin on soccer moms. The changing department store landscape he inherited at Claiborne was familiar too. At J&J, he had watched his 200 largest drug store retailers consolidate into eight giant chains. "I've lived this," McComb says.

Once at Claiborne, he upended Charron's notion of the corporation as the all-powerful mother ship and instead championed a decentralized structure in which the brands controlled their destiny.

This new autonomy helped to quell a potentially disastrous revolt among the Juicy and Lucky founders, who, unhappy with certain business arrangements put in place by former management, threatened to bolt when their contracts expired in 2007. McComb headed off their defections - which would have cratered Claiborne's stock - by giving them greater control over key areas such as international distribution. Each signed on for three more years. "If we were going to stay," says Gene Montesano, a Lucky founder, "we wanted the freedom to do things our way."

Sometimes McComb's enthusiasm works to his disadvantage, coming off as sheer impulsiveness. Forty minutes into his first meeting with Tim Gunn, McComb offered the Project Runway host a job. It was months later that Claiborne executives hammered out what his actual responsibilities should entail. After installing first one and then another president at Narciso Rodriguez, McComb cut them loose when the Rodriguez team revolted, people familiar with the situation say. (Of the Rodriguez split, McComb says he had little choice but to cut his losses. And he defends his hiring of Gunn by pointing out that the TV personality draws big crowds when he makes department store appearances.)

Whether Claiborne survives will ultimately depend on how McComb handles a challenge he has little control over: the tanking economy. On a recent tour of the Americana mall in Glendale, Calif., McComb looked like a longtime garmento as he fussed over the Kate Spade window displays and fretted over sales receipts. It's more than likely that Claiborne will emerge from this crisis a leaner, stronger company. But then again, no one knows how this economy will play out. Although there were people milling about the mall that day in California, few carried shopping bags. On our visit to the Juicy Couture store, McComb picked up a charm bracelet for his wife. He was the only one buying. To make it, Claiborne will need many more consumers to follow his lead.  

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