• Wall Street Journal, Monday, August 16, 2010 10:49 AM

When JC Penney launches a new Liz Claiborne clothing, home and accessories line in its 1,100 stores this month, "it could mark the final chapter in the story of the 34-year-old Liz Claiborne brand," Rachel Dodes writes with additional reporting by Joann S. Lublin.

If that sounds like a paradox, here's why: Claiborne is essentially ceding control of its brand to Penney. It is giving up production and marketing and converting the formerly premier department store label into a mass market line in exchange for royalties. "For Penney, this is wonderful," says Candace Corlett, president of New York retail consultancy WSL Strategic Retail. "It's Liz I wonder about."

Flamboyant and charismatic CEO William L. McComb inherited a history of sliding sales and a bruised relationship with Macy's department store, a key client, when he took over Claiborne in 2006. But his acquisition spree and strategy to move the company away from its baby-boomer roots has created new problems rather than solve the old ones.

Penney CEO Myron E. Ullman III, on the other hand, looks forward to using the Liz Claiborne brand as a way to steal market share from mainstream department stores. Its research found that half the women who buy Liz Claiborne at other stores would follow the brand to Penney.

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