Juicy Couture looks to China for new lease on life

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Kyle Bean for Fortune

Juicy Couture, the once-hot brand known for its velour track suits favored by celebrities, recently said it would close all of its U.S. stores this summer while it goes off to re-invent itself.

But while it rethinks its U.S. business, it has its eyes fully trained on fashion’s new promised land: China.

Authentic Brands Group, Juicy Couture’s owner, on Tuesday announced a long-term partnership with ImagineX Group, a China-based brand management company, that first bought  the management and distribution rights of Juicy Couture for Greater China and South East Asia in 2006. The idea is to deepen the brand’s reach into China by getting it into another 40 locations and expanding the brand’s assortment.

The two parties’ new arrangement will have a minimum term of 10 years with an option to extend it for two more 10-year terms. ImagineX, which works also works with brands like Salvatore Ferragamo, and Marc Jacobs, will now try to bring the brand to locations beyond shopping malls. It will also add a new Juicy footwear collection produced by Steve Madden next year. Finally, it plans to open Juicy Couture freestanding stores in the coming years. (Many Western brands start off in China with sections inside department stores.)

As it builds out in China, Juicy will have plenty of painful U.S. lessons it can draw from to avoid making the mistakes that drained its fashion cred stateside. (Juicy will return to U.S. stores this fall when it is sold in Kohl’s (KSS), a far cry from the luxury department stores such as Nordstrom (JWN) and Bloomingdale’s it used to be available in its early years.)

Authentic Brands bought the struggling brand from the company now known as Kate Spade (KATE) (and before that Fifth & Pacific Cos, and before that Liz Claiborne) for $195 million, reasoning that there was life yet left in Juicy Couture, a brand that at its peak in 2008 had annual sales of $605 million (primarily U.S. sales.) before going into free-fall.

But the brand built out its own chain of stores too quickly, including the kiss of death, outlets, and flamed out, with customers turned off by its ubiquity, its use of garish logos.

How the China expansion goes will be instructive for Juicy. It is planning to return to the U.S. with its stores that would be part of a fleet of 127 stores it will build globally in the next 5 years in major cities like New York City and Los Angeles and abroad in centers like Vancouver by early 2015.


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