LIZ: Much Beneath the Surface

 

There’s a lot to read into with today’s CFO announcement. They passed over some stars. Overwhelming focus on operational/financial/digital integration and growth. All in, a great announcement with low risk.

 

 

This morning’s announcement by LIZ that George Carrera joined the company as CFO might not seem notable at face value. But we think it’s rather big. The punchline relates not only to whom they chose, but to who they passed over. Our sense is that the others that were in the running were extraordinarily strong from an operational perspective – particularly as it relates to growing solid brands in a digital age outside the U.S. while not missing a beat operationally, logistically, and financially.

 

Additionally, our sense is the candidates did not have great (if any) capital markets experience. Carrera spent the better part of 10 years as CFO/COO of Tommy Hilfiger, including the period during which it was bought by Apax Partners for $1.6bn and subsequently sold for $3bn to PVH.

 

The knock for some investors on more of an internal vs external focus would be that someone focused on capital markets might want to monetize Kate ASAP. We’re not worried there. That’s a CEO/Board level decision, and would not happen until 2H at the earliest (after McComb’s contract renews). Also, if/when such a monetization event happens, it is likely to be a stub to establish value rather than to sell outright. 

 

Our big concern would be if they brought on someone that can pander to the capital markets while leaving operational gaps in the infrastructure. Then we’d be left with the corporate version of Ben Bernancke. Now we’re far less likely to think that this concern comes to fruition.

 

All-in, this is a great event.

 

Here are a couple bullets on Carrara:

  • Apax Partners bought Tommy in May 2006 for $1.6Bn
  • Carrara was the COO/CFO at Tommy from 9/06-2/11 during which time it was turned around and then bought by PVH for $3Bn in March 2010

LIZ: Much Beneath the Surface  - LIZ CarraraLinkedIn

(Source: LinkedIn Profile)

 

LIZ: Much Beneath the Surface  - LIZ TommyRevs

(Source: Company Documents)

 

Brian McGough

Managing Director


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