NEW YORK — Paul Charron, the new chief executive of Liz Claiborne Inc., was telling a visitor about the giant apparel maker's outlook when, eight stories below his office window, a man on the street started yelling angrily at no one in particular. It was one of those Manhattan moments, and Charron couldn't resist.
"That's one of our shareholders," he deadpanned.
Charron will need his sense of humor in the coming months, because the task facing him and Claiborne's other 8,500 employees is not particularly funny.
After astonishing growth in the 1980s that made it the hottest women's apparel brand in department stores nationwide, Claiborne has been struggling. The company badly misread a major change in women's clothing tastes--a mistake that strained customer loyalties and led to flattened sales, eroded profits and a battered stock price.
It's nothing new in the faddish rag trade that an apparel maker is a hit one day and struggling the next. But Claiborne's misstep illustrates how even an enduring company can succumb to the caprice of the apparel business if it does not adapt quickly.
"They weren't listening to the customer," said Jennifer Black Groves, executive vice president of Black & Co., a brokerage firm in Portland, Ore.
Claiborne's stall, which began in 1992 after its sales surpassed $2 billion a year, is also due to several other factors: The national recession in the early 1990s, continued weak spending on women's apparel in general, growing competition and a declining number of department stores due to mergers and bankruptcies.
But analysts, retailers and even Charron said Claiborne's cardinal sin was failing to adapt to the change in women's attitudes toward clothing in the 1990s, both in terms of what clothes they want and how much they're willing to pay.
The experts generally explain the shift this way: In the 1970s and '80s, many women--notably the flood entering the workplace--were willing to let Claiborne and others dictate what they should wear.
But by the 1990s, those women became more confident and assertive about choosing apparel themselves. And women in their 20s are more independent than their mothers and older sisters, and they seek wider selections and the freedom to wear more casual clothes to work.
Before, "women wanted to be told what to wear, how to dress," said Charron (pronounced \o7 Sharon\f7 ). "Today, women want to be shown their options, so they can put their own individual stamp on what they appear to be."
Because it did not see the shift, Claiborne let its styles go stale and designed its core lines of office wear (called Collection) and casual clothing (LizSport and LizWear) too much alike, leaving women confused and frustrated, critics said.
"People come in here and say, 'I want something new,' " said Eva Przybyla, the Claiborne specialist at the Broadway store in the Glendale Galleria.
"You'd go into a store and you wouldn't even have to see the label, you'd know it was theirs," said Evelyn Faruzzi of Sunland, a Claiborne customer for years.
Also, "the customer in the '90s is not interested in forking out a big budget for apparel, because she has other things to worry about [paying for]," such as kids' educations and home furnishings, said Eileen Gormley, an analyst with the Pershing subsidiary of Donaldson, Lufkin & Jenrette Securities Corp.
Case in point: Judy Ganz, a 30-year-old homemaker and mother. As she browsed through Claiborne's racks at the Broadway store in Glendale last week, she said she values Claiborne's quality--but only up to a certain price.
"I don't want to buy something that's going to fall apart," she said. "But I usually look only when Claiborne is on sale."
Analysts also said there aren't as many women entering the work force each year as there were a decade ago, which is limiting growth for all apparel makers. And those women who are taking jobs aren't as clothes-conscious.
"Today's consumer aged 25 to 44, their core audience, is less interested in clothes and less a consumer of apparel than her mother or grandmother," said Alan Millstein, publisher of the Fashion Network Report, a trade publication.
Add it all up and Charron, 52, who left apparel powerhouse VF Corp. a year ago to join Claiborne and became its top executive earlier this month, has his work cut out.
To be sure, Claiborne still has strengths that keep it a power on Seventh Avenue, home to the New York fashion industry. The company retains enormous space in department stores, and has a solid, identifiable franchise with women, in large part because they still admire founder Liz Claiborne--even though she retired six years ago.
The company also sells successful lines of cosmetics, shoes, purses, other accessories and men's apparel, and the company has zero debt. That gives it the financial wherewithal to make changes and then wait for them to pay off.