Kate Spade has been carrying Fifth & Pacific (NYSE:KATE) for a while now. The brand is growing sales, expanding its physical footprint, and making up for the weakness that Juicy Couture and Lucky Brand have shown this year. In October, Fifth & Pacific decided that enough was enough, and it sold off the Juicy property for $195 million to Authentic Brands Group -- which also owns the Marilyn Monroe, Elvis Presley, and Muhammad Ali brands. To complete the divestment, Fifth & Pacific needs to drop all the support pieces and retail outlets that go along with Juicy.

This week, it entered an agreement to get out of its flagship store lease early, receiving a payment of $51 million in exchange.

Why Fifth & Pacific is getting paid
The reason the transaction results in a gain is due to the value that could be generated from the location that the Juicy flagship now occupies. The space was 17,000 square feet and right on Fifth Avenue in New York City, making it a perfect flagship location. Juicy's sales were slow and low, meaning that the owners of the space -- Jeff Sutton's Wharton Properties and SL Green Realty -- were losing out on all kinds of potential income.

For its other Juicy locations, Fifth & Pacific is going to undertake a mix of options. In the best locations, it's going to be able to convert the stores to Kate Spade or Lucky Brand locations. Other locations will simply be shut down, with some of the closures likely to generate income for Fifth & Pacific. The company estimates that 70% of its rental agreements are below the market rate, presenting mall owners with a potential windfall.

What's next for Fifth & Pacific
The Juicy shutdown is going to continue over the next eight months, and the company should come out on top. Juicy was acting as an anchor on earnings, and the work required to bring the brand back to glory was more than the company was willing to put in. The focus from here on out is going to be on Kate Spade, which grew comparable sales by 31% last quarter.

Many observers -- this one included -- believe that the company will eventually sell the Lucky Brand brand as well. It's no secret that the company shopped the brand earlier this year, but talks fell through late in the game. Lucky is a much better brand than Juicy, and should the company want to slim down to one brand, it wouldn't be too difficult. Look for that move to come next year, at the latest.