Donna Karan New York

founded by

Donna Karan & Stephan Weiss

belongs to

LVMH Moet Hennessy Louis Vuitton Inc.

about

Donna Karan International Inc. is a leading American clothing designer and a powerhouse in the international fashion industry. Though founder Donna Karan began her career designing for women, she also designs full clothing lines for men, teens, children, and infants, as well as an extensive line of accessories, beauty products, and home furnishings. Donna Karan International (DKI) also owns and operates freestanding stores in fashion meccas around the world, including New York, Beverly Hills, Las Vegas, and London, with new stores dotting the globe in Japan, Singapore, Switzerland, Saudi Arabia, Taiwan, and the United Arab Emirates. While DKI was acquired by French fashion titan LVMH in 2001, Karan continues as chief designer for the renowned fashion labels bearing her name.

DKI began licensing its name for products ranging from intimate apparel and furs to shoes and eyeglasses. The company also launched a more aggressive overseas initiative, started Donna Karan Beauty Company, and tried to market its own fragrance rather than hire an outside marketing firm. Early results from the sales campaign were disappointing and the project was temporarily shelved. The slow start for Karan's fragrance venture was a precursor to a spate of setbacks that plagued the company beginning in 1992. The problems showed up on DKI's bottom line as financial losses and in the organization as late deliveries and insufficient cash flow. Part of the problem was traced to the addition of the men's lines and beauty business, both expensive efforts, which when combined with other initiatives loaded the company with debt. Karan and Weiss were also criticized for their unconventional licensing program, particularly related to the fragrance endeavor. Although sales continued to rise to $260 million in 1992 and well over $300 million in 1993, DKI was bleeding losses and buckling under its debt load.

Confident of Karan's core business strategy, investors stepped in to buoy the enterprise. A group of banks led by Citicorp infused $125 million into the company, while a Singapore-based company invested $21 million in Donna Karan Japan, the company's Japanese subsidiary. DKI scrambled to restructure its debt, cut unnecessary costs, and shuffle its management team. To this end, Karan's husband eventually announced his intent to relinquish his co-CEO position and return to sculpting, although he continued to be active as a legal adviser and in various product developments.

As the company's finances stabilized, sales growth continued at a rampant pace. Annual revenues rose to more than $450 million in 1994, helped by the opening of a London flagship store, and to $550 million in 1995, the year Karan launched Woman to Woman, her in-house magazine. Substantial gains came from several DKI operations, including the DKNY lines and the once-lagging beauty business. The international businesses were also taking off--with distribution centers in Hong Kong, Amsterdam, and Japan, and 15 freestanding stores in Europe, Asia, and the Middle East. Overseas operations were generating about $140 million in revenue by 1995.

In 1996 Donna Karan International went public on the New York Stock Exchange, a crowning achievement for Karan, Weiss, and the designer was hailed once more as CFDA's Designer of the Year and was also honored with the Parsons School of Design Critics Award. The next three years saw the opening of stores in London and Manchester, England; Las Vegas and Beverly Hills; and Short Hills, New Jersey; the introduction of DKNY jeans; the sale of Donna Karan Beauty to Est�e Lauder and Donna Karan Japan to Onward Kashiyama; the launch of men's dress shirts with Van Heusen Corporation; a new infants and toddlers line through Esprit de Corp; DKNY underwear and coat collections; a home furnishings line; and a successful fragrance with Est�e Lauder. Two scents, DKNY Men and DKNY Women, debuted in 1999; the latter with a bottle designed by Weiss, reminiscent of a woman's (presumably Donna's) back. While the Donna Karan name seemed to be everywhere, with licensing deals on everything from jeans, beauty products, footwear, watches, and furniture--sales and earnings seesawed from 1997 through 1999. Happily, after a slew of losses, DKI ended the century with an upswing in sales to $662 million.

In 2000 rumors began circulating that French luxury group LVMH Mo�t Hennessey Louis Vuitton, which had been gobbling up major players in the fashion industry, was interested in DKI. The official offer came in December, with LVMH offering Karan and Weiss $450 million for Gabrielle Studio, Inc. (named for Karan's daughter Gabby), which held all of the Karan trademarks. Karan and Weiss counteroffered, slashing $50 million off the price if the deal could be done quickly. LVMH agreed and the purchase was completed in early 2001, so Karan and an ailing Weiss, who was dying of lung cancer, could spend their time outside the boardroom. Weiss died in June and while Karan was devastated by the loss, she went on designing for her next New York show, scheduled for September 11. Due to the World Trade Center tragedy, the show was canceled. Karan met privately with buyers the following week, then traveled to Milan to promote her new designs under the aegis of LVMH.

In November 2001 Karan sold the remainder of her company--the manufacturing and distribution units of DKI--to LVMH for $243 million. She remained chief designer and chief creative officer, while Giuseppe Brusone of Armani came on board as CEO. Karan then stepped back a bit and reshaped her life, spending more time away from New York with her children and grandchildren in the Hamptons. While DKI seemed stable, the firm continued to waver in a weak fashion market. Sales rose and fell, but income remained considerably less than projected. In 2002 Brusone moved up to chairman and LVMH insider Fred Wilson was appointed CEO. Karan herself was rumored to be clashing with LVMH over control of her collections, while the conglomerate reportedly sought new designers to work within DKI's divisions.