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A New Combo at DKI: Wilson Named CEO, Brusone Is Chairman

NEW YORK — Pino Brusone is handing over the reins of Donna Karan to another LVMH insider.<br><br>LVMH Moët Hennessy Louis Vuitton said Monday that Brusone has been replaced as chief executive officer of Donna Karan International by Fred...

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NEW YORK — Pino Brusone is handing over the reins of Donna Karan to another LVMH insider.

This story first appeared in the October 1, 2002 issue of WWD.  Subscribe Today.

LVMH Moët Hennessy Louis Vuitton said Monday that Brusone has been replaced as chief executive officer of Donna Karan International by Fred Wilson, previously president and ceo of the LVMH Fashion Group, America’s. The impending Brusone-Wilson shift was first reported in WWD on Sept. 24.

Although rumors have circulated becoming increasingly frustrated during his 14-month tenure at DKI, in a statement, the company positioned the changes as Brusone’s act of setting up “an operational management team,” having successfully reorganized the company.

“It was a great pleasure to work with [the] Donna Karan company to develop a new strategy for the business,” Brusone said in the statement. “The LVMH Group has been extremely supportive to allow me to reposition the company and put in place the new management team as the major objective of my mission.”

Brusone was a former managing director of Giorgio Armani, but jumped to LVMH early last year as senior vice president of acquisitions and brand development of LVMH Fashion Group, and was named to the high-profile post of turning around LVMH’s expensive American acquisition six months later. While it wasn’t expected to be a permanent post, the swiftness of the executive shakeup was a surprise.

Brusone will remain chairman of Donna Karan, and will continue to advise the company on the strategy he initiated last year to upgrade its brands by repositioning their distribution and production along the lines of LVMH’s other luxury brands. However, Wilson will step in as ceo, responsible for its day-to-day operations, as well as accelerating the growth of the business, including its imminent relaunch of men’s wear for fall 2003 and the development of its accessories program.

LVMH, which did not name a replacement for Wilson, also confirmed in the statement that Donna Karan will be profitable this year, “despite the difficult economic environment, which has impacted numerous luxury brands.” This includes the LVMH group as a whole; the company reported Sept. 12 that its net profits fell 10.5 percent in the first half ending June 30 to $208.8 million from $233.1 million on a 2.3 percent rise in sales to $5.68 billion from $5.55 billion in the previous six months..

LVMH has not broken down sales for DKI since the completion of its acquisition of the business and trademarks in 2001, but in its last quarter as a publicly traded company, Donna Karan reported substantial losses of $53.7 million and a sales decline of 13 percent. Well after the deal was struck — for a total payout of $643 million by the French conglomerate — LVMH executives were said to have been surprised to learn of the level of off-price distribution of the Donna Karan and DKNY brands, as well as unexpected costs related to the management of the company.

On top of this, former ceo John Idol, who was replaced by Brusone during the transition, filed suit against LVMH in December when the conglomerate initially balked at paying out his $12.2 million golden parachute, and eventually settled out of court.

Rumors have also continued to circulate over the course of LVMH’s yearlong ownership of DKI that the top brass had become unhappy with Donna Karan herself and that they were encouraging the designer to take a more strategic role within the company, while naming a new women’s design director for the collection.

However, Karan, who is chief creative officer, has repeatedly stated that she would not give up control of the collection, and has since characterized the reports as a misunderstanding of her long-standing executive search for a design director to work under her. Still, recurring reports of a variety of designers being approached by LVMH about taking over the collection are said to have been a continuing point of friction between Karan and LVMH executives, Brusone included.

While Brusone has made measurable progress in taming the legendarily wild Donna Karan corporate infrastructure, including a 7 percent staff reduction in December, Wilson’s appointment is viewed as a means of introducing a neutral element into the mix of clashing personalities at the designer’s 550 Seventh Avenue offices. Wilson is considered more of a “good cop” in the LVMH hierarchy, who is capable of dealing with a creative temperament.

The move is also indicative of the premium LVMH places on a speedy turnaround in the image of the Donna Karan brands, and of a response to embarrassing criticism of the heavy financial cost to the company of the acquisition — a price that many analysts said was too high for a luxury brand, particularly at the moment when the market for such big deals seemed to collapse.

Wilson has a long track record at LVMH, having served as ceo of LVMH Specialty Store Retailing and holding various positions at the firm’s DFS Group Limited during a 19-year career there, where he was named president and chief merchandising officer in 1998. He began his career at Federated Department Stores in 1969, and moved to Associated Dry Goods in 1976 as vice president and general merchandise manager of Stix, Baer & Fuller.

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