Byline: Valerie Seckler

NEW YORK--Seeking to counter what it charged was "very unfavorable and unfair" press, The Donna Karan Co.--in an unusual move by a privately held firm--disclosed Monday strong second-quarter operating results.
Earnings before interest, taxes, depreciation and amortization (EBITDA) more than tripled in the three months ended June 30, totaling $1.85 million, up from $603,000, the company said. The firm did not disclose the final net.
Citing heavy demand for its designer women's and men's apparel, as well as dramatic growth in its beauty and shoe businesses, the company reported sales grew 27 percent in the second quarter, to $88.9 million from $69.9 million a year ago.
"The press the company received through a very difficult period for all of retail was very unfavorable and unfair," charged Stephan Weiss, co-chief executive officer. "We thought we'd try to show [everyone] how well we're doing."
"Clearly, the banks are behind us," he added, speaking of Donna Karan's $110 million credit facility, which has been extended by its bank group through Dec. 31, 1995. Citibank continues to be the facility's agent.
Asked about the status of the company's search for funds in the private placement market or elsewhere, Weiss said, "We continue to look at all [financing] opportunities for the company, depending on things like interest rates and market conditions."
As reported, Donna Karan has enlisted New York investment bank Benedetto, Gartland & Greene as its financial advisor in the effort.
Responding to a question about the firm's star performers in the quarter, Weiss said, "DKNY continues to be a tremendous strength of the company, and I think the international growth we're experiencing is tremendous. International represents 25 percent of our [year-to-date] sales."
By the end of 1994, the company said, it expects to have more than 15 licensed stores in operation internationally.
"We're enjoying strong sales at retail," Weiss said in a prepared statement. "The women's Collection has been solid, and we're seeing substantial wholesale reorder activity in DKNY for fall."
"The most impressive growth has been in our emerging divisions," he continued, citing demand for DKNY Petites that "has exceeded our expectations" and "dramatic [retail] sales gains" in the Beauty division.
"We continue to have the number-one selling fragrance brand in Nordstrom's and Bloomingdale's, and we are in the top five at most of our other retail accounts," Weiss said.
For the first six months, Donna Karan's EBITDA rose to $9.2 million from $8.1 million excluding a non-recurring benefit last year of $1.4 million resulting from a favorable ruling in an arbitration. Sales swelled 14.8 percent to $188.3 million from $164 million.
"We have tremendous momentum going into the second half of the year, which is typically our strongest period," Weiss said in the statement. "July had the highest volume of shipments of any month in the company's history."
He also pointed to the Beauty division's recent launch of a treatment line.
In addition, Weiss cited the opening in September of a DKNY boutique encompassing 4,500 square feet in Bloomingdale's Manhattan flagship, and a 12,000-square-foot freestanding DKNY store on Old Bond Street in London.
Donna Karan also plans to open a new store in Geneva and two in Singapore this fall, as well as a second store on London's Bond Street, featuring the company's designer collection for women and men, in the spring.
"In terms of future profitability, our emerging divisions are performing on plan," said Weiss, "and are expected to reach break even in 1995. Overall, margins are stable and SG&A expenses are trending downward."
Taking a wry view of Donna Karan's decision to report its second quarter results, Weiss offered, "The thing that amuses our PR company, our that we're the most public private company in the world."
Much of the negative publicity the company has received centered around the dismissal in May of David Golden, who was chief financial officer for little more than a month. The Karan company sued Golden on charges of negligence, among other things. Golden countersued and in court papers alleged that the company was on shaky financial ground.--Fairchild News Service

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