NEW YORK — Donna Karan International is close to announcing a raft of new licenses as it endeavors to make DKNY a major player in the better-price men’s wear arena.
Since Mark Weber took the helm of the LVMH-owned company in October 2006, the former Phillips-Van Heusen chief has been expected to beef up DKI’s activities in men’s wear, which had dwindled to the DKNY bridge collection, the license DKNY Jeans business and a handful of licensed accessory categories. Those are significant, but leave other brands to fill many of the categories found on better department stores’ main floors.
From the outset, Weber said, “I knew there was tremendous opportunity for men’s at all levels in the business.”
As DKI sets out to take advantage of that opportunity, it will continue to operate its DKNY bridge collection, which is shown on the runway and has a black label. When DKI eventually relaunches Donna Karan Collection at designer prices, that too will be directly operated, according to the chairman and chief executive officer.
The first of the new ventures to launch under DKNY’s better-price gray label will be shirts and ties, which are licensed to Phillips-Van Heusen. Shirts will retail for $50 to $60, ties for $49.50 to $65. (For comparison, black label shirts go for $85 to $125, and ties for $75 to $125.) These will have a soft launch for spring 2008, since the PVH contract was the first to be signed. The rest of the categories will hit stores next fall.
Industry sources say DKI is finalizing licensing deals with Liz Claiborne for sportswear; Peerless Clothing for suits; Custom Leather Canada Limited for small leather goods, including belts; and an underwear company.
Collezione SA has signed a term sheet for the outerwear license, according to its president, Sanford Wax.
Weber said it was premature to disclose or confirm any of the partners-to-be except for PVH, but he sat down with DNR to lay out the strategy for gray label, affirm DKI’s commitment to its directly operated units and reflect on other areas of the men’s business.
How did you recognize the potential in men’s right away?
I had been a former dress-shirt licensee for DKNY and I had seen firsthand what this brand could represent in men’s wear. It was the largest, quickest launch of shirts we had ever seen in [PVH’s] 100-year history, and the performance and the following for the brand were as strong as anything we’d ever seen. The suit people, the neckwear people and all the other people associated with the brand also were astounded at how successful men’s DKNY had been. Having said that, I came in and was surprised to find out the men’s business had gotten smaller and many of other the licensees I knew had withdrawn. So how do you maximize the opportunity?
The real question for us as a company is, “What do we do well?” What this company is extraordinarily gifted at is developing women’s ready-to-wear. After that, our core competency is accessories, which aligns us perfectly with LVMH. We do a great handbag business, a great small leather goods business, and we’re dominant and becoming more so in shoes, both women’s and men’s.
We want to focus in men’s on the luxury component, which is the bridge level and above. We don’t have the expertise [to figure] out how to be a major factor in the classifications zone in the better department stores in the U.S. In that regard we’ve chosen to license. Licensing has always been a component of DKI and it will continue to be one. But this is in no way signaling that we’re going on a licensing agenda. We’re an operating company and running a business around the world that’s far greater in revenue than in licensing. We intend to operate, as we currently do, all of women’s rtw and women’s accessories, all men’s and women’s shoes, men’s better and hopefully Collection business, to be announced as we go forward.
What we’re in the process of right now is showing LVMH that this is a great company, and it could be bigger than they ever anticipated. As relates to men’s, or any business, I’d rather deliver anything before talking about it. Our report card will be sometime in February, during the MAGIC show, when all these deals are signed and people start to show.
Could the association with women’s wear and the image of Donna Karan be hard for men to relate to?
People here will tell you that the results in men’s with the Donna Karan name were nothing short of extraordinary. I have a Donna Karan suit and sport coat that I’ve had for 15 years. When I wear them I still feel great and people always comment. There’s a whole following there. If past is prologue, I can tell you that when the Donna Karan name was on the collection, people thought it was a legitimate alternative to Armani or Ralph or whomever. I’ve been told by any number of the finest stores in America that the moment we come back with Collection, they will find a space for it. As for DKNY, men are buying our products—watches, jeans, on and on. The spirit of New York and the association with New York play well around the world.
Will you ramp up your marketing to men around fall ’08?
Yes, we’re going to dramatically ramp up interest in men’s in the company. We have great ad partners who’ve been with DKNY since the beginning, and they’re very excited to get back in men’s. I can tell you categorically the original men’s campaign, with [model] Mark Vanderloo, was one of the best campaigns I ever saw ... So the bar is very high in men’s. Can you quantify what scale you see for men’s or how much these new businesses will contribute?
I will say this will be one of the most exciting, fastest ramp-ups of a new product category that you’ll see in men’s next year. The American department store scene is very excited about this. They’ve been waiting for it and they endorse it wholeheartedly. We’ll be in very many doors. Which retailers do you anticipate as major partners?
Because of the price points we’re focusing on the so-called better zone. Macy’s should be one, and Dillard’s, and Nordstrom to a degree.
Is there a freestanding store aspect to this initiative?
At the moment our DKNY stores are strictly bridge, the black label product. If we believe the product has merit and belongs in stores, we’ll integrate it. Could you envision dedicated men’s stores?
Yes. Outside the U.S., where price points are higher and margins are higher, there are a lot of dialogues for what our retail network would look like. But having said that, when you have such a strong women’s component, we’d rather have the world of DKNY than just one category.
What can you tell me about the licensees?
We spoke to every major men’s resource of consequence in every one of these categories. It almost became a bidding war because everybody believes that the brand is bigger than the existing business. Of course we will retain rights to all design. We influence everything. We have a team of designers here who are involved in the design or approve every single detail. How involved is Donna?
When I watch Donna work it’s like watching Picasso with fabric. She’s unbelievably gifted, and she’s one of the most successful businesswomen in the world, and I’m in awe of that. Her success is no fluke. Donna is intimately involved with the designing of this company and what we look like in both the product and the advertising, and for that I’m grateful. It makes my life so much easier. Does that go for men’s as well?
Donna is so interested in men’s. She revolutionized men’s wear. [By putting stretch into suits, among other things.] Donna Karan suits? Like wearing sweaters, so comfortable. But that’s for a conversation about Collection, at a later date.
Collection is more complicated. It’s very expensive, very unique. There are only a handful of places you can get the quality and the fabrics that you want. And from a financial point it’s risky because runway shows and all the marketing associated with it are a serious investment. In order to do it you have to make sure all of your ducks are lined up. So we’re taking our time and making sure we do this right. I wouldn’t enter into any business that I didn’t think could be wildly profitable.
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