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NEW YORK — If there’s one message that Katayone Adeli would like to deliver along with the news that her company has temporarily suspended operations, it’s this: “This is not a horror story about how bad the economy is,” she said.

This story first appeared in the April 18, 2003 issue of WWD.  Subscribe Today.

The designer, whose signature collections have received consistently strong marks from editors and retailers alike over the past six years, said her decision to close her studio and Bond Street store on Wednesday was more a result of the challenges faced by an independent designer not willing to make a compromise when it comes to quality or fit. Adeli said the company, which she built herself, suffered from a lack of financing and staff that made it virtually impossible to complete her fall orders.

“This is about a smaller company not being able to meet the demand,” she said. “If you are an independent designer working today, if one store is late on payment, then you have a problem.”

Rather than contracting the work to a European licensee, Adeli oversaw the production of her own signature collections, as well as a secondary line. She did that to maintain the quality and fit that set her apart when she opened the line in New York after designing the successful Parallel collection in Los Angeles. With a staff of about 27 people, she also managed the financial side of the business and all the related shipping, quality control, store management and sales — a feat that required her to work nearly constant 18-hour days over the past five years, she said — shipping over $1 million in orders each month. Even as potential licensing partners approached her, Adeli refused to turn over control because she feared that quality would suffer.

“The company started off very small with about $300,000, and we’ve always done everything in-house,” Adeli said. “My theory was that I was never here to do disposable clothing. I was here to design a garment so that when a customer went to clean out her closet, mine is the one she would not want to throw away.”

This meant that Adeli paid close attention to fit, designing everything on herself, coming up with a sexy style of pants that was an instant success at stores like Barneys New York, Ron Herman and Louis Boston, during a time when the industry was dominated by more androgynous designs. “After a season, I started getting a reputation for my fit,” Adeli said. “I was surprised, because I just thought that was part of my job. Women were responding just because they had found something that fit properly.”

As the collection business expanded, Adeli raised the prices of her signature looks and introduced a secondary line called 2 by Katayone Adeli, or 2 Kat, that retailers picked up on as one with an important designer point of view that could be carried in more contemporary departments. At Barneys Co-op, it hangs alongside such labels as Marc by Marc Jacobs.

“It surprises me that she would close, because she has such good product,” said Julie Gilhart, vice president and fashion director at Barneys. “She has the best eye for taking something that has a vintage feel to it and making it look modern and sexy. It has that look of not being so new and trendy, yet it is really stylish and sexy.”

But Adeli was plagued by the same difficulties as many independent designers working in an industry dominated by luxury conglomerates. The company grew quickly, with a volume as high as $20 million at one point, but her ability to produce the collection was entirely dependent upon the movement of cash from stores to suppliers. Adeli frequently dealt with fabric companies on a c.o.d. basis, and in recent seasons, as some stores delayed payments, she realized it would be more difficult to remain in the black. Often, shipments were diverted from her own store to fulfill wholesale orders.

“I was keeping my own customers on a waiting list while some stores had my clothes that had not even paid for them,” Adeli said.

She finally made the decision to give herself a break and restructure the business, probably by partnering with a European company that would finance and produce the collections, freeing her up to design. “I just turned 36 and I’ve been working nonstop for the past five years,” she said. “You really need to have a life outside of work in order to create.

“I do believe the industry is going to turn around,” she continued. “People are going back to wanting to have real quality clothes that offer variety instead of a price tag. My goal is to come back in one season and hopefully be able to do this in a sane way. I’m wiser now and I’m respecting my personal life a lot more than ever before. I’m probably more ready to relinquish some of my responsibilities, as long as I can find a situation where the quality is the same and where my customers will still be happy with the fit. We will come back.”