NEW YORK — After a courtship of almost two years, Vera Wang has finally said "I do" to Kohl's Corp.
The designer and Kohl's said Wednesday that they will team up to create a premium fashion and lifestyle brand called Very Vera by Vera Wang, which will be available at more than 900 Kohl's moderate department stores and kohls.com beginning in fall 2007.
The multicategory deal encompasses women's apparel, intimate apparel, handbags, leather accessories, jewelry, footwear, linens and towels.
Terms of the multiyear contract weren't disclosed, but industry sources said the arrangement could develop into a $500 million business for Kohl's by the third year. Wang will receive both an upfront payment and royalties from Kohl's and could personally reap about $100 million over the length of the contract, said sources.
The deal ends a nearly two-year period during which Wang was wooed by several suitors, including Jones Apparel Group, Liz Claiborne Inc. and even St. John for assorted deals ranging, respectively, from a better sportswear line to an outright acquisition to becoming creative director.
Wang, whose high-end bridal, ready-to-wear and licensing business generates $225 million at wholesale, is the latest major designer to tap into the lucrative mainstream market. For years, the designer has expressed a strong desire to offer more affordable products to a wider audience, and she said Wednesday that was the impetus behind the Kohl's deal.
"I can become a more iconic American brand and be exposed to America in a larger sense," said Wang in an interview at her offices here.
"Some of my frustration is I work very hard at the upper end with all the resources and intellectual thought processes and it's a very challenging thing to do, but more women can't wear it and it will never reach them."
She said she began offering fragrances so women can get the essence of what Wang is about for $85. Today, her fragrance business, licensed to Coty Prestige Inc., garners $100 million at retail, according to industry sources.
Wang seems almost embarrassed by the high prices her Collection commands. "To work with $100-a-yard fabric and $200 embroideries is an elitist world. I value it and adore it," she said, but she also wants to dress women from all walks of life with different lifestyles.Wang's Collection retails from $395 to $5,000 and is sold in 80 doors, while her lavender label contemporary apparel ranges from $350 to $1,000 and is sold in 300 doors. Her bridal gowns, sold in 100 doors, start at $2,500 and "the sky's the limit," said Wang, who has designed bridal gowns for celebrities such as Jennifer Lopez, Jennifer Garner, Kate Hudson and Jessica Simpson.
Kevin Mansell, president of Kohl's, explained that throughout the lengthy negotiations with Wang, all the conversations had a common ground. "She has had a desire to figure out how her style can be available to more people, and our primary objective as a company has been to broaden the reach of what we offer, reach a broader consumer base and give the consumer we have more options for their wardrobes," he said.
Mansell explained that Kohl's apparel strategy revolves around a good-better-best merchandising plan that focuses on different fashion profiles. The Very Vera lines will be designed to reach the uppermost segment of Kohl's modern women's offerings.
Currently, the highest priced "classic" women's line at the department store — and the biggest launch in its history — is Chaps. Retail prices range from $49.50 to $69.50 for sweaters, pants and skirts and $79.50 to $119.50 for jackets. Mansell said retail prices for Very Vera haven't been set yet, but they will be higher.
"The way we see each brand developing, it's a step up, not a leap," said Mansell.
"We see it as our premier brand that focuses on a modern sense of style," he added. "Vera's got a great fashion sense and a point of view that reaches people. We'll rely on her to guide us."
Kohl's also has a successful deal with Daisy Fuentes for modern women's apparel, accessories and fragrances, which is approaching $250 million at retail, according to sources, and an agreement with the Estée Lauder Cos. Inc. for fragrances, skin care and color cosmetics under five brands, including American Beauty.
According to Mansell, Wang will serve as the design inspiration and style guide for the Very Vera brand. "Our job is to make all the decisions about sourcing and deliver it to consumers," he said, as well as develop presentations and marketing programs. "Our job will be to determine who will produce these goods."He said several of Wang's 10 designer licensees may be approached to do a lower-tier collection.
Mansell said it hasn't been determined who will be responsible for sourcing the women's apparel. In February 2004, Haim Dabah, chairman and chief executive officer of Regatta Pacific Alliance, was spotted at the Vera Wang fashion show, stirring speculation that he was looking to make a deal with the designer and Kohl's. Mansell confirmed Dabah brought Wang to Kohl's attention, but it hasn't been decided whether Regatta will produce the women's apparel. It is widely believed, however, that Wang will enter into a production deal with Regatta for the apparel production.
"We think very highly of Haim," said Wang. Dabah declined comment Wednesday.
Mansell said the Wang collections will be supported by national TV, local TV, inserts, the Internet and magazine advertising. "There's not a single piece [of Kohl's marketing program] that Vera won't be part of," said Mansell.
He declined to divulge how big a business Wang will be for Kohl's, but said Vera's lines will have their own section of the store, and will also be merchandised with other brands, i.e., Very Vera towels in the linens and towels area.
"We won't project how big a business this will become. It's very, very big," said Mansell.
Wang said she has been working toward this goal for many years, and has informed her retail partners.
"They understand what my goal is and have been supportive. We've been in business for almost 20 years, and we've built up a brand. We've built a certain name recognition and a trust and confidence from the consumer. Anything that we've tackled and tried to start, we've given the same design integrity to anything we've done."
Mansell said Kohl's conducted extensive consumer research before signing with Wang. And Wang herself visited many Kohl's stores throughout the country doing her due diligence.
"She has incredibly high brand awareness and it all came down to women saying, ‘I can't afford it,''' said Mansell. He said consumers know her name from her successful wedding gown business and the fact that celebrities are often seen in her creations on the red carpet. "There's a trust in the brand," he said.He explained that their research focused on asking women what they thought of being able to buy Vera Wang at Kohl's. "It got most of us thinking this could be really big," said Mansell.
For her part, Wang said, "This gives me the opportunity to grow an American iconic brand and one that influences people's lives in a much broader sense. It doesn't mean I don't love a $12,000 cocktail dress," she said, but she wants to translate that to things she feels are attainable to people.
While she loves designing high-end apparel, Wang said she's excited about the prospect of having more fun with fashion.
"The Collection business is deadly serious, and it's not even fun. There's so much responsibility with it. We devote a tremendous amount of resources to Collection. The fabric costs are huge. This is very fun and spirited, and I'll get to do some lifestyle things. I'll do wonderful white shirts, great little skirts and great little jackets," said Wang. She said she'll offer a group of items "with a fashion flair."
"We'll certainly have the trends and I'll bring my own unique twist to it, with a sense of detail," she said.
As she has built her company for the past 17 years, Wang said she's been greatly influenced by designers such as Ralph Lauren and Giorgio Armani. "I've seen all these people do such brilliant things with their businesses. They find an audience at many price points and with every retailer. I feel very fortunate, but it doesn't preclude the intense investments at the upper end." Nor will her choice to go with Kohl's stop her from doing a separate bridge line for department stores someday.
"I was very flattered to be approached by some of the best companies in America — Jones, St. John and Liz Claiborne. No two deals were the same. It [the Kohl's deal] was a plan I had in my heart, not just in my head."
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