Joel Horowitz was on a golf course in Miami two years ago when he received a phone call from his friend Tommy Hilfiger. (Horowitz had been chairman and chief executive officer of Tommy Hilfiger Corp.) The designer had just had lunch with Diane von Furstenberg, who wanted to meet Horowitz.
“Tommy had been trying to get me to go back to work. We’ve looked at a lot of deals over the years with Silas [Chou] and Lawrence [Stroll], and nothing was that interesting to me,” said Horowitz, who retired from Hilfiger in 2005.
Horowitz said he wasn’t interested in a “real fixer-upper,” taking a company and restructuring it through cutbacks. Nor was he interested in something that was really small and needed to be built from the ground up. Von Furstenberg was looking to start a board of advisers because she wanted to take DVF to the next level and thought Horowitz might want to join.
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“I came up to meet her and we hit it off right away. I got the brand immediately by seeing her office and how it fit her personality,” said Horowitz.
Von Furstenberg, who had already built a personal legacy, talked to Horowitz about wanting to build a legacy business that could long outlive her, he said. He enjoyed the conversation, but told her that he doesn’t do boards. “But if you sold me part of your company, I’d have to be on the board,” he said. “We both laughed. I left, and about six weeks later, she called and asked if I was still interested, and I said yes.”
Horowitz said he’d done his due diligence, spoken to a lot of people and retailers, and got “amazing feedback” from everybody. “Her goodwill is so tremendous. Everyone wants her to succeed.”
Horowitz returned to have lunch with von Furstenberg’s husband, Barry Diller, and her son, Alex von Furstenberg, and they talked at length about the type of business he would want to build. They decided Horowitz should put together a business plan to present to the family to make sure they were on the same wavelength.
“We all agreed, and that’s why I’m here,” said the 63-year-old Horowitz.
Named DVF’s cochairman in September 2012, Horowitz was hired to bring a level of professionalism to the company and prepare it for an eventual public offering. He is often credited with building Hilfiger into an international multichannel brand. He served as Hilfiger’s business partner and ceo for 19 years, stepping down as ceo in 2003 and then becoming executive chairman of the board that same year, and non-executive chairman of the board in 2005. He retired on Oct. 31, 2005, and in 2006, he, along with a management group and Apax Partners Inc., took Hilfiger private. It was eventually sold to PVH Corp. in 2010 for $3 billion.
Horowitz said the reason he doesn’t join boards is that he considers himself a hands-on executive: “I either have to be in or out. I’m not one of these people who could sit on three or four boards and give you a 40,000-foot view of something. I need to be in the specifics of the business, or not at all.”
Horowitz developed a business plan for DVF that “was based on having the confidence that this brand could be the next multibillion-dollar brand,” he said, noting that he wasn’t looking to take a business from a couple of hundred million dollars to $300 million, $400 million or even $500 million. He saw an opportunity to have distribution all over the world. To achieve that, he put several elements into the plan.
“The company up until this point had been run purely as a family operation. There was no major investment made in the business. All the investment came from the natural flow of the business,” he said. “In today’s world, that’s not going to get you very far.”
His business plan called for building a major retail network and an accessories division within the company for handbags and eventually footwear, and developing a corporate infrastructure.
Obviously, that would take a lot of money.
Horowitz met with the family and threw out a number based on his past experience looking at many different companies and designing business plans over the years. He said the family put in their share, and he put in his share.
“We’re now two years into the plan. It was a six-year plan with a focus on building a corporate infrastructure that could support the growth in the plan, investing in retail stores, building a stand-alone accessory business and continuing to invest in our ready-to-wear business,” said Horowitz.
He added that the strategy calls for them to more than double the business in a five-year period, “which we’re well on our way to doing.”
When Horowitz arrived at DVF, there were 11 freestanding stores in the U.S. Today, there are 21 open, and in the next seven months, the company plans to open another 10 domestic stores.
But how does he know there’s enough demand out there for the product?
In Horowitz’s opinion, one of the best parts of the business is that in its 40-year history, the brand has built up a lot of goodwill, not just in the U.S., but globally. When he joined the company, it had a total of 55 stores globally. All of the international stores were done with franchised partners, except for the ones the company owns in France.
“The demand for the brand was there. It was a matter of giving consumers what their expectations for the brand were. And that, quite frankly, was one of the issues when I got there,” Horowitz said. “The product had gone off brand. There was no consistency in the product and no consistency in the advertising. That was the bad news. The good news was that the stores and the consumer had great affection for the brand and wanted to see it win.”
First and foremost, the top priority was to get Diane von Furstenberg “back in the driver’s seat.” Horowitz said she had walked away from design and brought in a European designer, Yvan Mispelaere from Gucci, “and gave him the keys to the house.”
“It was a big mistake,” said Horowitz. “That was the main demand I had when I said I would come back in. It would be only if she stepped back in to be the creative director of the brand. She is the brand. She created it, it’s expressed in everything she does.”
In February, DVF hired Michael Herz as artistic director. Von Furstenberg brought him on to consult on the exhibition marking the 40th anniversary of the wrap dress. Herz curated it, and as part of putting together 200 wrap dresses, he created 40 new styles to complement 160 historical wrap dresses.
“It was a great audition for Michael, to see if he would be the next person to bring in as artistic director,” said Horowitz.
For his part, Herz said, “Diane is someone I have been inspired by as a person and designer since I was a design student. She surrounds herself with every generation of creative people, and it is inspiring to watch and be a part of every day.”
“Diane is here 100 percent. She now has someone she can rely on totally to make sure things get executed according to brand,” he added.
A major initiative at the company is to maximize its accessories offerings, which at present account for 15 percent of the business. DVF’s accessory division is mainly handbags. It also makes scarves and small leather goods. Horowitz explained that when he arrived at the company, the category was treated as an accessory to the rtw. It wasn’t set up as a freestanding unit with a business head, creative people and sourcing people. Now it is its own division, with its own P&L. The head of the division is Michelle Ryan, who has been at DVF for a year and previously worked at Jimmy Choo.
Naturally, an ambition for the company would be to develop an “It” bag that would take off and be identifiable as DVF. Asked if she is known for a particular handbag, Horowitz said, “Not yet.”
Opening more stores around the country is an immediate objective. DVF has opened stores in Seattle, Las Vegas and Scottsdale, Ariz., and will soon open in Aventura, Fla.; Miami’s Design District; Glendale and Santa Monica, Calif., and The Grove in Los Angeles. The three new L.A. stores will bring the total in California to five. There are already units on Melrose Avenue and at South Coast Plaza in Costa Mesa.
“I believe we can have 100 stores in the next five years,” said Horowitz. Other stores will open throughout 2015 at the Americana Manhasset in N.Y. and in Atlanta and San Francisco.
“We want to start moving into Chicago and Houston,” he added.
Horowitz has no big plans to expand the brand’s wholesale base, but he does want to build its business within stores that already carry the line. Aimed at the higher end of the market, DVF sells to stores such as Bloomingdale’s, Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman and Holt Renfrew, as well as specialty stores like Scoop and Intermix and Web sites including Shopbop.com, Net-a-porter and Matchesfashion.com, which is its partner in the U.K.
The strongest markets for DVF are New York, Miami, Texas and California.
During the six years that Horowitz was away from the business, e-commerce took off in the industry, but ironically, he didn’t make that a big part of his initial business plan. So when he took the DVF job, he found it interesting how important e-commerce was to the business.
“We do a very sizable dot-com business. Having been away from the business, I didn’t realize how significant dot-com could be. When Diane first told me what percentage of sales the brand does online, I didn’t believe her at first.”
But after doing some research, Horowitz quickly realized she was correct. Between their own Web site and third-party sites like nordstrom.com, bloomingdales.com and saks.com, close to 30 percent of the business is generated online. DVF’s online store does more business than any of her freestanding stores.
“Diane has always been a leader when it comes to technology,” Horowitz said. “She’s always invested in dot-com, both internally and with third parties.”
DVF licenses footwear to Schwartz & Benjamin. “That’s a category that needs a lot of focus. We should sell two pairs of shoes for every dress that we sell, and we sell a lot of dresses,” he said.
Next spring, DVF will launch fashion jewelry with Haskell Jewels. The collection includes necklaces, earrings, rings and bracelets, retailing from $68 to $628, far below those of von Furstenberg’s high-end collection, Diane von Furstenberg by H.Stern, which has pieces priced up to $100,000.
The company will start shipping outerwear, which is licensed to Herman Kay, as a separate classification for fall, and has home fabrics with Kravet. DVF no longer makes home furnishings, except for rugs. “Not everything was rosy when I got here,” said Horowitz. “There were a few deals that needed to be unwound. Home furnishings was one of them, fragrance was another.”
At present, DVF does not have a fragrance license. Its other licensees are Randa for luggage, Marchon for eyewear and The Rug Co. for handwoven rugs.
Another big push is its international business. Some 40 percent of DVF’s sales come from overseas. Europe is the largest market, and it also has a rapidly growing business in Asia. China is currently a big focus for the company. DVF plans to open 10 to 12 stores a year there with a partner, Globalluxe, and will have 18 stores by yearend. Throughout Southeast Asia, including Hong Kong, Macau, Indonesia and Malaysia, there are 24 stores, which were also opened with Globalluxe.
Horowitz said the company is renovating its London flagship on Bruton Street, and will renovate its Paris store next year. “Both of those stores will mirror what we’re doing here in the Meatpacking District, a lightly elevated and evolved design concept,” he said, adding that they’ve been opening a lot of the most recent concept stores with its partner in China and Southeast Asia.
The house also plans to open a few more stores in Tokyo with its partners. It has a nice business in Turkey and took back the Russian license from its partner.
Currently there are no freestanding stores in Prague or Berlin, but there is a shop in KaDeWe in Berlin.
Globally, DVF has 95 full-price stores, and expects to double that number in five years. During that period, the company’s volume will more than double what it is today, predicted Horowitz. At present there are global flagships in London, Paris, Brussels, Tokyo, Hong Kong, São Paulo, Beijing and Dubai.
Horowitz said 60 percent of the business is generated in the U.S. He still sees great opportunity within the U.S. to grow.
“I said to the family, ‘You know what you guys did? You sprinkled your fairy dust all over the world. You have a little bit here, a little bit there, all goodwill, but you don’t dominate anywhere. In order to bring the business to the next level, you have to be dominant in your home market.’ So that’s why our financial resources are focused here,” he said.
Over the past few years, the rtw stumbled, but Horowitz believes business has improved, specifically where they had lost a lot of ground. “Now, depending on the store, some weeks we’ll be the number-one performer on the floor, but certainly number two or three,” he said.
The company is trying to gradually move itself out of contemporary and into the designer two world.
“For me, that’s a huge difference. It’s accessible designer. We sit near Red Valentino, Burberry Brit and M Missoni. That’s where we like to sit,” Horowitz said, noting that contemporary “is about the latest hot fashion. But that’s not what this brand is about. Sure, we’re fashionable, but it’s all about the brand. It’s all about the heritage and core DNA of what this brand stands for, which is a woman who is confident, ageless.”
He said the DVF woman is “effortless, sexy and on the go,” that she doesn’t need to have the latest things and is loyal to a designer who fits her lifestyle.
In Horowitz’s view, DVF and Theory created the contemporary department 12 years ago. “Bridge became a bad word,” he said, “and stores were looking to create a new department, with newness and to make it younger, and contemporary became a buzzword.”
But contemporary is the more sophisticated and grown-up version of what juniors was years ago: “You need to be the flavor of the month, and there’s no real brand loyalty. What DVF always had was brand loyalty.”
While Horowitz acknowledged that DVF still has a lot of twentysomething customers, the woman she appeals to is “ageless.”
“She can be anywhere from 20 to 60-plus,” he said. The sweet spot, he believes, is represented by the company’s 30-year-old model Daria Werbowy, who has been the face of the brand for the past three seasons.
In general, Horowitz believes the customer falls into three distinct segments: the go-to-work woman; a woman who’s a little bit bohemian and may work as an artist or curator, and a suburban mom who’s more casual. While the emphasis of the company continues to be toward dresses, the brand is adding more casual pieces, whether in rtw or footwear.
DVF makes most of its collection in China, although it produces some recuts in the U.S.
Since Horowitz joined, the infrastructure of the firm has grown significantly. “It’s not so much the amount of people, but the quality of the people,” he said. “Our payroll has gone up considerably — we’ve hired some very professional people.”
Excluding store personnel, DVF has added 10 percent to head count and 20 percent to payroll.
Over the past year, the company has been searching for a ceo and hired Maxine Martens, of Martens & Heads, to conduct the search. Horowitz said the criteria for the new ceo would be a merchant, first and foremost, with global experience and a strong retail background. Last year, Paula Sutter, who had served as president of DVF for 14 years, left the company and was never replaced.
Sutter was instrumental in the re-branding and growth of the business over the past decade. In tandem with the designer, she spearheaded a “second life” for the label, which was best known for its wrap dress in its Seventies heyday and launched a comeback in 1998.
After Sutter left, the company divisionalized its business. Previously, everything funneled through Sutter, and there weren’t specific divisions. Now, retail, licensing and accessories are distinct divisions. The London office is a wholly owned subsidiary and is responsible for its own P&L. Prior to Horowitz’s arrival, it was a sales office for accounts in Europe.
Asked if DVF’s business is run differently than Hilfiger’s, he said, “The structure is the same.”
Which leads to the question: Can Horowitz orchestrate the same evolution at DVF that he did at Hilfiger?
“Does lightning strike more than once? If you ask Silas and Lawrence, it sure does,” said Horowitz, referring to his former Hilfiger partners’ success with Michael Kors. “I think this brand has as big a potential as Tommy or Michael Kors, or I wouldn’t be here. Diane’s [name recognition] and the appreciation and love for the brand definitely has that potential.”
As for whether the company might go public, Horowitz said, “It’s certainly a possibility. It’s always the best way to realize equity, and it’s important for the people working here to know there’s a pot at the end of the rainbow. If that’s the best way to monetize equity, we’ll go public. Getting people monetized and giving them ownership is something I believe in strongly,” he said, but added there’s no timetable on when that might happen.