NEW YORK — “I tried to get into this school [undergrad], but they didn’t accept me. Brooklyn College did and they didn’t do too badly, but it’s not NYU,” said Mark Weber, chairman and chief executive officer of Donna Karan International and ceo of LVMH U.S.
This story first appeared in the February 24, 2012 issue of WWD. Subscribe Today.
Weber gave a talk Wednesday to the New York University Stern M.B.A. Luxury and Retail Club on the strategy behind managing a global brand. In an often humorous, lively and informative presentation, he said many of the principles of running a fashion brand are the same as running an automobile company, “but with less problems.”
In addition to the 150-plus M.B.A. students, Karan executives such as Mary Wang, president of DKNY; Christa Michalaros, president of DKNY Jeans, Cathy Volker, executive vice president of licensing at Karan, and Tisha Kalberer, chief financial and administrative officer, were in the audience.
Weber took the students through the brand hierarchy of Donna Karan, explaining how the company breaks down to Donna Karan Collection, where dresses can go from $1,800 to $10,000, to DKNY, which is a diffusion brand, and DKNY Jeans. He showed an image of an evening gown to the students, “Pretty, huh?” he said. Weber then showed a DKNY ad featuring the company’s latest model and asked if anyone in the audience recognized her. Surprisingly, none of the students’ hands went up, but the image was of “Twilight” actress Ashley Greene. Weber said they chose Greene as the spokesmodel for the brand for several reasons. She looks good in the clothes, she has 1.4 million followers on Twitter and she has five movies coming out this year.
Weber explained to the students how licensing works. If Karan doesn’t have expertise in a particular category, “we rent our name to a company for a fee.” However, he pointed out that licensing “is a two-edged sword.” On the dull side, he said, you’ve got another company who’s making the investment, taking the risk in inventory and worrying about whether they’ll sell enough product to pay the royalty fees Karan charges, but on the sharp edge, while they’re paying you a lot of money, they make the decisions and you have to make sure they don’t take any shortcuts in quality. DKI, which does $3 billion in retail sales, has licensing deals for categories such as fragrances, eyewear, intimate apparel and watches.
The ceo showed various examples of how Donna Karan and DKNY imagery plays out around the globe. “The success of running any luxury brand is to have one image and one point of view that’s seen around the world,” said Weber, pointing to DKNY posters on the sides of London busses and DKNY imagery completely wrapping the Hong Kong Police Department. Weber said that the company has 40 Donna Karan and DKNY stores in China. Weber said the reason the firm opened a store in Las Vegas was for tourists, and especially those coming from China. “We built it hopefully to make money, but we were prepared not to,” he said. The company put aside a $1 million reserve in case the store didn’t make money, but didn’t need to use it. They recently opened eight DKNY stores in India, he said.
Social media has become a more important part of the firm’s marketing mix, said Weber. DKNY PR girl, which is handled by Aliza Licht, senior vice president of global communications, has close to 400,000 followers. “Aliza and the PR and marketing team have put us at the forefront of what’s taking place.” He said the company was the first of the LVMH brands to have an app on the iPhone. It was all about the “Cozy” sweater and how it can be worn 40 different ways. The firm invests “no less than $1 million a year” in dressing celebrities.
Weber said that since he came to Karan about five years ago, he hasn’t had to replace a single direct report. “We’ve had the fifth record year in a row in earnings,” said Weber. At his previous job [PVH Corp., although he didn’t mention it by name], six of the top people were brilliant and the other 20 were very smart. “I came to this company, LVMH, and they’re all brilliant,” he said. During the Q&A, one student asked if Karan makes different products for foreign markets, and Weber replied that it will offer the same product range to all the international markets. “We have a large range, it’s too large,” he said. But Weber added, “if you’re in China, you can pull from the range, which might be different from what Korea pulls.” He said he recently got a request to design more outerwear for the Korean market, since they sell more outerwear, and Karan obliged.
Asked how involved Donna Karan gets in the business, Weber said, “She is the real deal. She’s brilliant. Donna Karan and I are like Clark Kent and Superman. You never see us in the same room at the same time. Donna Karan today is all about philanthropy.…She’s still the founder of the company, she still has her name over the door and is still the chief designer of the company. It’s our job to create a business that runs efficiently and effectively with the amount of time she’s willing to give to the business. Donna spends a tremendous amount of time on the design of the product and if she can, she looks at it all. She has an amazing team behind her.”