DONNA KARAN: A DIFFERENT TACK

Byline: Janet Ozzard

NEW YORK — Since many designers’ paths to financial stability these days are paved with licensing deals, Donna Karan’s small number of licenses could seem risky.
But the designer insists that she’s not anti-licensing.
“It is a misnomer that I disapprove of licensing,” she said. “I believe in licensing as a strategy. It’s when two people get together to create something bigger than both of them. It’s like a marriage. You make something that’s greater than the sum of its parts.”
In the 12 years that she has had her own label, Karan has licensed out only five products: intimate apparel, hosiery, eyewear, children’s apparel and patterns.
All the other categories, such as beauty and fragrance, are still in-house. Now that Donna Karan is a public company, its growth is a matter of public record. But the stock, which came out on the New York Stock Exchange last June at $24, has been hovering around $10 for several weeks.
And her last attempt at licensing, for a jeanswear deal with Designer Holdings, fell apart in March, six months after it was signed.
“In retrospect, I still believe in jeanswear,” said Karan. “I believe in it as a business. It needs to be far greater than just jeans, and for me to go into that business doesn’t make sense. Why does the world need another jeans brand right now?”
Karan insisted she will continue to do jeanswear — in-house — although it’s likely to be smaller than a license would have been. Ralph Lauren’s year-old Polo Jeans venture is expected to hit $350 million in three years, and Calvin Klein’s CK Jeans went from about $120 million to $466 million in three years.
“Originally, DKNY was a jeans business, but it took off in a lot of directions — the classics, the activewear,” said Karan. “Then [Designer Holdings’ chief executive officer] Arnie Simon comes in and says he can position us for jeanswear. Then all of a sudden we have two issues; we both, in a very zealous way, wanted to accomplish something in a very accelerated calendar. But the main issue was the breadth of the collection. Arnie saw the jeanswear business declining fast and furious, and he wanted the whole thing. But the clothing is our business.”
Karan said now that jeanswear is back in-house, she’s restructuring the division to give it room to grow.
The main reason Karan and her company don’t do more licensing is because the designer is skeptical that another company would be as committed to the details.
“If you’re discussing why we don’t do beauty, it makes absolute sense. When we were first asked to go into the business, it was not about fragrance, it was about being a total beauty company. Would I have been able to do this with another company? Would they feel that a candle was as important as a fragrance, that the body lotion had to have no fragrance?
“Sure, I’d like to have a $20 million ad campaign behind me and have all the expenses go over to someone else. Calvin Klein does it brilliantly, for what his philosophy is.
“When we look at a new area, we think, ‘What is Donna Karan going to do here that makes a difference?’ We look at our basic core principle, which is about fit, comfort, luxury and innovation.”

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