DONNA’S GLOBAL AGENDA
Byline: Miles Socha
NEW YORK — First Donna Karan conquered the West, opening a 9,000-square-foot international flagship Collection store in London last year.
On Oct. 18, she officially throws open the doors to her international flagship for the East: an 8,000-square-foot Collection store on Queen’s Road in central Hong Kong that marks the latest major step in the firm’s ambitious global retail plan.
“We believe retail is a very important component of our growth,” said John Idol, chief executive officer of Donna Karan International, who, in an interview with WWD, outlined the company’s international strategy. “Freestanding stores are the cornerstone of our vision for retail,” he pointed out.
Indeed, Idol said the company is exploring the possibility of freestanding stores for DKNY Jeans, the in-house jeanswear brand bowing at retail next spring.
All of Karan’s international stores are owned by third parties through license agreements or partnerships. About 18 are owned by Hotel Properties Ltd., a public company in Singapore that’s run by Ong Beng Seng and his wife, Christina, under the Club 21 banner.
But for the United States, Idol said he plans to move “quickly” to set up company-owned stores in Los Angeles, San Francisco and here.
The company plans to end the calendar year with 64 stores in 32 countries. In addition to the Hong Kong flagship, other locations already open, or opening by yearend, include a 10,000-square-foot DKNY store in Kuwait City, as well as DKNY units in Rome, Geneva, Moscow, Shanghai, Johannesburg, Stockholm and Amsterdam.
Last year, Karan’s international sales increased 32.5 percent to $203 million. That represents 37.3 percent of net sales, excluding outlet stores and licensing. Idol declined to say what percentage of international sales goes to its freestanding retail stores and what percentage goes to multibrand wholesale accounts. But he portrayed the freestanding stores as powerful vehicles for building Karan’s global image and showcasing the brand and product range in an idealized setting for wholesale accounts.
“The freestanding stores set the standard for our image around the world,” he said. “What the company has done in the past five or six years is extraordinary; to build all the stores in such a short amount of time is quite an achievement.”
Idol did not break down volume for Donna Karan International’s total wholesale, retail and licensing operations, noting that the company is still formulating those ratios. He said a comprehensive strategic plan will be disclosed to the corporate community in December.
“We’re looking for a balanced company between licensing, wholesale, retail and brand segmentation,” he said, listing some of the key growth areas he cited when he took on the ceo position in July.
In the race to open freestanding stores outside the U.S., spurred by a mature home market for designer collections, Karan currently ranks second among the Big Three American designers.
Polo Ralph Lauren, in first place, operates 71 stores in 24 countries, according to a company spokeswoman. Polo will finish the year with 76 stores in 28 countries. Calvin Klein has 24 international units, but is gunning to have 100 CK Calvin Klein stores in Europe and the Mideast by 2001.
Idol would not project Karan’s rollout plan beyond 1998, when the company plans to open about 12 more international stores. Leases have already been signed for Collection stores in Barcelona and Istanbul and DKNY units in Madrid, Brussels, Tel Aviv and Santiago, Chile, according to Allison Ryba, president of Karan’s international division.
In total, Karan opened 20 stores in 1996 and will have opened 23 more by the end of 1997. Idol said he envisions a similar rollout pace for the foreseeable future.
“We still think we have tremendous opportunities for growth with Donna Karan and DKNY and will continue at that rate,” he said. “We believe that the brand can be successful in all international markets in the world. We have multiple distribution centers around the world to facilitate our needs in all the different countries.”
In addition to its distribution and customer service headquarters in New Jersey, Karan operates similar facilities in Holland, Hong Kong, Tokyo and Montreal.
Asked if the company might consider licensing certain product categories for international distribution, Idol replied: “We will be looking for that as an alternative for us in select markets in the world where duties would preclude us from entering the market at the right price, and also where we could work with a strategic partner who may have a greater ability to grow our presence in the marketplace.”
He did not indicate which product lines might be leading contenders for licensing abroad. “We may license the entire brand to someone in a marketplace,” he said. “Each marketplace has to be looked at separately.”
But he also insisted that licensing its jeanswear brand, which is being produced in-house following the collapse of its deal with Designer Holdings earlier this year, is not necessary to explode that brand globally.
“We will service our retail stores and wholesale accounts directly with DKNY Jeans,” he said. “We think that DKNY Jeans offers us a great opportunity to expand our customer base due to its look and its price point. We’ll look at a number of different avenues that will allow us to exploit that brand. And it could include retail. We’re exploring the concept of opening separate DKNY Jeans shops.”
In the interim, some of the largest DKNY units are slated to get in-store DKNY Jeans shops, including London, he said.
By contrast, Calvin Klein Inc., also in the midst of an aggressive program of opening international stores, has set up several international licenses, including Stefanel for CK Calvin Klein and Designer Holdings and Frattini for Calvin Klein Jeans and Calvin Klein Khakis.
For Karan, Europe and the Far East are the focus of its international expansion efforts, according to Ryba. She credits Karan’s 10,000-square-foot Milan showroom for boosting the company’s rapid growth in Europe.
“We sell in tandem with the men’s and women’s fashion weeks to our European customers,” she said. “We also have a sales and marketing company in Japan with its own showroom.” That company, Donna Karan Japan, is a joint venture with Hotel Properties Ltd.
Ryba said Karan is also developing a retail expansion plan for South America. “We consider it an emerging market,” she said.
In international markets, Karan licenses its freestanding stores “with people who we believe are experts in retail in various markets,” Idol said. “But in the United States, we will own and operate all the stores ourselves.”
Karan plans to open its first company-owned store, a 7,500-square-foot DKNY unit, next February at The Forum Shops at Caesars Palace in Las Vegas. Initially, Karan had intended that unit to be a licensed shop with Club 21.
“We changed the relationship,” Idol said. “We have plans to open a number of stores in the U.S. rather quickly, and we’re in the process of site selection and lease negotiation.”
Idol was reluctant to elaborate on developments in other strategic growth areas. Asked to identify his next licensing priorities, now that the firm has signed a fragrance and cosmetics licensing agreement with Estee Lauder, Idol would only cite home furnishings and DKNY men’s and women’s underwear as active negotiations.
And, two months into the job, he said his relationship with Karan, chairman of the board and chief designer, is going “very well.”
“The partnership I’ve had with Donna is outstanding,” Idol said. “We both have the same vision for the company, and it’s been as exciting as I could ever imagine.”