A NEW DAY AT DONNA
BRUSONE RESTRUCTURES: TOUTS GLOBAL POTENTIAL, CUTS 140 EMPLOYEES
Byline: Eric Wilson
NEW YORK — “It has always been business and image, business and image.”
That’s a balance Giuseppe (Pino) Brusone had deftly achieved during two decades at Giorgio Armani and Valentino, and it’s a tightrope he is walking again at the helm of Donna Karan International, where the new chief executive has begun the process of restructuring the company to meet his strategic vision.
On Monday, Brusone gathered Karan’s sizable New York staff to announce the first steps, which included the confirmation of what many had feared — 140 layoffs affecting nearly every department, including four senior executive positions. But he also told employees that Donna Karan will become a stronger, more streamlined organization that is “more hands-on and that can quickly adapt to change.”
“I would like to build an organization that is more active and not overstructured,” Brusone said in an exclusive interview with WWD on Monday, discussing the reorganization of the company since it was acquired by LVMH Moet Hennessey Louis Vuitton on Nov. 27. for $643 million, including its separately held trademarks. Brusone had joined LVMH in January and was tapped as Karan’s ceo in May as the deal was going through, replacing John Idol.
The majority of the layoffs affected people in Karan’s New York offices, including the four executive positions: Brigitte Kleine, president of international and licensing; Allison Ryba, president of retail; Anna Bakst, president of shoes and accessories; and Lee Goldenberg, executive vice president of worldwide operations.
Brusone also made two appointments, naming Anne Marino, who was vice president of marketing for the Prestige Cosmetics division of Shiseido Cosmetics (America), as senior vice president of Donna Karan, taking over Kleine’s licensing duties, and Siegmund Rudigier, who was group sales and marketing director at Wolford Worldwide, as president of retail.
Goldenberg’s duties will be assumed by Tisha Kalberer, who was named chief financial and administrative officer last month, while Bakst has not yet been replaced. The company also clarified that the 20 positions within DKI’s coordinator program that were eliminated last week were structured under Christina Nichols, senior vice president of human resources, not under creative services, as reported.
In his first interview since becoming the top executive of one of America’s most preeminent fashion brands, Brusone discussed the changes and some of the tasks ahead as Donna Karan is assimilated into the LVMH corporate culture. Brusone has faced challenges in the past, and, during his 14 years at Armani, developed a skill for managing a creative mindset while watching costs. “I know the reality of creative people,” Brusone said. “You cannot say ‘No.’ You have to show them how something can be done, but in a softer way.”
Considering the complexity of Karan’s workforce, layoffs seemed inevitable. Employee losses were sizable, representing about 7 percent of Karan’s overall workforce, but they are not out of line with recent cutbacks at other designer fashion houses. Gucci recently let go of 130 employees in the U.S. and Giorgio Armani eliminated 28 positions, while Calvin Klein Inc. earlier this year cut an estimated 105 jobs. While Brusone cited the current economic situation as one impetus for the cutbacks, the layoffs were also related to the acquisition of the company and its transition from a corporate philosophy that encouraged building volume through licensing to one that typically eschews such brand extensions in favor of maintaining direct control.
Brusone said he has just begun to review Karan’s relationships but plans to honor the existing licenses. However, while articulating his philosophy for the future of the Donna Karan and DKNY brands, he stressed that he plans to hold its partners to the same standards of a strategy that is focused on upgrading the overall image of the labels.
“We have made a huge, important investment in Donna Karan because we believed in the potential of these brands,” Brusone said. “The brand of Donna Karan is one of the few with the potential to grow at an international level. We want to upgrade the brand, to bring it to the level of our major competitors — Gucci, Yves Saint Laurent, Giorgio Armani and Prada.”
Similarly, Brusone wants to position DKNY at the level of its European counterparts, such as D&G, Miu Miu and Emporio Armani, specifically targeting the brand for international growth because of its association with the American dream and its connection to New York City. He offered a preview of the company’s spring ad campaign for DKNY, for instance, which he had just shown to LVMH chairman Bernard Arnault last week in Paris. Photographed by Peter Lindbergh, it goes back to the brand’s roots, incorporating collages of New York imagery like the Stock Exchange, Chrysler Building, speeding taxi cabs and subway stations.
But the company’s advertising plans will be more selectively upscale, Brusone said, noting that there will also be more concentration in overseas publications.
Brusone clarified that his overall philosophy is to bring each brand to a higher level, by improving its retail distribution, the quality of production and presence in the marketplace, even if it means pulling back from some categories that Donna Karan already produces. Through a broad path of licensing over the past four years, the company now carries merchandise from the better to designer apparel markets, plus a big jeanswear business, in addition to its licensed home, accessories and beauty lines — totalling sales of about $662 million last year.
“We want to try to be more focused on our full-priced retail sales and decrease the number of outlets,” he said, noting that one important step will be the elimination of sales of Donna Karan and DKNY merchandise through discounters, including product that is made under license.
Even though LVMH has taken a hard-line approach to licensing with many of its brands, the conglomerate has made exceptions. Marc Jacobs, for instance, has licensed his name for handbags, fragrance and a new sunglass line that will make its debut in January. Brusone also said there could be advantages to licensed collections for Donna Karan and DKNY, but only if they follow the same principles of quality production and sales that he intends to instill at the company. Importantly, he said licensees will not only have to provide volume, but also enhance the image of each brand.
“It’s not the top line that is important, but the bottom line,” Brusone said. “I want to be severe, and careful, in how we achieve the bottom line. I hope that all of the licensees will follow us in this new philosophy. If not…”
Also on the plate for the company is an expansion of both production and sales internationally. Brusone cited Europe and Asia as key consumer markets that have been relatively untapped by Donna Karan, while emerging markets such as eastern Russia and China could logically follow.
As for production issues, the company is looking to move more sample production to Italy, where it would also concentrate on developing a stronger accessories collection and take full advantage of the corporate connection to Louis Vuitton. The company may open offices there for Karan to specifically focus on the development of collection accessories, Brusone said, both of which are moves geared to improve the quality of products. He theorized one reason why many American designers have not had as much success in accessories as Europeans is that they often approach accessories the same way they design apparel — starting from scratch twice a year.
“With accessories, you have to continue with a core product and continue to grow until you achieve a recognizable image,” Brusone said.
While the plans of a new parent company often conflict with those of the creative mindset, Donna Karan herself has cited accessories and international sales as matching her personal goals in recent interviews. Like many American brands, Karan has faced a difficult entry into overseas markets because their retail networks are often so different from the U.S., where apparel sales are dominated by department store channels.
Brusone will also concentrate on developing Karan’s freestanding and franchised store operations here, extending the focus on full-priced sales to its own locations. While sales have been hurt by the recession, Brusone said he’s begun to see some semblance of a return to normalcy, particularly during frequent air travel, where he has noticed more and more travelers. Considering its investment in new locations in New York City this year, with a signature store on Madison Avenue and a DKNY store in SoHo, Brusone considers it something of a victory to have ended the year with sales down 2.8 percent on comparative stores.
“I know that retail is important for brand image, but it would be a big mistake to open a store only from the point of view of image, because retail is a business,” Brusone said. “At the end, it would be a negative. A store that doesn’t make money would be a negative for a company.”
A profitable store and company are also obvious assets for the image of a brand, and Brusone feels that Karan’s collections are poised to combine the right elements of business and image under a more disciplined philosophy for growth.
“We believe this can be a great business,” Brusone said. “Donna Karan is one of the few brands with potential for growth in terms of international sales. There is an energy and level of creativity that this brand represents, and there is always something new about this brand.”