KERRIGAN CONFIRMS PEGASUS GROUP DEAL
Byline: Miles Socha
NEW YORK — Daryl Kerrigan is on cloud 189.
On Tuesday, the designer confirmed reports in these columns that she is joining the American conglomerate-in-the-making Pegasus Apparel Group, describing the move as a way to relieve her of production and administrative headaches in order to focus on design and on building the image of her nine-year-old fashion house.
“I’m delighted,” said Kerrigan, who is known for the hip, streetwise sensibility of her Daryl K and K-189 lines. “We’ve been wanting this for a long time. It feels like somebody just lifted a big weight off of me.”
Stephen L. Ruzow, chairman and chief executive officer of Pegasus, said the group took a majority stake in Daryl K in a deal similar to last month’s acquisition of eveningwear firm Pamela Dennis. Terms were not disclosed.
However, he said Pegasus would move swiftly to develop Kerrigan’s “underdeveloped” business, installing top-level management to help build her collection distribution, open more freestanding Daryl K and K-189 stores, and extend the brand into men’s wear, footwear, eyewear and accessories.
Kerrigan and her husband and business partner Paul Leonard, both Irish expatriates, had expressed a strong desire to take on a partner in recent years, speaking openly about the onerous demands of running a fashion business on their own and staying afloat in a tough business.
“I’m not riding around Manhattan in a black car,” Kerrigan quipped in an interview late last year.
Leonard, an architect and artist by training who had acted as the company’s chief executive, said he now plans to focus on store design, as well as acting as vice chairman of the company’s board.
“We’re really a design-driven company that tried to do everything and we have really spread ourselves thin,” he said. “We’ve always felt we could do a lot more with a strategic partner. Stephen and I talked and I realized this is exactly what both of us wanted.”
Kerrigan, a self-described “perfectionist” who personally fits every flak jacket and low-riding pair of pants, confessed that she was often overwhelmed by the demands of running the business and getting her collection produced and delivered to stores.
“It’s a miracle that we’ve got to this point,” she said. “The fashion gods are smiling on us.”
Ruzow said Kerrigan’s existing staff will remain intact, but he plans to centralize design studios, showrooms and corporate offices in a new space to open early in 2001.
“We’re not changing what’s not broken. We are very cognizant that there is a culture in every company,” Ruzow said. “The Pamela Dennis culture is different from the Daryl K culture and will be different from the next company [we acquire]. Everything we do is a partnership.
“Paul and Daryl are immensely creative and immensely talented people and we are bringing the non-design part of the equation to the partnership.”
Pegasus, patterned after European luxury conglomerates like LVMH Moet Hennessy Louis Vuitton and Gucci Group, hopes to buy eight to 10 brands in the next two years. As reported in WWD, Miguel Adrover, Cynthia Rowley and John Bartlett have been identified as potential targets for Pegasus.
Ruzow said he, Leonard and Kerrigan have developed a three-year business plan that calls for strong growth in sales and profitability. Elements include:
Bringing in strong management to assist the existing team, including a president of women’s wear and a president of men’s wear. Ruzow said additional announcements will be forthcoming in the next few weeks.
Introducing a full-fledged men’s wear line for fall 2001 wholesaling. Until now, men’s wear, sold under the Daryl K Fir label, has been considered experimental and will continue to be tested in its own stores.
Opening more company-owned Daryl K and K-189 stores, at a rate of two to six locations per year, including flagships in Dublin and London.
Ruzow said expanding the Italian-made Daryl K collection business is a top priority. Despite winning consistent praise from fashion critics, the line is sold in only 12 doors in the U.S. and six abroad. Ruzow projected collection distribution will grow to between 120 and 140 doors internationally by the end of 2001.
Meanwhile, there are plans to segment the K-189 business into jeanswear and fashion-driven lines, putting basic items like hooded sweatshirts and basic jeans on auto-replenishment and expanding the distribution beyond the current 175 doors worldwide.
Ruzow noted that he plans soon to meet Kerrigan’s Japanese partners, Onward Kashiyama, with whom she signed a multiyear licensing and distribution agreement last year for the K-189 label. Kashiyama had indicated it expected to do $10 million in the first year of the contract and as much as $30 million by the third.
Ruzow stressed that the goal is not to transform Kerrigan into a megabrand but to “find the right level of distribution” for the brands.
The Pegasus deal caps off what has been a big year for Kerrigan. In January, Tommy Hilfiger named her creative consultant for all its women’s products, including sportswear, jeans, juniors and accessories. Kerrigan is working closely with the women’s design heads and its creative team, some 60 people, on trends, color and overall direction of the lines. Her input will be felt with the spring 2001 lines.
At the time, Hilfiger said he was seeking someone “who understands the market, has a great feel for fashion and who’s energetic and thinks like we do.” Her consultancy was initially signed for a one-year term.
Best known for her lean pants and streetwise, urban-flavored sportswear, Kerrigan launched her label out of a small store on Sixth Street in Manhattan’s East Village in 1991. Market sources estimate wholesale volume of the Daryl K and K-189 lines reached about $11 million last year.
Kerrigan has three stores: the original East Sixth Street outlet and a larger shop on Bond Street, plus a location on Melrose Avenue in Los Angeles. Among the wholesale accounts she sells are Barneys New York, Fred Segal and Ultimo.
The Daryl K collection retails from about $175 up to about $1,000 for shearling coats. The average wholesale price is $156. Items from K-189 retail from about $80 to $400, with the average wholesale $72.
Aided by the investment from Pegasus, Leonard said he plans to remodel the Bond Street flagship this year, which will foreshadow the design of other freestanding units. Ruzow noted that priorities for new locations include Florida and possibly another Manhattan location.
Kerrigan and Leonard said they also plan to take their first vacation in years to recharge their creative batteries. They were slated to leave today for 10 days in the Caribbean.