ONG EYES CHANGES AT CLUB 21; IN TALKS WITH KARAN AND PRADA
Byline: James Fallon
LONDON — Christina Ong is restructuring her fashion empire Club 21, particularly its interests in Donna Karan and Prada.
While officials were insisting the moves do not stem directly from financial pressures due to the Far East crisis, one Club 21 executive pointed out: “If anything, the trouble in the Far East has made us realize one thing — we have limited management resources, and we are stretched too thin.”
Club 21 owns 52.5 percent of Donna Karan Japan. As reported, the designer’s company is in talks with potential international partners about a possible sale of that business.
John Idol, chief executive officer of Donna Karan International, told WWD Thursday, “We continue to have discussions regarding the potential sale of Donna Karan Japan with various world-class manufacturing partners in Japan.”
But he stressed that the sale wasn’t Club 21’s idea; it comes at the request of Donna Karan International. Club 21, part of the holdings of Christina Ong and her husband, Singapore tycoon Ong Beng Seng, considers itself more of a passive investor in the business. “The Ongs have been tremendously supportive of us internationally and remain terrific partners,” Idol said.
Club 21 declined to comment on its Donna Karan operations, referring queries to New York. However, industry sources said the two parties are in talks about restructuring the British business to enable Donna Karan to take more of a role in its management and operation. Club 21 owns 100 percent of the Karan U.K. retail and wholesale operations.
These moves would help improve some of the weaknesses of the operation; for example, the stores are known to have had problems with late deliveries. There also continue to be questions over how well they are performing, particularly the Collection store. Property sources estimate the store could be running at annual losses of up to $5 million.
Industry sources said the discussions between Club 21 and Donna Karan might involve some type of partnership between the two parties.
Ong also is in talks with Prada about a similar structure, although those discussions stem from the desire by the Italian fashion company to gain more control over its freestanding stores. “They have said they want to take a more active management role, both in the Far East and in London, and we have no problem with that,” a Club 21 executive said. Club 21’s Prada business at present includes just one store in London on Sloan Street and a deal with Prada to open stores in the Far East.
Plans for a second freestanding Prada store in London, on Old Bond Street, are continuing, although it has been delayed by a dispute with the landlord. London’s first freestanding Miu Miu store also will open on New Bond Street in the next few months.
The Club 21 executive repeated that the changes in its fashion operations do not result from any economic problems within the Ong Beng Seng empire, despite the drop in property prices in the Far East and the poor performance of Planet Hollywood, in which he holds a stake.
While Ong Beng Seng has sold a hotel in Australia, a private jet and a Bulgari store in London, he continues to invest in other hotel properties in the Far East and London as well as in freestanding stores for the Giorgio Armani collections Emporio Armani, Le Collezioni and, in the U.S., A|X.