NEW YORK — Donna, say hello to Mark.
LVMH Moët Hennessy Louis Vuitton on Tuesday tapped Mark Weber as chief executive officer of LVMH Inc. (U.S.) and chairman and ceo of Donna Karan International, ending a lengthy and much talked about search to replace Jeffry Aronsson, previously DKI’s president and ceo. WWD first reported Weber was the candidate to replace Aronsson on July 14.
In his new role, Weber, 57, will explore strategic opportunities for LVMH in North America, as well as manage and support that business’ central operations here. As reported Tuesday, Weber, who is joining the LVMH Group executive committee, is also taking over the worldwide operational responsibility for LVMH’s Thomas Pink division.
The appointment marks Weber’s return to Seventh Avenue after he was dismissed from PVH last February after 33 years, the last eight months as ceo. Weber joins Karan at a crucial point. The business, still considered fragile by some industry observers, has been on an uptick for the past two years, particularly at the Collection level, and DKI is said to have operated profitably since 2005. At DKI, Weber’s mandate will include building the accessories business and reinstating a men’s Collection line while making the most of DKNY’s men’s wear potential.
“As large as this business is, it’s one of the untapped resources that exist in our industry,” Weber told WWD Tuesday, sitting with Karan and LVMH Group managing director Antonio Belloni at the designer’s office at 550 Seventh Avenue. “The opportunity for growth in Collection and DKNY is there, it’s just a question of determining how you want to go at it. There’s a lot of open-to-buy in department stores these days for brands, let alone great designer brands. With Donna Karan and DKNY, the opportunities are there,” said Weber.
Weber, who will have an office at 550 Seventh Avenue and at the LVMH Tower on 57th Street, will spend the next few months determining the course for the company, “which will be a combination of licensing and direct manufacturing as it is today,” he said. “I don’t have the formula for this company yet, but to its credit, it’s already very successful in the licensing venue, and at the same time, very successful in operating its own businesses.”
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Weber continued, “My focus now is going to be on making sure that the Donna Karan company thrives and grows and gets put on the right track, to satisfy the financial hurdles as well as the image-building requirements of LVMH.”
In the months leading up to Tuesday’s appointment, much had been made in Seventh Avenue circles of Karan’s apparent concern over LVMH’s choice after Weber was flown to meet her in Parrot Cay, Turks and Caicos, this summer. The move to bring in Weber has triggered much speculation about Karan’s future role at the company.
“Things don’t always work out on your first date,” Karan conceded. “There’s a lot of really deep soul-searching, which was really what it came down to. When you care so much about a baby, your family, your people — all the ceo’s have walked in and out of this company and yet my people are still here — it was very important to find that person who would not just instinctively say, ‘OK, we thought it was a done deal,’ but it needed a little more time to digest. Upon meeting him for the second time, I really believe Mark has what it takes. Every designer needs a very strong partner in crime.”
At least one industry source speculated recently that, should the match sour, Karan could walk out of the Seventh Avenue house that bears her name, bid farewell to fashion and pursue many of her other dreams, one of which is believed to be a chain of spas. According to one apparel executive, Karan has told friends that she has threatened to leave DKI on several occasions, but that LVMH’s top brass has offered her incentives to stay.
“We all look to the endless potential possibility,” Karan said. “The day Jil [Sander] handed in her notice, mine was written. At the end of the day, it’s my people. Sometimes it’s not necessarily about what I want, but hopefully what’s best for the company and for my people. Right now, I am the supportive link. With Mark coming in, it’s a winning situation if I can make that work. My passion is to help support what’s best for the company and my people, and for Mark to be a winner.
“It would be very difficult,” she added, alluding to the prospects of a departure one day. “If it came down to the D-Day decision about what this company stands for, I have plans. I have a big life out there and am involved in a lot of things.”
“Let me make it simple,” Weber interjected. “I wouldn’t want to be coming in today, hearing that Donna was retiring. This is a perfect situation.”
Ironically, Parrot Cay wasn’t the first encounter between Karan and Weber. She and her late husband, Stephan Weiss, had interviewed the executive for the ceo position in 1997, and Karan said the trio got along well, but the decision came down to the board of the then-public company.
There was no Karan board voting this time, and Weber has been given power not just over DKI but also over Thomas Pink and LVMH’s corporate decision-making in the U.S.
Explaining Weber’s role, Belloni said, “We are organized by brand vertically, which remains the thrust of our organization. But in some key markets, such as Japan and China, we also have a corporate representation. The U.S. being the very important market that it is, Mark will provide the corporate horizontal view and will also take care of the central functions that we have at the Tower [LVMH’s 57th Street headquarters]. Obviously, his having knowledge and experience of the American market is the other added value, so that we can make sure we see things with a localized view and are more relevant to the American market.”
LVMH, which has never publicly stated its plans for the Donna Karan business, is said to be increasingly frustrated with the lack of return on its $643 million investment, and there has been ongoing speculation the conglomerate was looking to position the company for a potential sale. LVMH hopes to make Karan as relevant financially and fashion-wise as Ralph Lauren and his $10 billion Polo Ralph Lauren Corp., LVMH chairman Bernard Arnault told analysts last month.
“Right from the acquisition time, the value of the brand was in the fact that it had great awareness and a very unique and relevant niche in the fashion world,” Belloni said. “What Donna created over the years has that uniqueness, and it is around that uniqueness that we have to build that business model. We have made progress since the acquisition, but it’s fair to say we have a lot more to do. We want the brand to be extremely vibrant, we want it to be successful financially with whatever business model works, and we want to be very proud of it.
“In terms of the awareness it occupies in the market and the specific values it has, it deserves to be a big priority on our plate,” he added.
Sources said that in the past decade, the DKI business had shrunk considerably, plagued by poor deliveries, an ill-fated attempt at launching accessories and third-party selling that damaged the brand name.
In industry circles, Aronsson has been credited with improving the situation he inherited from predecessors John Idol and Fred Wilson. Aronsson, who was generally well liked internally and by retailers, tightened overhead and worked on improving the overall timing of deliveries and the quality of merchandise. According to a source close to the company, Aronsson had been able to stem the company’s losses, and DKI was in the black last year for the first time since LVMH’s acquisition. Aronsson had worked on positioning both Collection and DKNY for international expansion, with a particular focus on China.
That said, Aronsson’s mild manners and laid-back attitude were seen as general ineffectiveness, especially when it came to asserting himself with Karan, who continues to have a powerful hold over the company.
“Without a doubt, Donna can be a hindrance, but then all designers can be,” a manufacturing source said. “After a point, those founding creative people are a detriment to the growth of a company, and she is a complicated person. She can’t make up her mind. She travels a lot, which can be disruptive, especially when she comes back and changes things around.”
According to several retailers, the label has the potential for considerable growth. They said the Collection business is slowly seeing improvements, while DKNY, after experiencing some growth under president Mary Wang as recently as two years ago, is still facing challenges but continues to expand globally. One source estimated the Donna Karan Collection apparel business at about $30 million at wholesale and the DKNY wholesale apparel business between $150 million and $200 million. LVMH does not break down numbers, and Belloni declined to disclose volume information.
Karan said on Tuesday that she hoped to be back in the men’s Collection business soon, and that Weber’s hire would allow her the time “to breathe a bit now, to be able to look at the bigger picture.”
“It’s a joy to say that he knows Hong Kong, he knows what a collar is on a shirt,” she said. “There is an understanding of clothes, and I believe he has the respect that I have and my husband had for this company. Hopefully, behind every great man, there is a great woman, and there are going to be a lot of women behind Mark. We are a very womanized company. He is coming with passion, is alive and energized, and I am very excited about the opportunity of working with him today.”