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It’s the end of an era.
One of the most storied duos in American fashion is parting ways as, after 16 years at Coach Inc. Reed Krakoff will step down in June 2014 as president and executive creative director in order to focus exclusively on his high-end namesake brand. Krakoff will exit Coach six months after its chairman and chief executive officer, Lew Frankfort, cedes the ceo title to Victor Luis, but will remain executive chairman.
Coach has begun a search for Krakoff’s successor, setting off speculation as to who might take on the role.
The news of Krakoff’s impending departure had no negative impact on Coach’s shares — in fact, they rose 9.8 percent Tuesday to close at $55.55 on the back of strong third-quarter numbers. Coach reported a 6.2 percent increase in net income to $238.9 million on a 7.1 percent rise in sales to $1.19 billion for the third quarter ended March 30. This compares with net profits of $225 million on sales of $1.11 billion in the same period a year earlier.
“I’m [pleased] to focus exclusively on the RK brand and to embark on the next phase of my career,” Krakoff told WWD from a bright conference room on the 12th floor of Coach’s headquarters in New York. “It’s relatively recent [that I made this decision], I’ve been so focused on Coach and the RK brand for the last bunch of years. I’ve been focused on preparing and getting ready for the next evolution of Coach, building a team with Lew, moving forward....It’s really taken up all my time.”
The creative director said he would not renew his contract with Coach when it expires in June 2014. The news follows decision by the 67-year-old Frankfort, who is widely regarded as the architect behind Coach’s, to transition to executive chairman next year when Victor Luis, president of Coach international, becomes ceo.
As part of that transition, Krakoff, 49, would have had to report to Luis. In light of Krakoff’s new plans, he will act more as an adviser to Coach than creative director until June 2014. Karen Harvey Consulting has been hired to find Krakoff’s successor.
The New York-based accessories brand, which launched Krakoff’s brand two-and-a-half years ago, said it would explore “strategic options” for the RK collection that “may involve a sale to a group, in which Krakoff would participate.”
As part of his new mission, Krakoff said he hopes to “create more awareness” around his line, which includes growing its global presence, as well as developing key segments such as its men’s business.
“We’ve had an amazing reaction to the brand, without much awareness, whether it’s been with Michelle Obama, or on the cover of Vogue or the windows at Saks or Bergdorf’s,” he said. “It’s really to leverage the desire that we already see.”
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Frankfort echoed Krakoff, adding that the brand has experienced “substantial growth.” Although he would not put a number to that growth, he did point to RK’s distribution, which includes the Madison Avenue flagship, two additional freestanding stores in Las Vegas and Short Hills, N.J., and nine concession locations in Saks Fifth Avenue. The brand is also sold at Saks, Bergdorf Goodman and Neiman Marcus; in international stores including Lane Crawford, Colette, Le Bon Marché, Harrods and Tsum, and on Net-a-porter.
Saks was the retail launch partner for the Reed Krakoff label in 2010 and currently has several shops-in-shop for its handbags and sells the ready-to-wear in select locations. The retailer’s Manhattan flagship was set to welcome the designer for a personal appearance at the Reed Krakoff handbag boutique on the main floor on Wednesday.
“I got to know Reed through Coach and was so impressed with Reed and Lew, two of the most professional people in our industry,” said Ron Frasch, president and chief merchant of Saks. “We launched the brand, and we have done very well. I am pleased for Reed. If this is what he wants, I couldn’t be happier.”
Frasch called the move “a really big deal.”
“He has already made a commitment. Now he is making a bigger commitment, to his own stand-alone brand,” he said. “It’s giving him more opportunity to be the face of one brand versus being the face of two brands.”
Frasch added that it will also serve the brand well as the designer further develops his direct-to-consumer channel through freestanding stores.
Linda Fargo, Bergdorf Goodman's senior vice president of the fashion office and store presentation, said, "Reed has so clearly defined the DNA of Coach that it should be able to continue and evolve without his daily attentions. It's exciting for him, and for us, that he will be able to focus more intensively on [the Reed Krakoff label].
"The news bodes very well for his namesake brand," she added.
As for who could succeed Krakoff at Coach, Terre Simpson, president of Simpson Associates, an executive search firm, said she would advise identifying very high-profile executive designers in global brands such as Louis Vuitton, Burberry and Jimmy Choo “that could translate to the Coach aesthetic and lifestyle concept they are seeking to maximize.”
Some names that have popped up as possible successors to Krakoff are Tracy Gardner, former president of J. Crew brand, direct and retail, who’s now a consultant to the Gap, and Deborah Lloyd, president and chief creative officer of Kate Spade.
Known as one of the best merchant-marketers, Krakoff is “extremely commercial, and that’s a compliment,” said one source. “He has a sense of what works and what doesn’t work. He can take a trend in the market and make it Coach’s.…I don’t think they need another president, they need a creative director. I think the person who’s coming in has a much harder job than Reed had. It’s a hard job because Reed is so good at it. He’s the product voice behind Coach, and he has been for years.”
Elaine Hughes, owner of E.A. Hughes, an executive search firm, said, “Any company, especially one that’s publicly traded, where there’s a stall in stock price and comes a resurgence of a new brand, like a Michael Kors, when you have a change of the ceo at the top, it impacts everything.”
She said that Krakoff was an integral part of taking Coach from a leather resource to a multifabric, diverse handbag, small leather goods, footwear and apparel firm. “There are no names that pop into my head as an overall creative director because there isn’t a singular individual in any multibillion company that does it. What Reed has that is unique is he not only had a great aesthetic sense and an understanding of raw material, but he also had a good business head,” said Hughes.
“Reed, like a John Varvatos, started his career at Polo Ralph Lauren. What they saw was a creative genius that kept his hand on the product. Everything had to be approved by Ralph. That is very similar to how John Varvatos runs his business, and how Reed runs his business. There are very few people who do that, who are not a principal of a company. You can’t look at Tory Burch and say she’s a possibility because she owns the company.…Vince Camuto is a design genius, but he owns the company....It could be somebody from Europe. Europe has a lot of visionary talent. It’s a matter of who can calibrate to that and how do you commercialize that to billions of dollars,” said Hughes.
She said that under Luis, there will be an evolution of the Coach culture. “He’s a global thinker, he’s a very collaborative guy, and no matter what the company is, the culture stems from the ceo office,” she said.