LVMH Makes a Deal: Stroll, Chou Buy 85% Stake in Michael Kors

NEW YORK — Silas Chou and Lawrence Stroll added a second luxury brand to their holdings, having struck a deal to acquire a controlling stake of...

"I would describe Michael’s style as modern traditionalism," Stroll said. "We feel that his taste level could have a much broader appeal that could eventually filter down to a broader audience. It’s much more difficult to do that with a contemporary designer. Michael Kors has shown itself to be, to date, a luxury brand, as are Asprey & Garrard.

"Michael clearly represents American luxury and we felt that complemented our entry into the luxury goods sector two years ago," he said. "One of the reasons Michael’s business isn’t bigger today is that it has not had a big insurgence of cash or aggressive management behind it. We intend to bring both."

Kors’ company has undergone several changes in backers since its inception, as well as one bankruptcy. In 1993, the designer was forced into Chapter 11 after a deal he signed three years earlier with Italian manufacturing group Compagnia Internazionale Abbligliamento for his bridge line fell apart, leaving Kors to deal with massive debts at a time when his top clients, luxury specialty stores like Martha and The Gazebo, were closing shop. Kors and Orchulli were able to reorganize the company by 1994 and then relaunched the bridge collection in 1996 with the beginning of its relationship with Onward Kashiyama, creating an immediate hit that helped usher in a wave of collections mirroring the designer mentality in the bridge category.

Despite a healthier-looking company since the infusion of capital from LVMH, occasional cracks still appear on the surface of the company. There have been some reports of too much similarity between the bridge and designer collections, and last year, when executive changes were taking place throughout the company’s entire sales team, Kors’ mother stepped in to direct a series of trunk shows.

"I won’t say business is glowing," Kors said of the company’s current fiscal state. "We are profitable. The business in our store on Madison Avenue continues to be strong and the business in Tokyo is great, but the climate out there is not great. That makes you work harder. The most important thing in fashion if you want to be around a long time is to learn to be flexible."
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