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On the Road to Recovery: As Donna's Knee Mends, So Does DKNY

Donna Karan, who is recovering from a broken knee, is also experiencing a recovery in her DKNY business, which she shows today.

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Last year, sources estimated retail sales of DKI to be about $700 million, with about 70 percent of that volume, or $525 million, coming from DKNY. That’s a significant decline from DKNY’s heyday in the 1990s when it was estimated to be generating around $700 million at retail.

Wang explained that the company has retracted its main business to position itself for future growth. DKNY upped its quality, raising the average retail price point from $50 to $200, and thereby slashing the lower-tier distribution which had hurt the brand’s image.

“We upgraded the fabrics, we went back to some of our original factories which are the more expensive factories in Asia and Italy, and we went back to the more luxurious material,” Wang said. “We added cashmeres from Italy rather than using Hong Kong’s. We became stabilized, and our orders show that.”

According to Jeffry Aronsson, chief executive officer of DKI, comp sales for DKNY’s 13 company-owned stores were up 20 percent last year, with a fourth quarter surge of 32 percent. The brand is sold in about 300 stores worldwide. The U.S. market represents about 45 percent of DKNY’s business.

“We are planning for ready-to-wear a conservative growth of 100 percent in five years, and we are looking at tripling to quadrupling the size of the accessories,” Aronsson said. “Our own freestanding stores in addition to specialty store distribution are and will become increasingly important while accessories emerge as the growth engine of the company.”

Wang added, “Accessories potentially could take over ready-to-wear in terms of size eventually.”

The company is also banking on aggressively building its specialty store business. At this time, about 75 percent of DKNY’s wholesale business is through department stores. By adding new specialty store accounts to the department store business, that ratio could reverse one day, Wang explained.

“Because of the sell-throughs we have had with specialty stores and with the reaction we have had to our line at the Coterie, we really believe we will have the biggest growth with specialty stores,” she said. “It’s the personality of all the individual owners, and how well they can sell the products. They have incredible customer following with people who will only buy from them.”
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