The Empress Of Seventh Avenue

They're just so New York. Donna Karan and Stephan Weiss, fashion designer and sculptor, burnished from summer weekends in the Hamptons and glowing with the knowledge that they're hot and getting hotter. Donna is wearing black, of course, because she's in Manhattan (white is reserved for the beach). Weiss, his silver hair pulled back in a tight ponytail, has on one of her new men's suits. They're discussing their burgeoning apparel company, but they can't help slipping in a little Tracy-Hepburn from time to time: "You're wearing someone else's shirt, darling," Donna says. "Are you wearing my shoes?" "No, sweetheart," Weiss retorts. "These are my shoes. Your heels kill my feet."

Perfect. A little banter, a bit of clever repart'e. This is Seventh Avenue, after all, where wit and glamour are a kind of currency. Donna Karan has been here since she was 19, and she knows how it all works. First, you make a reputation, then, you make the scene. Before you know it, Murphy Brown's Candice Bergen accepts her Emmy wearing one of your $490 "cold shoulder" bodysuits, and everybody else wants one, too.

For many in fashion, the hard part is making money--and keeping it. But Donna Karan, one of the world's most popular designers, is doing that as well. Since 1985, she has built a $270 million business that should top $400 million by 1994. Her talent for marketing, it turns out, rivals her gift for design. By transferring the cachet of her high-priced designer label to a cheaper (though by no means cheap) line of sportswear called DKNY, she created a rich avenue for growth. And by controlling the new lines herself instead of just licensing her name, she pockets all the profits.

As Karan, 43, expands into casual men's and children's apparel this year--while launching a women's fragrance and a line of lingerie--comparisons are being drawn with mighty Liz Claiborne Inc., long a Wall Street darling because of its fast growth and consistent profitability. That kind of clout is a long way off, but "for the last 18 months, everything Donna has touched has been gold," says Andrea Jung, an executive vice-president at Neiman-Marcus Co.

ECLECTIC. That would explain the hum at Karan's recent show to introduce the racy DKNY spring line, which includes new men's and children's sportswear. As tattooed models sauntered down the runway, the eclectic combination of styles looked like Hell's Angels meets the Hamptons. Still, the top executives of Macy's, Saks Fifth Avenue, Federated Department Stores, and Bergdorf Goodman sat expectantly. "Donna takes basic commodities and elevates them," says Saks Vice-Chairman Philip Miller, who expects to sell $50 million worth of Karan's merchandise in 1993. "She brings something that's beyond The Gap."

Beating The Gap Inc., the nation's preeminent specialty retailer, is something department stores very much want to do. So they bend over backward to please Karan. This Christmas, Neiman-Marcus is producing a separate, 52-page glossy catalog featuring the full Donna Karan assortment. And Bloomingdale's, in return for the exclusive right to launch her perfume, is displaying the fragrance in every window at its flagship Manhattan store. When Bloomie's relocated Ralph Lauren's Safari fragrance to make room for Karan's scent, Lauren's perfume people went wild. Bloomie's tried to pacify the vaunted designer with better signs--but wouldn't budge otherwise.

Karan learned the fashion business early. Her father, a tailor named Gabby Faske, died when she was 3, and she was raised by her mother, Helen, a showroom model in Manhattan. Donna Faske graduated (barely) from high school and attended New York's Parsons School of Design until she dropped out to join Anne Klein & Co. Klein believed her new assistant was talented but fired her after several months. Klein thought Donna was too preoccupied with a boutique owner named Mark Karan.

Donna later married Karan, and Klein eventually hired her back. Over the next 15 years, Karan became a top Anne Klein designer. In 1983, she and designer Louis Dell'Olio launched Anne Klein II, a moderately expensive line of women's career wear. It took off, but Karan's plans for it rubbed Anne Klein's Japanese owner, Takihyo Inc., the wrong way. So she was fired again--sort of. Takihyo President Frank Mori urged her to launch her own company--with Takihyo's money. When Karan balked, he let her go. "There was a bit of silence, some tears, and Donna said: `You can't mean that,'" Mori recalls. He did, and in 1985, she started Donna Karan Co., 50% owned by Takihyo.

After divorcing Mark Karan in 1976 (he still sells her clothes in two Long Island boutiques), Donna moved in with Weiss and married him in 1983. He joined the business as her partner and still sculpts a couple of days a week. (He designed the bottle for her perfume.) Together, Karan and Weiss became fixtures on the New York social scene, settling into a new house in East Hampton and entertaining stars such as Barbra Streisand and Liza Minnelli.

Like many designers, Karan can be harshly demanding--even imperious--at work. But her great asset is that she never lets her ego get in the way of her marketing programs. She admits she's less than gorgeous and even uses that to her advantage. Her customers know she's not some fey couturier sitting in Paris designing party dresses. "I don't present myself as picture-perfect," says Karan. "Because of the reality, I've been able to talk to people."

SCHMOOZING. Karan advertises much more than most designers, adding bus shelters, telephone booths, and the walls of highly visible buildings to the usual mix of glossy high-fashion magazines. She'll spend a hefty $10 million on ads this year and $15 million next year. She also sells her message personally--something most designers don't like doing. At "trunk shows" for couture customers, she has breakfast with them and explains why her clothes are special, with shapes that camouflage the hips and stomach. "We've got to accentuate the positive, delete the negative" is a familiar Karan refrain.

That's easy to do when things are going so well. Karan, Weiss, and their chief operating officer, Stephen Ruzow, hope the new scent, Donna Karan New York Parfum, can blossom into a beauty business featuring cosmetics. And they see strong potential abroad for both the haute-couture collection and DKNY. Under Weiss's direction, the company even plans to open 50 to 75 freestanding stores in the U.S. To help pay for the expansion, the Karan team floated the idea of a public offering, though for now, those plans are on hold.

The bigger Donna Karan gets, however, the trickier success will be. Some think DKNY's quality doesn't warrant the prices. And the threat of Karan's own shops is irritating department stores. As for the beauty business, giants such as Unilever and Cosmair make it intensely competitive.

Despite the risks, Karan's reputation usually stirs comments such as this one from longtime retail investment banker Gilbert Harrison: "They're branching into categories where it's possible to reach Liz Claiborne's size." But Karan may be looking beyond Seventh Avenue. "I must tell you," she says, "my astrologer sees me doing something in 1997 that is very, very different from what I'm doing now. It has nothing to do with fashion. I'm dying to know what it is."

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