I've never dressed this group before," exclaims designer Michael Kors. He's talking about the millions of consumers out there who may covet designer fashion but are not prepared to shell out $850 for one of his 10-ply cashmere sweaters or $8,900 for hand-beaded pants. Or who may not even know his name. Kors built a fashion reputation dressing American jet-setters in cashmere and sequins, but now he covets single-name status like Ralph or Calvin. So he's launching MICHAEL Michael Kors (yes, the first name twice), intending to swathe Americans in what he calls "affordable luxury"--bright Argyle sweaters, paisley-print raincoats and stamped-leather handbags, most priced at less than $500. The new collection debuts this month in 350 department stores across the U.S. and next year in Europe and Asia.
The Michael-as-Ralph strategy is the brainchild of Kors' financial backers, Silas Chou and Lawrence Stroll, who bought a majority stake in Kors' company for a reported $100 million in January 2003 through their firm Sportswear Holdings Ltd. "It was time for him to become the next great American designer," says Stroll, who, along with Chou, conducted a "simple process of elimination" before they put their dollars behind Kors. "We wanted to invest in someone who is American, whose style is aspirational and who is seasoned but not too old. With these criteria, there were surprisingly few names to choose from."
Kors, 45, not only had the right experience; he was hungry. After 23 years in business, one trip to bankruptcy court and a seven-year relationship with LVMH Moet Hennessy Louis Vuitton, where he designed the Celine line, Kors was respected but not iconic.
Stroll and Chou intend to change that by turning Michael Kors into a $1 billion brand within a decade and taking the company public along the way. It's an ambitious plan to say the least, but they've done this kind of thing before. Canadian-born Stroll and Hong Kong--based Chou were the masterminds behind Ralph Lauren's international licensing deals throughout Europe in the 1980s. In the '90s, they put their money and Seventh Avenue experience behind a novice designer named Tommy Hilfiger. They took Hilfiger from a $25 million jeans business to a $1.8 billion global brand.
The secret of their success is the combination of Chou's manufacturing power--his family owns Novel Denim, one of the largest suppliers of textiles, sweaters and yarns in the Far East--and Stroll's keen knowledge of international distribution, product development and marketing. With Hilfiger, they were able to use manufacturing muscle to lower prices below those of competitors like Ralph Lauren. They also invested millions of dollars in advertising, flooding international markets with Hilfiger's name and attracting a trend-setting young urban crowd to the brand. In 1992 they took the company public with one of the industry's most successful IPOs. In 2001 Chou and Stroll cashed out their holdings in Hilfiger and a year later relinquished their co-chairman titles in order to branch out and invest in other brands. They had already bought the British luxury-goods firms Asprey and Garrard in 2000, and after unsuccessful runs at Valentino, Brooks Brothers and Calvin Klein, the partners went after Kors.