Project His Way: Kors Expands

By RAY A. SMITH

Bryan Derballa for The Wall Street Journal

Designer Michael Kors, whose fall looks hit the runway Wednesday, in his Manhattan office.

Michael Kors describes his design aesthetic as "pragmatic indulgence." His clothes are luxurious, but classic and flattering. "Pragmatic indulgence" also describes his business style. He is indulging in new areas—opening 175 free-standing stores around the world and adding men's underwear and leathergoods, iPad cases and even travel and food to his empire—but he has been doing all this relatively slowly.

The U.S. designer, celebrating his label's 30-year-anniversary, is evolving from a fashion brand sold in department stores to a retailer with global ambitions. Michael Kors USA Inc., is set to open its largest store, a 7,000-square-foot flagship, in Paris on Rue Saint-Honoré, next month—his first store in France. Fifty stores are slated to open in greater China over the next three years. His first Collection store—carrying only Kors's highest-price line—is set to open in Hong Kong this summer. The company also formed a Japan subsidiary last year to distribute his products in stand-alone stores and department store "shop in shops." The designer opened his first Tokyo boutique in August.

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Michael Kors's fall 2010 show. He describes his 2011 looks as 'glamour that's comfortable.'

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Michael Kors's fall 2010 show.

During an interview at his minimalist Manhattan offices, the perennially tanned designer and judge on TV's "Project Runway," talked about expanding his stable of fragrances, handbags, women's shoes and men's and women's eyewear and watches, and taking his brand into travel and food packaging—though those ideas aren't yet fully formed.

"Perhaps I am a little ADD right now," says the animated designer, whose fall fashion show is Wednesday. "My mind is always blinking."

A key factor in the 51-year-old's success has been wearability: "The only way [fashion] comes to life is if someone wears it, and I don't think just wears it in a fashion show."

Mr. Kors's plans to become an American mega fashion brand in the vein of a Ralph Lauren are ambitious and raise the issue of whether, after initially moving slower than other designers with store openings and product expansions, Mr. Kors could be opening too many stores and expanding too quickly. That was part of the problem for Tommy Hilfiger in the late 1990s, when consumers abandoned the brand, fatigued by its ubiquitousness. The once-highflying Kenneth Cole announced he was closing eight stores last month.

Michael Kors as mega brand seemed unlikely 25 or so years ago. The designer's company filed for Chapter 11 bankruptcy protection, in 1993, with debts reportedly totaling $1.4 million.

The designer emerged out of bankruptcy shortly after and in 1997 was recruited by French luxury-goods giant LVMH Moet Hennessy Louis Vuitton to design the Celine brand. Two years later, the conglomerate purchased a 33% interest in Mr. Kors's own high-end Collection business.

Mr. Kors parted ways with Celine after his contract ended in 2002. The following year, Sportswear Holdings, run by private investors Silas Chou and Lawrence Stroll, who had propelled Tommy Hilfiger's expansion and eventual initial public offering, acquired a majority stake in Michael Kors's company. They hired John Idol, a former chief executive at Anne Klein, and embarked on a plan to broaden Michael Kors's audience through a more affordable line called Michael Michael Kors. It overcame a bumpy start by pushing accessories like handbags, typically cash cows for designer brands.

For its fiscal year ending March 31, Michael Kors USA expects to reach an estimated $1 billion in sales.

Michael Kors Fall 2011

See photos from the runway show.

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A suntan crystal jersey gown at Michael Kors Fall 2011 presentation.

Mr. Kors's popularity exploded with reality show "Project Runway" in 2004. His penchant for bons mots such as "that was so Paris hooker '50s" and "Appalachian Barbie" to describe looks he disdains made him a standout on the show, and exposed his brand to a broader audience.

Since opening his first store in 2000, Mr. Kors offers two kinds of retail shops. Some carry only his high-end Collection. But Mr. Kors also opened "lifestyle stores," which mix all of his lines together, with $4,000 crocodile handbags perched near $30 key chains—somewhat rare in the fashion industry.

Mr. Kors says he did this because it's how he shops and how he thinks customers shop: "Let's be honest, the wealthy still need a flip flop."

The tiered lines and store strategy were in place well before the economic downturn. Those plus prices that, while high, are slightly less than other high-end designers such as Marc Jacobs and Donna Karan, helped the label, says Wendy Liebmann, chief executive of retail analytics firm WSL Strategic Retail. "He's been able to fill that tier just below the haute couture and that has served him well in this country, certainly in this last couple of years," she says.

Ms. Liebmann says Mr. Kors's wearable clothing—cashmere turtlenecks, cashmere and wool pants and sheath dresses—helped him weather the recession. "People felt like they weren't buying something high-trend that would be out of fashion in a year or so," she says.

"That's why his customers love him, he's not trying to place men on the moon," says Ronald Frasch, president of Saks Inc., which carries Michael Kors Collection in about a dozen stores and online with some Michael by Michael Kors.

This fall, Saks plans to debut an expanded Michael Kors shop for women in New York with clothing as well as accessories and shoes, a strong sign of confidence in his business. Currently, the ready-to-wear clothes are sold in one area and the accessories another.

Some critics have called the designer's clothes too conservative, plain, or not edgy enough. "Oh the 'C' word," Mr. Kors drawls, referring to the word commercial, often perceived as a slur in high-fashion circles. "I am very happy to be the 'C' word. I think that fashion is, unless someone wears it, it is a moot point."

Write to Ray A. Smith at ray.smith@wsj.com