WSJ: An Established Designer With the Eye of an Upstart

WALL STREET JOURNAL | CHRISTINA BINKLEY

Among the fashion deities and style editors seated at the Thakoon show this week was a besuited gentleman dressed more for the United Nations than New York Fashion Week: Piriya Khempon, the consul-general of Thailand.

"He is like an icon" in Thailand, said Mr. Khempon of designer Thakoon Panichgul. The diplomat appeared in the sea of fashionistas because, he said, Mr. Panichgul could be a diplomatic and economic boost to the country where he was born.

That might sound like a tall order for a 35-year-old designer who is most widely known for the red-and-black dress worn by Michelle Obama at the Democratic National Convention in 2008. But Mr. Panichgul is proving to be a rare sort of designer—one with enough business savvy to have hired a sales staff even before pattern-makers and seamstresses when he started his label six years ago.

For a season or two after his burst of Obama-related fame, Mr. Panichgul seemed to use Mrs. Obama as his muse, and his collections appeared aimed at one high-profile customer who wears a lot of nice dresses.

This week in New York, though, the designer went in an entirely different direction. Opening looks in the collection were white, and tailored—including a stunning double-breasted suit. White was Mr. Panichgul's response to the camel colors being so heavily promoted for fall. "I've been sick of camel for the past year," he said in his studio a few weeks before this show. His dog Stevie, a tiny Yorkie-Chihuahua mix, was yapping around his ankles.

The collection moved on to sexier looks and juxtaposed girlish white cotton eyelet with vampy hook-and-eye enclosures that in some cases ran the length of the garment. That's the sort of thing that has earned the Thakoon label critical praise—its familiar and flattering silhouettes sparked up by unexpected or daring finishing details.

"I'm not an artist, I'm a designer," said Mr. Panichgul. "Designers are supposed to look at culture and solve problems."

These days, Mr. Panichgul is competing for adoration with newer, younger designers such as Prabal Gurung and Joseph Altuzarra. At a time when retailers are chasing the newest thing every season, he is neither the latest flavor nor the famous-as-Kleenex likes of Ralph Lauren or Michael Kors.

Mr. Panichgul works from a studio in New York's SoHo neighborhood, with offices cut out for him and his chief executive, Maria Tomei Borromeo. It's so crowded that when a summer intern arrived on her first day this year, Ms. Borromeo said, she looked around and exclaimed, "This is it?"

That's a step up from the meatpacking district garage from which Mr. Panichgul sold his first collection in 2004—10 garments that he made without telling his family for fear they would disapprove of his new career.

"I went to business school because my mom wanted me to take a scholarship. I didn't want to do business, but I was good at it," he said. His mother, a seamstress, brought him and his brother Kritsada from Thailand to Omaha, Neb., as boys. "Asian parents want their kids to be doctors. You feel that pressure," said Mr. Panichgul, who said he is very close to his mother and brother.

Fashion was his hobby. He adored European minimalist designers Helmut Lang and Jil Sander. School was awkward. "I always felt like a mutt. I was born in Thailand, grew up in Bangkok, moved to Omaha at the age of 11 and had to deal with the friends thing—all that."

After graduating from Boston University, he worked a stint in editorial at Harper's Bazaar, where he says he met Chicago boutique owner Ikram Goldman and others who helped him learn the ropes of fashion. He lived frugally and saved money. "Someone told me I lived like a monk," he said. His mother found out he'd quit his job to launch a line when she called Harper's Bazaar two months later and learned he was no longer employed there.

"It was kind of surprising for me and my mom," says Kritsada Panichgul, a food photographer who has worked with celebrity chef and cookbook author Rocco DiSpirito. "I should have known. When we were kids, we would go to the newsstands and he knew exactly when the new [fashion magazine] issues came out. He would get really excited."

Thakoon Panichgul, who said his mother is shy about her English and prefers not to speak with the press, noted that she swallowed her worries about her son's ability to support himself and has been "very supportive." (As usual, his very pleased mother was at this week's show, bowing shyly as she met guests.)

Mr. Panichgul was completely inexperienced that first year. "He didn't know the prices" of his own collection, said Ms. Borromeo, who joined him that season at Ms. Goldman's prompting.

In those early days, Ms. Borromeo said, Mr. Panichgul "would give me his chair and he would sit on an overturned garbage can."

Robert Burke, then an executive with Bergdorf Goodman's, remembered sitting at a folding card table to write up a small order with the first-season designer. "There are a very few designers who you look at and just know they're going somewhere." Mr. Burke called Thakoon well-priced for the luxury segment, with dresses in the $800 range—well under the $1,200 and up that many designers charge.

Ms. Borromeo declined to cite the company's annual revenues, but said this spring's sales were up 63% over last spring. A secondary line was launched last fall called "Thakoon +", which they refer to in the office as "Addition." Addition reaches a broader audience, with prices that run $195 to $1,000, compared with prices starting at $295 and rising to the sky at the main Thakoon line.

"He's a fresh, young, established, seasoned designer, and only today could you use those adjectives altogether," said Mr. Burke, who is now a fashion-business consultant.

WSJ: Appeals-Court Ruling Favors eBay in Tiffany Case

WALL STREET JOURNAL | CHAD BRAY

NEW YORK—In a potential setback for luxury brands trying to combat sales of knock-offs on the Web, a federal appeals court on Thursday sided with eBay Inc.EBAY -3.55% in a lawsuit against the online auctioneer by jeweler Tiffany TIF -1.37% & Co.

The U.S. Second Circuit Court of Appeals here upheld a district judge's 2008 ruling that eBay couldn't be held liable for trademark infringement for counterfeit jewelry sales on its site, unless it had specific knowledge an item might be counterfeit.

Ebay has fought back a number of challenges by luxury-goods makers in recent years. Last year it won victories in British and French courts over the sale of fake L'Oreal SAOR.FR -1.40% products on its site.

The Tiffany lawsuit, which was filed in 2004, has been closely watched because the U.S. market accounts for the bulk of eBay's business, providing $3.88 billion, or nearly half, of the company's 2009 revenue.

At trial in 2007, Tiffany argued that eBay knew it had a problem with counterfeit luxury goods on its Web site and should be forced to take a more aggressive approach to policing it.

The appeals court on Thursday said eBay has a "strong incentive" to reduce the number of counterfeit goods sold on its Web sites and has taken a number of steps to do so, including removing suspect auctions when notified by a trademark holder.

"The risk of alienating users gives eBay a reason to identify and remove counterfeit listings," U.S. Circuit Judge Robert D. Sack said in Thursday's ruling.

Michael R. Jacobson, eBay's general counsel, said the decision was a "critically important victory" for consumers and said eBay supports cooperation with brands, rather than litigation, to combat counterfeit goods.

Tiffany said the decision was a loss for consumers, and said it is considering whether to appeal to the Supreme Court. "As an e-commerce leader, eBay has a responsibility to protect consumers and promote trust in its marketplace," said Michael J. Kowalski, Tiffany's chairman and chief executive.

One bright spot for Tiffany was that the appeals court reinstated its false-advertising claims against eBay and referred them back to the lower court for more proceedings. The false-advertising claims related to ads on its Web site for Tiffany products and sponsored links on search engines.

Tiffany "can try to prove up its claim that this was false advertising," said Brian E. Banner, an adjunct law professor at George Mason University. "That's good news for brand owners."

"Nothing is more important to a luxury brand than image and authenticity," said Robert Burke, president of Robert Burke Associates, a New York-based luxury-goods consulting firm.

WSJ: LVMH Wipes Céline Slate Clean, Opening Way for 'Phoebe Effect'

WALL STREET JOURNAL | RACHEL DODES & CHRISTINA PASSARIELLO

PARIS—French fashion house Céline is quickly shedding its reputation as one of LVMH Moët Hennessy Louis Vuitton SA's most troubled brands.

After struggling for years to forge an identity and a following, the label is finding influential retailers including Barneys New York, Saks Fifth Avenue and Bergdorf Goodman are clamoring to carry its collection, even as they cut back their portfolios to focus on best sellers.

Credit for the resurgence of the brand—which LVMH bought in 1996 for €412 million ($562 million at current rates)—goes to British designer Phoebe Philo and a decision to make a sharp break with the past.

Céline recruited Ms. Philo 18 months ago. To start fresh, the company destroyed all of the inventory left in the stores prior to her first collection, a move that contributed to the €98 million in restructuring charges LVMH took last year.

Céline also closed all but one store in the U.S., cut ties to less exclusive retailers, stopped producing bags in China and restored the accent to its name, all part of a move to tightly control and elevate the brand.

Despite prices that seem to forget the Great Recession—like $790 platform sandals—Ms. Philo's utilitarian overcoats, pants and blouses have tight-fisted store buyers ready to spend.

Prices are up under Ms. Philo, and less exclusive retailers like Bloomingdale's and e-commerce site Net-a-Porter are out. Céline's plan is to cement a high-end image before ultimately broadening out to include more affordable offerings.

"I felt it was necessary to establish quality to the brand," Ms. Philo said in an interview. "Now that we are establishing that and the top of the pyramid is in place, we can open it out."

Her designs "did not fail to inspire us, which is hard to do—particularly in this environment, where nobody was looking to add anything," said Ron Frasch, president of Saks Inc., which has picked up the line for its Boston and suburban Philadelphia stores.

Ms. Philo's minimalist reinterpretation of the label has struck a chord with retailers, and it was on display Sunday, when the 36-year-old showed her second runway collection for Céline during Paris Fashion Week.

LVMH pursued Ms. Philo intensely. She had spent five years as head designer of French label Chloé, where she created the hit Paddington bag and more than doubled the brand's sales, before taking off two years off to focus on her family.

Pierre-Yves Roussel, chief executive of LVMH's fashion division, traveled to London every other week for nearly a year to persuade Ms. Philo to sign on. The company agreed to build her a design studio in London, where she lives.

LVMH, which also owns Moët & Chandon champagne, Dior perfume and Tag Heuer watches, doesn't disclose sales by individual fashion house. It hasn't set a timetable for the label to make a profit, according to people close to the company. The line is still a tiny part of LVMH, which is dominated by Louis Vuitton.

It's apparent, though, that while retailers have been calling many of the shots with fashion houses, Céline is setting its own rules. The brand managed to get Bergdorf and Barneys to share the rights to Ms. Philo's debut Spring 2010 collection in the New York market, even though department stores normally get exclusives on new brands. Barneys put a $1,050 cotton taffeta top with matching $1,200 canvas pants by Céline on the cover of its new spring catalog—a coup for the niche French brand.

Times weren't always this good. Founded in 1945 as a purveyor of children's shoes that later expanded into women's clothing, Céline had floundered since a brief moment of profitability under the auspices of the American designer Michael Kors, who left in 2004.

The look of the brand "seemed to waffle after he left," says Robert Burke, a luxury goods consultant. "It felt a bit Prada-esque one moment, a little something else the next."

Mr. Kors declined to comment.

Once on board, Ms. Philo and Céline's new chief executive, Marco Gobbetti, who previously revived LVMH's Givenchy house, decided to whittle down the brand's distribution. They closed some 20 out of more than 100 stores around the world, including the flagship in New York, situated inconveniently across from Barneys.

"There were too many stores," Ms. Philo said, dressed head to toe in Céline except forNike NKE -0.54% sneakers.

"I really felt that in coming back into the workplace, and in life generally, if you start small and reduce everything to a point that's understandable, it gives you a foundation to grow," Ms. Philo said. "It's all about Céline being brought back to a focused situation."

Ms. Philo unveiled her first interpretation of Céline last June, with a pared down aesthetic. The current "utility chic" look, featuring "clean, interesting, almost military tailoring," is a direct consequence of Ms. Philo's first runway show in October, said Bergdorf Goodman fashion director Linda Fargo. She has linked the constellation of spring trends including wider-leg trousers, leather-as-clothing, and the palette of olive, camel and nude back to Céline, calling it "the Phoebe Effect."

WSJ: A Coming-Out Party for a Pedigreed Designer

WALL STREET JOURNAL | CHRISTIAN BINKLEY

There's one dress that designer Sophie Theallet makes each season that will never see the runway: the one she plans to wear at her show. Each season, superstition overcomes her, and instead she puts on the same pair of black jeans and tunic that she has worn at previous shows. Her show in New York this week was no exception.

Ms. Theallet, who is 46, is an unusual recent entrant to Big Fashion—a designer who is getting her big chance 20 years later than most. Her clothes are worn by Michelle Obama and sold in some top boutiques around the world. Her apparel is so well-crafted, requiring extensive hours of labor and miles of fabric, that a cotton dress might cost upward of $2,000.

"Ruching of chiffon or appliquéing of shearling are not things that are done easily or cheaply," says Robert Burke, founder of Robert Burke Associates fashion consultant. Mr. Burke calls her designs "investment" clothing. "The thing is educating the consumer to understand that," he says.

Ms. Theallet toiled for years for Jean Paul Gaultier and Azzedine Alaia—two famous designers known for the quality of their work—before striking out on her own. Last year, she won the prestigious Council of Fashion Designers of America/Vogue Fashion Fund award, which offers a $200,000 cash prize as well as a lot of publicity. About 160 designers apply for the prize each year, most of them young and looking for overnight success. Other winners and finalists include some hot designers: Proenza Schouler, Derek Lam, Thom Browne and Isabel Toledo.

"I like that she put in the time working with other designers," says Vogue Editor in Chief Anna Wintour, who attended Ms. Theallet's show this week with a phalanx of Vogue editors. Ms. Wintour notes many young designers lack their own clear vision, or the bottom-line design skills to make well-cut clothes. "She can really make a dress," Ms. Wintour says, "unlike a lot of [designers] who can't."

And then there's Ms. Theallet's strict adherence to her vision, regardless of what the rest of the world is looking for. "I don't do trend," she says.

Another hot, new fashion label, Rodarte—whose designers Laura and Kate Mulleavy never studied fashion—commands premium prices for tiny collections. But this is largely because their clothes are often more art than craft—worthy of being exhibited in a gallery. Ms. Theallet's creations are exacting, exquisite from the inside out, and expensive because of the labor involved.

Moments after Ms. Theallet's last look walked down the runway on Tuesday evening, Mr. Burke leaned over in his front-row seat and said to me, "You probably just saw the most sophisticated collection of the week."

The collection drew a room full of fashion heavy-hitters, but didn't touch on a single trend of the week. It was breathtaking for its secretive details, as well as its fine line between the formal and the casual. A green velvet dress shimmered, with a silk-lined hoodie that spread like a shawl collar over the shoulders. The clothes included pencil skirts that looked straight from the front, then revealed tiny pleats at the back, turning a power skirt into something more feminine and slightly flirty.

Short on money, Ms. Theallet doesn't always use the most sumptuous fabrics in her collections. She often works in fine cotton, though she has been able to add knitwear and some Loro Piana wool-cashmere blend fabric this season, using some of her prize money. "I don't have to line the garment because the wool is soft on the skin. It's a beautiful feeling to have that wool-cashmere on the skin," she says.

The seams are flawlessly taped, creating an inside that's as lovely as the outside. The mind boggles at the quantities of fabric she used for a Fall 2010 chiffon dress that was so finely pleated that it looked ruched or gathered.

Some retailers are now fighting for access to the small collections Ms. Theallet makes in a small factory in New York, where the seamstresses create flawless seams, tucks and pleats. Her line is carried in exclusive boutiques, including Ikram in Chicago (where Mrs. Obama shops) and DNA in Riyadh, Saudi Arabia. "I carried her from the beginning," says DNA's owner, Princess Deena Abdulaziz, establishing bragging rights for recognizing a talent before the herd.

The daughter of a doctor and raised in the south of France, Ms. Theallet works from the living room of the Brooklyn apartment she shares with her husband and business partner, Steve Francoeur. With one assistant, Ms. Theallet creates only two collections a year, compared with six or eight for many designers. She will start on her next collection in a few weeks, and it will take until September to complete it. Her husband helps with deliveries as well as serving as the company's business head. The couple reinvest their earnings in the company, which is also backed by friends, including the actor Rupert Everett.

She finished this week's fall collection just three days before her show, then went to work cutting fabric samples and pasting together the sales books for retailers herself.

She's says she knows her recent rise has been a long shot. "Normally it's young designers that get that benefit," she says. "I'm not a young designer. I am a woman and I know what I'm doing."

WSJ: Art Couture: Theyskens' Next Act

WALL STREET JOURNAL | CHRISTINA BINKLEY

Often heralded as one of the greatest designers of his generation, Olivier Theyskens has seen his wispily layered clothes enshrined at the Metropolitan Museum of Art and worn to the Oscars by Madonna. It's hard to fly higher than that in fashion. And he's only 33.

Yet Mr. Theyskens (pronounced TAY-skenz) has had a hard time keeping jobs. At French brands Rochas and Nina Ricci, Mr. Theyskens' collections won rave reviews but failed to sell well enough to satisfy retailers or investors. He became fashion's version of "My So-Called Life"—the TV show that was simultaneously applauded and canceled.

Unemployed for the past year, Mr. Theyskens has collaborated on a book with an old friend, portrait photographer Julien Claessens. Due to be published Feb. 11—the kickoff of New York fashion week—by Assouline, the $120 book has an enticing title: "The Other Side of the Picture."

But this is no tell-all rant, airing the Belgian designer's side of the art vs. commerce controversy. It's a photography book covering his short but highflying career. All art, with just a touch of commerce.

Mr. Claessens, the photographer, studied art, not journalism, but there is reportage in the way he captures moments backstage at a fashion show. If anything, I wish he and Mr. Theyskens had included more shots of the Mr. Theyskens and his assistants at work, and fewer of models' eerily made-up faces and hairdos. The book's magic is in moments such as the tangle of arms as a dress is being donned, or perhaps doffed. Without comment, there are the emaciated bodies of models and muses, such as the corseted boniness of Hana Soukupova backstage at Rochas. There's also the mundane act of sewing, the designer needle in hand.

The book isn't an attempt to bask in the past, he says. "I'm not at all nostalgic," Mr. Theyskens said recently from Paris. He sounded remarkably grounded for someone who once posed for a portrait in "lingerie borrowed from the photographer's girlfriend," according to the introduction by Vogue news editor Sally Singer.

Since departing Nina Ricci last March, Mr. Theyskens says, he hasn't kept up with fashion magazines or parties—even during Paris fashion week last October. "Actually, I was thinking, oh, you should see on the Net what was going on," he says. "But I didn't. It makes me think that normal people—99% of the people—don't run to the Net to see what's happening [on the runways]."

Mr. Theyskens is a boyish wisp of a man who wears his dark hair very long. He famously dropped out of art school at the age of 20. He was hired a few years later as designer of Rochas, where he dressed Nicole Kidman and Kirsten Dunst and won the International Award from the Council of Fashion Designers of America for his haunting, feminine designs. Mr. Theyskens insisted on designing his own fabrics: Some silk prints were reminiscent of watercolor paintings. He often used materials in new ways, for instance, attaching floaty strands of ostrich feathers to silk dresses.

Dresses 'Like Sculptures'

Mr. Claessens says he sees the designer as a pure artist. "Olivier Theyskens' work goes beyond creating clothes and a collection. Prints are like paintings, dresses are like sculptures," Mr. Claessens says. "I see it at the same level as the work of some conceptual artists or grand movie makers."

Yet some retailers criticized the Rochas collection for being high-priced. Critics gushed, then gasped, as owner Procter & Gamble PG -0.58% shuttered Rochas's fashion line in 2006, saying fashion wasn't "a core competency" of the company. The line was revived in 2008 with new investment partners and a new designer, Marco Zanini.

A year later, Mr. Theyskens landed at Nina Ricci. Again, reviewers gushed and retailers griped. Some ethereal silk blouses cost more than $2,000. His muses were rail-thin.

'I Can't Give It Away'

"He cut for somebody that was tall and very thin. It didn't fit women who could afford clothes of that caliber," says Karen Daskas, owner of the Tender Birmingham boutique near Detroit. There, the designer's final collection for Nina Ricci has been marked down to 60% off. "I can't give it away," she says. "And we try it on everybody."

Mr. Theyskens was shown the door after showing his fall 2009 collection in Paris—and Nina Ricci hired a new designer.

Mr. Theyskens says the criticism that his clothes sold poorly because they cost too much is "legend" but untrue. He also says the production department controlled fit issues using "strict measurement scales supposedly corresponding to the sector."

Is it fair to blame an artist for a brand's lack of commercial success when there are so many factors at play? Perhaps Mr. Theyskens should have paid more attention to the fit of his clothes. But fashion investment consultant Robert Burke believes that what Mr. Theyskens needs is a business partner who can help add wearable, more affordable clothes to his runway demi-couture. That model is working for Alexander McQueen, whose wild runway shows do for his brand image what his wearable precollections do for his sales.

"In the stable of fashion designers who are available [to be hired] now, Olivier Theyskens would be at the top of the list," says Mr. Burke.

Mr. Theyskens' experience with the two design houses says much about the fashion business today. It's reminiscent of the music industry, where record labels once gave artists like Bob Dylan or Pink Floyd years to build an audience. These days, pop artists are either overnight sensations or they're in search of a new label. In fashion, investors also often rotate through designers in search of a magic spark. Alessandra Facchinetti was given only one season at Valentino before a third set of designers in two years was brought in. There was a similar revolving door at Gianfranco Ferre.

As Mr. Theyskens searches for a new label, he says he has been creating imaginary collections in his notebooks. Three or four are completely ready to go—down to the chosen fabrics, plans, "everything."

When asked about the idea of creating his own label, he says, "Oh God. … That's for sure, I have always thought [about] it." Still, he notes, 2009 wasn't a bad year to be on the sidelines, with its economic tumult and dire straits.

When the subject is his artistic oeuvre, Mr. Theyskens seems unflappable. He says, "I know I can be proud of what I have been doing. So voilà. I don't know what I can say more."

WSJ: Marchesa Whips Up Delicate Ultra-Luxury Evening Gowns

WALL STREET JOURNAL | ELVA RAMIREZ

One nice side effect of attending presentations is overhearing reactions among the crowd. At Marchesa’sWednesday afternoon presentation in Chelsea, the guests were openly rapturous. “If I were getting married again, I’m going to wear that,” a woman told her friend as she pointed to a white tulle gown so airy it appeared spun out of meringue. “Wait until you see this one!” a man excitedly exclaimed to his friend as they turned a corner into a new vignette.

Each season, Marchesa designersGeorgina Chapman and Keren Craigwhip up delicate, luxurious gowns that later grace editorial spreads and red carpets. Expect this season’s Madame Butterfly-inflected collection to be no different.

The collection’s themes were sensuality and the “fragility of love,” Chapman says, flanked by gowns with laser-cut floral details, chiffon and crepe. In a subtle but chic touch, models wore nude pantyhose silk-screened with faded black roses, that made the women look as if they intricately tattooed their legs years ago.  Some of the patterns ran all the way up the legs, others hovered around the ankles. Peeking out of a hem, the effect was head-to-toe accessorizing that complemented the sumptuous detailing without looking over-styled.

Luxury consultant Robert Burke noted that Marchesa’s unwavering position at the highest end of the market is smart, even despite the current retail climate. “Marchesa’s been very focused on what they do best, which are incredibly beautifully-executed evening dresses, and the quality has gotten more exquisite over time,” he says. “They’ve positioned themselves as the ultimate evening dress designer. From there, they can go into multiple categories of business.”

“I think it’s really important to stay true to who you are and true to your customer,” Chapman says. “To water down what I do doesn’t feel right.”

WSJ: A Minimalist Gets a Makeover

WALL STREET JOURNAL | RAY A. SMITH

Under the Bryant Park tents of New York fashion week Tuesday evening, Narciso Rodriguez will show off his typically minimalist evening gowns and day dresses. What the crowd won't see is Mr. Rodriguez's own ambitious makeover, as he reinvents himself once again, a year after his relationship with financial backers collapsed for the second time.

Mr. Rodriguez is making more dresses that sell for less than $1,000, below his more-typical price tags of $1,800 and up, a move some retailers who carry his lines requested. The designer, who doesn't have stores of his own, has also signed a deal with eBay Inc. to create a line that will be sold exclusively through the online marketplace. Ebay, more known for bargains than luxury, will start selling the line in the spring. The line, "Narciso Rodriguez for eBay," is a first for eBay, which plans to announce the deal Tuesday. The clothes will sell for less than $350.

Mr. Rodriguez, who burst into fashion's major leagues with his sleek minimalist style when he designed a wedding dress for Carolyn Bessette Kennedy in 1996, sees the moves as a chance to "bring in a new customer." He also designed the dress Michelle Obama wore on election night.

The critically loved designer has been known for experimenting with fabrics as varied as polyester, silk crepe and charmeuse and incorporating materials like plastic and fiberglass. And his eBay clothing is expected to hew to his sleek aesthetic and body-conscious sculpted design. Ebay, which says it has 88 million active users, plans to host the after-show party. Press releases of the announcement will be in the gift bags handed out as guests exit the bash.

While the moves could help broaden Mr. Rodriguez's audience, they also risk alienating his most-loyal higher-end customers.

Behind the scenes at Fashion Week, many designers are grappling with how to balance the realities of the economic climate with their creative, and often expensive, impulses. As consumers have balked at high fashion's prices, retailers are demanding that designers produce more-affordable clothing.

Mr. Rodriguez is on board: "I think she's [the customer is] grateful to have the opportunity to buy something that's under $1,000. The person who wants the dress at $2,500 or $1,500, it's a unique piece, they're designer pieces. The pieces that are less expensive just open the opportunity for them to shop more."

Mr. Rodriguez, who keeps collections he is planning to show very close to the vest, has said that the spring 2010 collection he designed to show Tuesday was greatly influenced by the modernist sculpture of the late British artist Barbara Hepworth. In a recent interview in his Manhattan studio, the designer said the show would reflect optimism. He is also known for being slightly futuristic and modernist, and isn't likely to bring back 1980s looks as a number of designers have done in New York so far during Fashion Week. A board covered with pictures and clippings on a wall of his studio, his "inspiration board" for the collection, included a picture of an alien from the movie "District 9."

"The atmosphere here [at my company] has been so upbeat. It's a new beginning. It's been an upbeat season and that's what's reflected in this collection. It's a great way to combat what's going on in the world," he said.

He has gotten a lot of buzz in recent months when Michelle Obama wore his dresses, particularly a red-and-black dress on election night. His runway shows are highly anticipated and have drawn stars such as Sarah Jessica Parker, Claire Danes and Rachel Weisz. Jessica Alba is expected to attend this year.

The eBay deal is a tentative but important step for a designer who has long shunned measures that other designers use to expand their lines, such as designing for inexpensive chains like H&M or Target, or signing licensing deals to make accessories or cosmetics.

Mr. Rodriguez cited an unconventional designer as someone he looks up to: Isabel Toledo, who is also of Cuban heritage and a good friend of the designer.

"It's not a mass brand but she is someone I personally admire because she's a creator," he says. "She has always created in a very specific way and has never changed her way of designing. There's such a glut of mass [merchandise] and there is so much fast fashion. Someone like her, smaller companies, true designers, thrive more, that's who the true designer customer wants to buy."

Mr. Rodriguez says that he is not opposed to adding more products, such as accessories and expanding further into fragrance or other beauty items. But, he says, he is looking for the right partner and wants to personally supervise design and production rather than having those functions outsourced.

And though he's looking for a partner, he isn't interested in collaborating with a low-priced fast-fashion chain, as so many other designers have, because he believes the clothes that result from the partnerships end up being the retailer's vision rather than the designer's.

"You may grow very quickly the first two years and then watch the business decline, unless you really start selling product at any price range with various degrees of quality," he says, regarding "a diffusion line," or a lower priced line. "That's certainly not a strategy I've ever had for this company."

Mr. Rodriguez needs to bolster his business. While the designer is a contemporary of Michael Kors and Marc Jacobs, his privately held business is far smaller with less than $10 million a year in sales. Liz Claiborne Inc. pulled its financial backing from Mr. Rodriguez in 2008, with both parties citing differences on how best to achieve sales growth. His prior investor, Italian manufacturer Aeffe SpA, which owns fashion labels Alberta Ferretti and Moschino, and he had a strained relationship because of their opposing views of how to expand the label, both parties say. They split in 2006. Massimo Ferretti, Aeffe's executive chairman, said in an email: "The termination of our business relationship with Narciso Rodriguez was mutually agreed upon and is attributable solely to our different vision of how the Narciso Rodriguez brand should be developed."

Liz Claiborne declined to comment beyond its statement last year: "Initially we both saw significant opportunities to develop the collection in multiple product categories, channels and geographies, but differences emerged as to how best to achieve this organic growth, and we have decided to terminate our business relationship by mutual agreement."

Mr. Rodriguez launched his line in 1997 after years of working at Anne Klein, Calvin Klein and Cerruti. In 2003, he became the first designer to win the Council of Fashion Designers of America's Womenswear Designer of the Year award two years in a row.

Among the changes he was forced to implement following the breakup with Liz Claiborne, he and his small staff now handle everything from manufacturing to ordering fabric to retailer shipments after relying on much larger partners Liz Claiborne and Aeffe to handle such functions.

Mr. Rodriguez, 47 years old, is trying to stay in the game amid the worst economic climate in decades, with luxury brands and retailers being especially hit hard. Consultant Bain & Co. forecast in a June report that the global luxury-goods market would shrink 10% this year.

"A designer that small needs a partner especially in the luxury area which has been in freefall," says Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail-consulting and investment-banking firm, based in New York. "It's very very difficult in this economic environment to do what you need to do alone."

So far, some retailers say, Mr. Rodriguez has managed. "It hasn't been an easy time for a lot of brands and we are paying close attention to the financial condition of the people with whom we're doing business," says Bergdorf Goodman Chief Executive Jim Gold. "Narciso has been shipping on time and we're selling his clothes very well." He says there's been no disruption since Liz Claiborne and the designer parted ways. "It's been business as usual."

Mr. Rodriguez says he is hopeful but wary about finding another suitable investment partner. Potential investors may also be wary. He lacks features that would make the label attractive to an investor: a line of handbags, shoes, sunglasses and boutiques, which are de rigueur cash cows for other designers. The only ancillary product line is three fragrances. What's more, he has two failed partnerships, which may give investors pause.

Robert Burke, a consultant to luxury-goods companies and high-end designers, and a former fashion director at Bergdorf Goodman, adds that there are far fewer investors looking for luxury brands to acquire. But he thinks Mr. Rodriguez has a lot of brand-extension potential and needs an investor "who is looking at the long-term picture."

The designer says he hopes this period in his label's life will demonstrate to potential investors that he is disciplined and capable. He also argues that not having accessories and complicated licensing agreements means less "baggage" for potential investors to sort through. "This is a new beginning." he says.

WSJ: Life After the First Lady

WALL STREET JOURNAL | CHRISTINA BINKLEY

One enduring image of the Obama inauguration last January was the new first lady enveloped in a shimmering white one-shouldered ball gown that bared her back and arms. The dress ended weeks of speculation over what Michelle Obama would wear that evening and launched the career of a nearly unheard-of designer, Jason Wu.

The designer hasn't wasted a bit of his Obama-induced momentum. Last January, Mr. Wu was selling his clothes in 10 stores and employed six people, and his 2008 revenues were $800,000, says Gustavo Rangel, Mr. Wu's chief financial officer and life partner. Now Jason Wu is sold in 40 stores including Saks, Neiman Marcus, Harrods in London, Lane Crawford in China and Harvey Nichols in Canada, and is on track to make $4 million in revenue this year, Mr. Rangel says. Mr. Wu has hired a personal assistant and has upped his staff to 10, with more hiring to come.

On Friday at New York's St. Regis Hotel, just two hours before showing the first collection he designed since his breakthrough, Mr. Wu worked backstage pinning and stitching a finely draped cocktail dress of black silk tulle with embroidered red hash marks—a modern sort of pointelle—onto a model. Rather than his standard uniform of Levis and Converse sneakers, Mr. Wu donned a dark Christian Dior suit. "This is Mr. Wu at the St. Regis. I'm grown up," said the featherweight 26-year-old, with the faintest grin.

With this latest collection, Mr. Wu is attempting to strike a new chord with creations more modern and sexy than the demure gowns and dresses he was known for. Aspiring to create a broad ready-to-wear brand, he has added knitwear, outerwear and more daywear, the better to fill a woman's whole closet with Jason Wu creations. "Where does my girl want to go? Ideally, I'd like to provide for her whole wardrobe," he says.

"He's really smart. He's got both the left-brain and right-brain thing going, says Robert Burke, a fashion and luxury consultant who has discussed growth plans with Mr. Wu.

Paced through a series of grand rooms in the style of Paris couture shows, Mr. Wu's collection walked a fine line between ladylike and daring. Vibrant colors and rich textures—Chanel-like tweeds and startlingly vibrant silk patterns, tweed trimmed in silk and a knitted sweater in mustard—gave punch to demure silhouettes.

There was a range of looks designed to address almost any closet conundrum, from sporty slouch-shouldered jackets over trim pants to the closing look in which model Karlie Kloss flounced down the runway in an ostrich-feathered cocktail dress. It was all wearable—wearability and breadth of offerings are the sort of things retailers are looking for these days, and Mr. Wu says he's paying attention. The show was crowded with retailers including senior executives from Saks Fifth Avenue and Bergdorf Goodman, whose presence indicates that a show is hot and expected to sell commercially.

Mr. Wu says he doesn't leave a lot of work up to design assistants. "Until the piece goes on the runway, it's got my hands on it," he says.

Born in Taiwan, Mr. Wu began designing as a child. At 16 he began designing clothing for fictional royalty: a line of Barbie-like fashion dolls for Integrity Toys Inc. that cost upwards of $100. Percy Newsum, Integrity Toy's president, credits Mr. Wu on the company's Web site with turning his firm "from a producer of mass market toys to a producer of high-end collectible dolls."

After attending Parsons School of Design and interning for designer Narciso Rodriguez, Mr. Wu launched his company three years ago. Although his first collection was purchased by Saks Fifth Avenue in 2006, it "was a rough couple of years, like all designers," says Mr. Rangel.

Then Ikram Goldman, owner of a high-fashion Chicago boutique, showed Mr. Wu's designs to Ms. Obama. Not only did she wear Jason Wu at the debut inaugural ball, she also donned his designs for the cover of Vogue (fuschia sheath dress), to the London opera (black satin overcoat) and when disembarking from a plane in London for the G-20 summit in April (chartreuse shift).

In November, Mr. Wu plans to quadruple the size of his studio, and his plans include Jason Wu stores and someday accessories such as shoes and handbags. "It's creating a lifestyle," says Mr. Rangel, using the 21st-century buzzword for big time money-making.

WSJ: Why a Posh Store Is Selling on eBay

WALL STREET JOURNAL | RAY A. SMITH

Dallas's Stanley Korshak clothing store has long been known for its high-end merchandise, wealthy clientele and personalized customer service. But as owner Crawford Brock watched the recession take hold, a new idea clicked.

Mr. Brock decided to sell some of his excess merchandise, which included $5,700 Kiton sport coats and $900 Christian Louboutin heels, in a decidedly more downscale venue: eBay.

Since late last year, the retailer has been quietly unloading unsold clothing and accessories on the online auction site under the screen name takeitawayluxury.

Stanley Korshak's eBay experiment is an example of how one of the worst retail environments in decades is spurring stores to innovative -- and somewhat controversial -- ways of coping. Members of Threadwize, a trade group of 10 U.S. specialty stores, are considering selling on eBay, too, says President George Bass; last fall, his New Orleans men's store became the first of the group to sell on eBay.

I found out about Stanley Korshak's eBay gambit when a friend who's a bit of a clotheshorse was on eBay searching for Ralph Lauren Purple Label clothing. He clicked on a Purple Label tuxedo that caught his eye and was directed to takeitawayluxury. A link at the bottom told him it was Stanley Korshak. The auction site's bargain-basement image seemed at odds with the carefully guarded brand of a luxury retailer.

Old-line, high-end independent clothing stores have long been holdouts when it comes to new technology. It's only in the past 18 months or so that specialty stores have sent customers mass emails, which in the past would have seemed less than genteel. Many specialty stores still are resistant to online sales, feeling high-end clothing needs to be touched and tried on. For years, Stanley Korshak's sales associates have been known to travel to customers' homes for wardrobe consultations and closet evaluations.

But the downturn has put pressure on all stores to go online or go extinct. In recent months, Stanley Korshak has generated a database of 70,000 customer emails, which it uses to advertise as well as send alerts for special events, sales or new merchandise. It set up a Facebook page for a women's satellite store branch called The Shak. It launched its official e-commerce site in October. For the time being, the site sells only accessories that aren't sized, such as handbags and jewelry. Mr. Brock says visits to the site now total about 700,000 a month.

Stanley Korshak's eBay effort has a relatively low sell-through rate -- the percentage of goods posted that are sold -- of 16.5%, according to Advanced Economic Research Systems Inc.'s Terapeak, a company that tracks sales on eBay. It has captured $37,239 in sales, the firm says, and sold just 151 items out of 915 listed for the 90-day period between Jan. 20 and April 19.

In recent days, a Loro Piana sweater vest that the retailer says was originally priced at $975 sold for $195 on eBay, and a pair of Bottega Veneta sandals originally priced at $920 sold for $242.50.

People who buy Stanley Korshak goods on eBay find some of its personalized touches. When merchandise arrives, it's tissued and neatly packaged in one of the retailer's signature gift boxes.

Mr. Brock says he is pleased with sales on eBay so far. Still, the store remains ambivalent about how openly to reveal itself on eBay. At first, Stanley Korshak identified itself with a line that read: "Please check out our regular priced merchandise at:www.stanleykorshak.com."

But recently, Mr. Brock removed that link and ID tag. "We've been thinking it through, and we're not so sure we want people to know necessarily that this is Stanley Korshak," he says. "We may turn it back on, but right now it's off."

One risk of his strategy: upsetting fashion designers who don't want their goods sold on eBay. Labels have come, however reluctantly, to expect some discounting in stores, as well as resales to T.J. Maxx and the like. But eBay makes them uneasy, in part because their stuff is being auctioned off, allowing customers to determine the final price. "In the retail world, that is just a no-no," says Robert Burke, a former fashion director at Bergdorf Goodman who owns a luxury-goods consultancy.

Pier Luigi Guerci, chief executive of Loro Piana USA, says, "Loro Piana disapproves and does not authorize resale by any of its wholesale accounts." Bottega Veneta and Polo Ralph Lauren declined to comment, while Christian Louboutin and Kiton didn't respond to comment requests. Also, eBay declined to comment.

Mr. Brock says he didn't consult with the brands he has sold on eBay and hasn't gotten any feedback. He's aware the brands might disapprove, but he argues that eBay isn't really that different from the outlet stores that high-end department stores use to get rid of unsold goods. He notes that many individuals try to turn a profit by buying luxury goods at stores on sale and reselling them on eBay.

The other risk that Stanley Korshak and the brands face is becoming associated with bargain shopping. Mr. Burke notes: "Because [eBay is] such a big and vast selling site, the product would not be presented in a high-end and luxury manner acceptable to the brands that have worked so hard to create their image."

Indeed, one man who bought a Bamford & Sons dress shirt from takeitawayluxury for $80 declined to give his name for this article. He says he didn't want acquaintances and colleagues to know he was shopping on eBay. "There's a little bit of a stigma," he told me. "I'm not ready to start taking the ribbing."

—Geoffrey A. Fowler contributed to this article.

WSJ: Can Jeweler's Celebrity Chic Entice Investors?

WALL STREET JOURNAL | CHRISTINA BINKLEY

BlackBerry Bold in one hand and chicken satay in the other, Loree Rodkin is juggling her schedule and her business over lunch at Mr. Chow in Los Angeles: Elton expects her in Vegas the next week, and Cher wants her to come to an upcoming Caesars Palace show. "I'm like, I've seen your show four times -- I could sing it," she says.

Well-connected in Hollywood and rocker circles, Ms. Rodkin has jetted to widespread fame as a jewelry designer since becoming Michelle Obama's go-to jeweler. Her medieval-looking pendants and signet rings are pitch-perfect for baby boomers who have fond memories of their peace-love-and-rock'n'roll days but have grown into diamonds and gold.

Now, Ms. Rodkin is ready to cash in. She has been telling friends that she would be willing to sell her company.

Recession or no, the dream of selling one's brand lives on in the luxury business. Investors can offer designers the joys of creativity without the headaches of operations and can bankroll global expansions. Louis Vuitton made luggage and ran his company until his death in 1892, when he passed it on to his son George. But these days, who wants to labor as an artisan into old age?

After last fall, it looked like the unstable economy might have killed those dreams. Yet there are signs that some investors are already regaining their stomachs for risk, says Robert Burke, founder of Robert Burke Associates, a luxury and fashion investment consulting firm. Indeed, he says he is forming a joint venture to invest in fashion brands. Mr. Burke declined to identify his partner and says he doesn't know enough about Ms. Rodkin's business to say whether it's of interest.

Ms. Rodkin owns her company wholly, has a lucrative licensing deal in Japan, and says she has little or no debt. With revenue of roughly $12 million a year, her business is small -- but big enough to grow into the $100 million range that investors often want.

If she finds a buyer, Ms. Rodkin says she'd like to stick around after selling her company, and be hired to do the pure designing. She talked about wanting more stores, including some in Europe and Asia, but not wanting to have to own and operate them herself.

What can't be known is how much of Ms. Rodkin's edgy style DNA would remain in a corporate version of her company. Such marriages are notoriously risky; often, designers' visions for the products that bear their name differ from the plans of people writing the checks. Designer Narciso Rodriguez recently split with investor Liz Claiborne Inc. after only 18 months, with both sides citing irreconcilable differences.

"Smaller companies growing and becoming corporate can culturally be challenging," says Mr. Burke. Indeed, his new venture is banking on his expectation that brands have become more needy, or at least more humble -- and thus more willing to accept strategic direction from outsiders.

For designers, making a successful deal can depend on finding a buyer who is like-minded about the company's future. Mr. Burke cites as successful the case of Ippolita, another jewelry designer whose company sold a stake in 2007 to private equity fund Castanea Partners. Ippolita has since expanded into new materials, such as a rose-gold line.

Ms. Rodkin, like J. Crew, is an atypical choice for a first lady. The designer is known for her expensive Goth bondage rings and macabre skull motifs, intricately carved and generally studded with diamonds, that put a subversive twist on high jewelry. Prices run between $5,000 and $400,000.

"It's beautiful, but it's not too pretty," says Shelley Aarons, a longtime customer and art collector from New York. She can be seen wearing a necklace and earrings by Ms. Rodkin in a portrait by Italian artist Francesco Clemente.

Ms. Rodkin, whose droll conversation is peppered with expletives, likes to say she's just a "crazy artist." "I have no idea how much money I make," she announces, an oversized Chanel logo bag thrown over her shoulder as she hikes up Brighton Way to her Beverly Hills office.

But she is, in fact, a canny businesswoman -- a former Hollywood talent manager who got her former boyfriend, the late ballet dancer Alexander Godunov, his role in the movie "Witness." Jewelry started as a hobby. Soon she was selling medieval diamond crosses and daggers to stores on both sides of the Atlantic.

"She makes things that cross barriers," says April Kramer, former wife of Aerosmith drummer Joey Kramer. She has been wearing Loree Rodkin for years. "The pieces are feminine yet strong."

Mrs. Obama, who tends to pick Ms. Rodkin's least edgy pieces, chose a pair of 61-carat earrings, a 13-carat signet ring, and 13 white-gold-and-diamond bangles to wear for the inauguration balls.

While Ms. Rodkin was asked to donate the inaugural-ball items to the Smithsonian, other items are loaners -- the same system that designers use to persuade starlets to wear their creations.

That system has its risks. Ms. Rodkin loaned one pricey ring to singer Rihanna, who happened to be wearing it on the night she was allegedly beaten by her boyfriend. The ring was taken by the Los Angeles Police Department and held as evidence.

WSJ: Bucked by Designer, Versace CEO Eyes Exit

WALL STREET JOURNAL | STACY MEICHTRY

ROME -- Gianni Versace SpA Chief Executive Giancarlo Di Risio is expected to resign, a person familiar with the matter said, after months of clashes with lead designer Donatella Versace over how to cut costs at the Italian fashion house.

Mr. Di Risio plans to tender his resignation in coming days, this person said. It was unclear how the Versace family, which owns 100% of the fashion house, would react.

A spokeswoman for the company declined to comment and said Ms. Versace wasn't available for an interview.

The Versace family issued a statement Thursday saying that "the professional relationship between Versace and its CEO" hasn't been terminated. Versace is focusing on "measures it should adopt to confront the effects of the economic downturn on the luxury sector," the statement said.

Ms. Versace owns a 20% stake in the company, which was founded by her brother, the late Gianni Versace. Her brother Santo Versace owns 30%. Ms. Versace's 22-year-old daughter, Allegra Versace Beck, owns 50%. Ms. Beck has backed her mother in the designer's clashes with Mr. Di Risio, the person familiar with the matter said.

A resignation by Mr. Di Risio, which would come as Versace's profit is suffering, would highlight the pressure faced by Europe's many family-owned fashion houses. Such companies are suffering more than their larger, financially sturdier peers amid the global economic slump.

Many of these family businesses in recent years have brought in professional executives to restructure their operations and help them grow.

Yet the belt-tightening has proven too painful for some. Brian Blake in April stepped down as chief operating officer and commercial director of Prada SpA, which is owned by the designer Miuccia Prada and her husband, Patrizio Bertelli. Mr. Blake had been tapped in 2007 to prepare Prada for a stock-exchange listing that never came to pass.

Mr. Di Risio and Ms. Versace, both 53 years old, have been at odds for months over how to reduce costs for such items as promotional events and parties, according to the person familiar with the matter.

Even in good times, the question of how much to spend on public events and advertising campaigns is a source of tension between executives who want to control costs and designers eager to generate buzz. With the global downturn crimping profits, CEOs are under even more pressure.

"It's going to be a fine balance for CEOs to balance budgets while maintaining the public face of the company and the exposure that it costs," said Robert Burke, a luxury-industry consultant.

Ms. Versace and her brother Santo took over the fashion house in 1997 after Gianni Versace was gunned down outside his Miami villa. Mr. Versace's death sent the fashion house into a financial spiral as customers loyal to the late designer's styles began to look elsewhere.

When Mr. Di Risio was brought in to run Versace in 2004, the company was saddled with more than $146 million in debt and posted a net loss of $124 million. Ms. Versace, backed by her daughter, gave the executive a free hand to restructure the company.

Mr. Di Risio began by untangling the company's assets from the family's personal holdings, which included a Manhattan town house that the family sold in 2005 for $35 million.

Mr. Di Risio closed unprofitable lines, such as lingerie and children's wear, and focused on overhauling Versace flagship stores in fashion capitals including New York, London and Milan. He also opened new stores in fast-growing luxury markets, such as China.

Under Mr. Di Risio, Versace also formed joint ventures that extended the Versace brand to Lamborghini sports cars and AugustaWestland helicopters.

Ms. Versace, known for her bleach-blond hair and sexy dresses, embraced Mr. Di Risio's commercial focus, reining in the brand's flashy designs for more restrained styles that have longer shelf life. She also began to concentrate on designing accessories, such as handbags and shoes, which generate greater profit margins.

At times, however, relations between Mr. Di Risio and Ms. Versace, who is vice president of the board, became strained. Initially, for example, Ms. Versace tried to persuade Mr. Di Risio to revive the house's tradition of mounting high-profile, but costly, fashion shows for the designer's haute couture collection. Mr. Di Risio talked her out of the idea, persuading Ms. Versace to present her collections to clients in private appointments.

By 2006, Mr. Di Risio's strategy had returned the fashion house to profitability, posting earnings of €19.1 million ($26.3 million). Versace's profit has slipped since, however. The fashion house last year reported sales of €336 million and scratched out a net profit of €9 million, down from €13 million a year earlier.

As profit fell, tensions rose. In January, Mr. Di Risio began to push Ms. Versace to simplify her designs so that the label could lower its prices, the person familiar with the matter said.

WSJ: Do You Want Clothes to Go With That Perfume?

WALL STREET JOURNAL | CHRISTINA BINKLEY

During the Paris fashion shows last week, a number of store buyers and style editors veered from the hubbub of the runways to the Yvon Lambert Gallery in the bohemian Marais district.

The draw: a new line of exquisitely detailed womenswear by the house of Rochas, a historic brand that for nearly three years had existed only as a lineof fragrances.

When owner Procter & GamblePG -0.58% shuttered the brand's fashion line in 2006, it seemed to be the end of Rochas. But as it turns out, those P&G fragrances kept the brand alive until a new manufacturer emerged.

Fashion and fragrance: It's one of the ready-to-wear industry's most stable marriages. Many, if not most, successful colognes are offshoots of luxury clothing brands. Gucci, Dior, Dolce & Gabbana, Thierry Mugler, Stella McCartney, Juicy Couture -- you can pick your favorite designer and smell like them. A number of once-celebrated fashion houses have been reduced to fragrances for years until a designer came along to air them out. Chanel was famously revived after years in a bottle. More recently, Vanessa Seward has been designing collections for Azzaro, known more for cologne than for clothes.

The benefits of fragrance for fashion are clear-cut. It costs more to manufacture clothes, which come in all those pesky styles and sizes, than scents. With their high margins, fragrances often contribute the lion's share of profits to a brand and can support it through boom and recession. At Puig Beauty & Fashion Group SL, the Spanish fashion company that owns Nina Ricci and Carolina Herrera, 80% of its net revenue came from fragrances in 2007, the most recent year reported.

Fashion these days is more about branding than clothes, and every brand needs a family of profitable products such as shoes, belts, bags and jewelry. "A brand is like a friend," said Robert Polet, chief executive of Gucci Group, whose Yves St. Laurent brand just turned profitable after years of losses. The path to profitability, he noted, involved marketing fragrances and dropping products that didn't draw fashion-minded consumers. "That's why there are no more YSL watches," he said.

But even as fragrances enrich fashion brands, it's a truth less acknowledged that fashion helps fragrances as well. Every good eau needs clothes.

When a brand is left with only a fragrance, as in the case of Rochas, it runs the risk of losing its relevance. "Fragrances have only a certain shelf life," says Robert Burke, an investment consultant and former Bergdorf Goodman executive. "Fragrances are generally successful when they're connected to a living person." The buzz created by celebrated designers and runway shows can update and revivify an old perfume.

So it was the fragrance of Rochas that lured Italian fashion manufacturer Gibò Co. SpA to re-open the house. After a licensing deal with P&G last fall, Gibò President Franco Penè hired Italian designer Marco Zanini. Mr. Penè asked for a collection with the elegant understatement of brands like Hermes and Gucci Group's Bottega Veneta, hoping to draw a contrast with flashy, heavily logoed lines. "The logo business was killing the luxury business," explains Mr. Penè.

This is hardly an ideal moment to introduce a new luxury-clothing line. After a six-year boom, luxury sales are expected to fall by at least 15% this year. Retailers like Saks and Neiman Marcus, facing tremendous losses, are cutting the size of their designer orders by between 20% and 30%. "It will be a difficult season," says Mr. Penè. I spent an hour at Gibò's Paris showroom last week and saw only one buyer looking over Rochas.

What's more, even the scent business couldn't prevent Rochas from losing money on clothes a few years ago. The house was founded in 1925 by Marcel Rochas, who has been credited with designing the first 2/3-length coats and skirts with pockets. By the time designer Olivier Theyskens was hired in 2002, Rochas was known more for cologne than clothes. But Mr. Theyskens's collections were critically acclaimed and turned that image around. He won the Council of Fashion Designers of America's International Award in 2006 -- akin to winning an Oscar.

Some of those gowns, though, were priced well over $30,000 -- reaching a thinly populated stratum that didn't make the line profitable. Procter & Gamble discontinued the clothes line within weeks of its designer's award.

It's worth noting that Mr. Theyskens two weeks ago left his job at Nina Ricci under similar circumstances -- critically acclaimed, highly expensive, detailed clothes that failed to meet profit goals.

Still, Mr. Zanini's Rochas is another world entirely. It's reasonably priced, as luxury clothing goes, with dresses costing between $950 and $1,400 at retail, and jackets priced between $850 and $1,300. Since that still isn't cheap, Mr. Zanini, a veteran of Halston and Versace whose deep sideburns give him a slightly wacky Victorian look, has endeavored to include for the brand's luxury clients the sort of interior details that have largely disappeared from modern clothing. Women's cardigans and jackets have generous interior pockets. Feather-light cashmere sweaters are lined in silk.

Everything is manufactured in Italy, and much of the work is done by hand. The result is understated and highly feminine. One knitted lace dress could be a workhorse, packable and, like the blazers, presentable at corporate meetings. Other elements of the collection, such as light silk blouses, are more fragile.

Rather than a logo, a signature Rochas ribbon runs through inside seams -- visible only to the woman who wears the clothes. In a knitted dress, the ribbon motif is subtly repeated in the knit pattern

"A garment is as important on the inside as on the outside," says Mr. Zanini. "For me, luxury is also the experience of wearing -- to discover the secrets of the pockets and the silk ribbon."

WSJ: Retailers Brace for Major Change

WALL STREET JOURNAL | RACHEL DODES, ANNA ZIMMERMAN & JEFFREY MCCRACKEN

The good news for retailers reeling from the holiday sales season is that 2008 is almost over. The bad news: The fallout in 2009 could be worse.

This year's retailing slide -- when stores were forced to cut prices to convince wary consumers to spend -- promises to have a lasting impact on the way the retail industry operates. Many retailers are rethinking how they do business, as others prepared for a large number of bankruptcies and store closures.

The first retail casualty of the weak holiday season could be Goody's Family Clothing Inc., a Southeast apparel retailer. The 287-store chain emerged from bankruptcy court in October but its holiday sales were below plan and financing it was counting on didn't materialize, according to a person familiar with the situation. The retailer is negotiating with lenders to avoid potential liquidation, say two people familiar with the matter.

A representative for Goody's was unavailable to comment. But in October, Chief Executive Paul White was upbeat about its prospects, saying "we are energized by the opportunity in front of us and are focused on continuing to fulfill the Goody's mission."

Other retailers are saying they will trim inventory and reduce the number of suppliers. That, in turn, will cause a ripple effect, prompting a number of weaker manufacturers, small brands and underfunded fashion labels to fail. New retail formats and concepts stores are likely to be curtailed in the coming year. And luxury-goods makers already are working to cut the long lead times between orders and store delivery as a way to reduce risk.

"We will have a lot fewer stores by the middle of 2009," says Nancy Koehn, professor of business administration at Harvard Business School. "It's happening very, very quickly because of the financial crisis and the recession."

During the holiday season, when retailers typically generate as much as 40% of their annual sales, Americans cut their spending. Total retail sales, excluding gasoline and autos, were down between 2.5% and 4% this holiday season, compared with the same period in 2007, according to MasterCard Inc.'s SpendingPulse unit. That makes it among the worst holiday seasons of all time, says Michael McNamara, a vice president.

There were exceptions. Amazon.com Inc. AMZN -3.13% said Friday its holiday sales exceeded all prior years. Still, industry analysts say that online retail as a whole is down slightly from the year-ago holiday season.

Retailers and their suppliers, who are hoping for a burst of sales this weekend and next week, are assessing the fallout to their industry. They and other retail watchers are forecasting big changes ahead:

More Bankruptcies: Corporate-turnaround experts and bankruptcy lawyers are predicting a wave of retailer bankruptcies early next year, after being contacted by big and small retailers either preparing to file for Chapter 11 bankruptcy protection or scrambling to avoid that fate.

Analysts estimate that from about 10% to 26% of all retailers are in financial distress and in danger of filing for Chapter 11. AlixPartners LLP, a Michigan-based turnaround consulting firm, estimates that 25.8% of 182 large retailers it tracks are at significant risk of filing for bankruptcy or facing financial distress in 2009 or 2010. In the previous two years, the firm had estimated 4% to 7% of retailers then tracked were at a high risk for filing. Retailers are particularly vulnerable to a recession because of their high fixed costs.

The most vulnerable retailers are those with debt coming due, says AlixPartners Chief Executive Fred Crawford. "There are companies in virtually every retail sector in distress, whether it's a jeweler or a high-end luxury store. But if they have a lot of debt and it's coming due soon, that's probably a better predictor that they may need to file," said Mr. Crawford.

Several turnaround experts said retail lenders including General Electric Co.'s GE -1.31% GE Capital, CIT Group CIT -0.42%and Wachovia Corp. are dialing back lending to retailers.

CIT, which lends money against vendors' receivables, recently withdrew coverage for orders to Bon-Ton Stores Inc., BONT +5.16% of York, Pa. Bon-Ton spokeswoman Mary Kerr said, "We are in the process of contacting those affected vendors with whom we have good relationships in order to work directly with them." A CIT spokesman declined to comment.

Recent changes in the bankruptcy code make it more difficult for retailers to emerge from bankruptcy reorganization. The changes, passed in 2005, shortened to 210 days the time retailers have to determine whether or not to assume real-estate leases, limiting the amount of time they have to complete their restructuring. Lawrence Gottlieb, a New York bankruptcy attorney at Cooley Godward Kronish LLP says that only two retailers have successfully emerged from bankruptcy proceedings since the amendments to the code were passed.

In turn, because the debtor-in-possession market for financing bankrupt companies remains squeezed, many bankrupt retailers could quickly turn into liquidations -- as was the case earlier this year with chains Linens 'N Things, Mervyn's and Steve and Barry's.

Store Closings: The International Council of Shopping Centers estimates that 148,000 stores will close in 2008, the most since 2001, and it predicts that there will be an additional 73,000 closures in the first half of 2009.

This underscores a sea change in retailers' business strategy. "Generally speaking the way retailers have grown is to get more volume, and open more stores," says Greg Maloney, chief executive of the retail practice at real estate services firm Jones Lang LaSalle JLL -2.14% .

Despite the closures, the U.S. is still likely to see a net gain in square footage mostly due to projects under way before the credit crisis hit. Barclays Capital analyst Jeff Black says growth in retail square footage will slow to 5% in 2009 from 8% in 2008. Some retail sectors likely to see growth include specialty teen stores while cutbacks are coming in the women's apparel sector.

Already a number of specialty retailers have said they are closing stores, includingAnnTaylor Stores Corp., ANN -2.27% Talbots Inc. and Charming Shoppes Inc. Those that aren't closing stores will likely curtail expansion to conserve capital. J. Crew GroupChief Executive Mickey Drexler said that the company is "revisiting all new store openings" and plans to cut square footage growth in half in 2009, excluding a new concept. Liz Claiborne Inc. is postponing store expansion until the economy improves.

Less Selection: Several department stores, including Saks Inc. SKS -0.09% and Neiman Marcus Group Inc., already have announced that they would narrow the range of merchandise they carry and drop vendors that don't perform. The cutbacks will ripple through the apparel industry, hurting the companies that are most exposed to the wholesale channel. Companies such as Jones Apparel Group Inc., JNY -1.82% for example, generate 50% of sales from department stores. Other manufactures, such asVF Corp., VFC -0.71% are less vulnerable because they have rolled out their own retail stores and realize only 10% of sales from department stores, according to J.P. Morgan Chase & Co.

"We are so used to using history to guide our future," says Brendan Hoffman, chief executive of the 48-store Lord & Taylor chain. Setting inventory levels "will be a challenge until we get to some level of economic stability."

Meantime, Lord & Taylor, a unit of Hudson's Bay Trading Co. is buying conservatively, preferring to be out of stock on key items than over-stocked. Buyers at Lord & Taylor will purchase "deeper in merchandise we really believe in" and cut back on the rest.

As a result of such cutbacks, a number of smaller fashion brands that have thrived over the past decade as luxury boomed, are expected to struggle or fail. "There's no question that you are going to see bankruptcies in the designer world," says Peter Boneparth, a Kohl's Corp. KSS -0.92% director and former chief executive of Jones Apparel.

Contemporary clothing label Theory LLC, which had sales of about $600 million in 2008, already is planning to sell 25% less to retailers in 2009, says Andrew Rosen, the company's president and co-founder. "The consumer's shopping patterns are going to change from what we've come to know over the past few years," Mr. Rosen says.

Smaller vendors are also adjusting the way they operate. Chantal Bacon, chief executive officer of designer Betsey Johnson's firm, said the brand is bringing its international sales in-house for the Spring 2009 collection to lower prices by cutting out a distributor.

Robert Burke, chief executive of Robert Burke Associates, a luxury-goods consultancy, said he is working with clients to shorten lead times between orders and deliveries, which are typically six to nine months. Long lead times, in part, are blamed for the inability of stores to respond quickly to the downturn.

"There's a focus on identifying what the key items are for the season and making sure that there is fabric and production capabilities more quickly," Mr. Burke says.

Fewer Concept Stores: Many retailers invented new brands to spur rapid growth in recent years. But many such concepts already are being abandoned or cut back. Neiman Marcus said it would postpone plans to expand its Cusp store concept. Pacific Sunwear of California Inc. PSUN -2.60% closed down its d.e.mo. stores earlier this year, and AnnTaylor abandoned plans for a "modern" baby-boomer concept.

Closing unprofitable new store formats "is something investors would like to see," says Barclays' Mr. Black.