A year ago, the hot topics of conversation in the fashion world were designer John Galliano’s comeback with his first show for Maison Margiela and Marc Jacobs closing his diffusion line, but many industry people were galvanized by something else as well: What had happened to Reed Krakoff, the man some in fashion had been calling “the next Tom Ford”?
Krakoff, whose stocky physique and thick, black-framed eyeglasses challenge traditional notions of how a fashion designer looks, was the former creative director of Coach. Over the course of 17 years there, under the leadership of C.E.O. Lew Frankfort, he had transformed the company from a sleepy $500 million leather-bag brand into a $4 billion powerhouse selling all manner of accessories. In 2009, while still at Coach, he launched a namesake line that aimed to achieve a new level of American luxury. Coach sank by one estimate between $120-$150 million into the venture, but neither critics nor consumers got on board. In 2013, Coach and Krakoff parted ways, and Krakoff lined up a group of private-equity investors. But the critical reception and sales didn’t improve enough to save the brand. Last winter, Krakoff announced he was suspending production and design while they reorganized. By that point, however, the company seemed more like a ghost ship than a business pivoting toward the future.
At that time, if you called the number of the Madison Avenue boutique, an automated voice answered, “There is no one to take your call.” The general Reed Krakoff customer-service line also failed to connect to a human being. Finally, at the store in Woodbury Commons, a discount mall 50 miles north of New York City, a live—cheery and helpful—person picked up. When asked for a working number for the corporate offices, she provided the one for general customer service. A trip to the SoHo store revealed a telling sign in the window: bright, with white block letters, it offered the clothes at half off.
The rumor was Krakoff had simply walked away from his own brand, leaving burnt bridges and scores of people without jobs. “I think it’s virtually unprecedented, where the investors are ready to fund it and the entrepreneur whose name is on the door goes, ‘I don’t want to anymore,’” says a person with knowledge of the business.
To those who followed Krakoff’s career the closing of his brand was a shock. Michelle Obama had chosen to wear his clothing on the cover of Vogue, and now it was selling at fire-sale prices? A Connecticut preppie from a wealthy family, Krakoff had become even wealthier while at Coach as he constructed a fabulous lifestyle centered around art and design. He filled his townhouse, in Manhattan, and houses, in Palm Beach and East Hampton, with art by the likes of Alexander Calder, Louise Nevelson, Frank Stella, Josef Albers, and Adolph Gottlieb, among others. His apartment featured a Serge Roche table and screen, a Lalanne sheep, a Marc Newson table, and a Lockheed lounge chair. According to a 2011 New Yorker profile of Krakoff by Ariel Levy, Krakoff’s “ground-floor bathroom [in the Manhattan townhouse] was covered entirely in golden snakeskin and contains a spheroid toilet more stunning than anything the vast majority of the population will ever own.” The reason the public knows about Reed’s priceless collections is that he told journalists--often. He and his wife, Delphine, an interior designer, sought attention for their homes, which they called “projects” to Architectural Digest, WWD, W, Harper’s Bazaar, CNN Money, the website 1stdibs. He even posed for the cover of Art and Auction magazine. The result was a great deal of exposure for his palatial residences, which he and Delphine would sell and then move on to the next—earning the couple a reputation of high-end flippers.
“I don’t see myself as a fashion designer,” Krakoff would tell virtually everyone (including me, for a 2013 Wall Street Journal profile). He saw himself, instead, as “someone who’s in the creative world and the design world.”
“I think he was obsessed with brilliant taste: architecture, furniture, art, design. And I think that’s what he strove for. And I think it was aspirational to him,” says Vanessa Friedman, fashion director of The New York Times.
During his time at Coach, Krakoff was an undeniable force in the fashion world. He was on the board of the Council of Fashion Designers of America (C.F.D.A.), the fashion industry’s trade association, and a recipient of its awards on more than one occasion. He was also on the board of Parsons School of Design, from which he’d graduated in 1986, after considering various other careers while attending Tufts, and briefly, the School of the Museum of Fine Arts, in Boston, and, the Berklee College of Music.
Steven Broadway, his fashion-drawing teacher at Parsons, says, “[Despite his many interests] I never had any doubt that his passion was aligned with fashion—his eye and his taste and his consciousness—which many times trumps not having the greatest art skills.”
After graduation Krakoff worked for Anne Klein and Ralph Lauren before becoming the top designer at Tommy Hilfiger, in the early 1990s. “He was into art, architecture, furniture design. It wasn’t just about fashion,” recalls Hilfiger. “He was very creative. I think he helped elevate our brand.” But in 1996 Tommy Hilfiger fired Krakoff after it became clear their visions for the firm’s future differed. “At the moment it wasn’t great,” remembers Krakoff. “I was disappointed obviously that [Tommy] wasn’t as enthusiastic about me staying—I went from being a design assistant at Ralph to being the creative director of a pretty big company, and it was only because [Tommy] allowed me and it occurred to me to do more and more.”
But Krakoff now believes there was a silver lining to getting fired. “A dream of mine was to work in Milan,” he says. “A lot was going on in the business. They were doing super well. Tommy was like, ‘Your heart isn’t in it. You shouldn’t be here.’ We’re friends. It was the best thing he ever did. It was amazing that he saw in me that it wasn’t right for me anymore. He pushed me and I ended up at Coach.”
At his new job Krakoff discovered a hole in the mid-level market that could be filled by must-have, name-brand accessories, so-called “accessible luxury.” (This trend was later refined by Michael Kors, Tory Burch, and Kate Spade, all of whom soon made aspirational bags.) “Before Reed got hold of it, Coach was not remotely known as a brand with any fashion edge,” says Friedman. “It was the kind of bag your mother gave you when you turned 13 or 14. Under his creative direction it became a trend-driven and popular company.”
Krakoff’s chance to break out with his own brand came in 2009, when Coach was looking to expand into the higher echelons of fashion. “It was at a time when a lot of companies were diversifying. That was a way for Wall Street to feel better about brands,” says a former Coach executive.
Coach looked into acquiring a luxury brand—in particular, Burberry or Ferragamo—but ultimately decided to let Krakoff develop his own brand from within. A person close to Krakoff confirms that “clearly [Reed] felt the need to have something with his name on it,” though Krakoff himself told Levy, “It sounds crazy, but I never thought of having my own line until a couple of years ago.” (His mother, Sandra, a salty “doyenne of Palm Beach society” much given to puncturing her son’s pretensions, told Levy, “He has wanted to do it all along. Ever since he got to Coach he has wanted to do this.”)
The new Reed Krakoff brand would not be just about making high-end bags and accessories, it was decided; there would also be ready-to-wear, a fragrance (selling for nearly $700 per bottle), shoes, and jewelry. Krakoff hired top talent to design, market, and style it all. The clothes would be sold not only in premium department stores, such as Saks and Bergdorf Goodman, but also in Reed Krakoff boutiques on Madison Avenue and in Las Vegas and Tokyo. Reed and his wife, Delphine, an interior designer, were the aesthetic force behind every aspect of the new brand, including the décor of the boutiques, which featured furniture by Mattia Bonetti and Joris Laarman, and lacquered grey walls. Krakoff, who counts photography among his avocations, insisted on shooting the campaigns himself. “He very clearly had ambitions to be an extremely high-end, minimalist intellectual luxury brand,” says Friedman. “Of a kind that had not really existed in the U.S. before. Perhaps for a reason.”
A former top employee recalls, “Not only did we have handbags but [also] shoes, jewelry, the sunglasses, the perfume, for which we were making the glass bottles in Murano, Italy. It was just like, Really? That’s crazy. It just went bam! Day to night it was this massive company, and we didn’t have anything on the shelf yet.”
Today Krakoff acknowledges, “We put an enormous amount of pressure on ourselves to do everything very quickly, and the luxury business absolutely takes time.” In fact, “a launch of this scope was virtually unprecedented,” says Fern Mallis, a former executive director of the C.F.D.A. “To his credit, Reed built a brand, which very few people are able to do, from head to toe. He did the whole thing. It takes people years to phase in all those categories.”
With so much money and other resources from Coach, Krakoff spared no expense. “There wasn’t a sense of resourcefulness,” says a former employee. “We’d just go for the top of whatever we needed, and we’d just ask for it, and we’d get it. We’ll only work with the best—if it’s stylists, materials, the place where we’re working—top, top of everything, versus [the usual way to start] a new business, where you might be a bit more industrious or a bit more humble.”
“We did a mock showroom for top retailers, a pre-test collection,” remembers a former executive. “They weren’t even going to sell this; it was just a run-through. It was just for show. They brought in wood parquet floors from France, and then they set it up and it was almost like a set. It was wacky.”
The argument made by those in Krakoff’s camp is that Coach, being such a behemoth, couldn’t go small, that it had to make a giant splash with the new label. The new brand was trying to compete with the European fashion houses that dominated the luxury-goods market. But they had achieved that with decades of experience behind them, not to mention billions of dollars. “It’s so consolidated now: L.V.M.H. and Kering and Michelin own everything. Either you’re competing with a billion-dollar company or you’re owned by a billion-dollar company. To be a player like we were you needed to have all those things firing,” says a close observer.
Some among Krakoff’s friends worried that his ego was getting the better of him. A fashion insider believes it was sheer folly to think that you could enter the luxury market and go instantaneously from scratch to compete with heritage firms like Gucci and Chanel. But, for the time being Coach’s brass stood firmly behind Krakoff. “We were pushed into a new space. We knew that if this was successful it would be a big idea. It would be elevating, and there would be a halo effect for the Coach business,” says Jerry Stritzke, a former president of Coach. “It’s easy to look back and say this was a lot of money, but we were trying to create something new.”
Spending so much money so freely engendered more than a little resentment in the fashion world. Many people felt that while Krakoff had plenty of experience designing leather accessories, he had not really earned his spurs in women’s wear and luxury design. Krakoff himself was aware of this resentment. “I think it’s a little bit like an actor who becomes a director, or a painter who becomes a director, or a fashion designer who becomes a painter,” he says. “If you’ve had a long career, people see you in a certain way. The reality is all those [previous] companies [I worked for] were not me; I was in the service of Coach and Ralph and Tommy. . . . To be frank, I never designed a handbag before I went to Coach. I never designed men’s wear before I went to Tommy. At Coach they knew I’d never done accessories [when they hired me].”
Krakoff’s boasts about not really being just a fashion designer also nettled people in the industry—especially since Krakoff was trying to re-invent himself as one. “You can have the Marc Newson chair, but you don’t have to pretend your clothes are the Marc Newson chair. Even Marc Newson doesn’t do that,” says Friedman. “I think Reed was so desperate to be taken seriously as a designer that he became overly serious about himself and his work.”
Krakoff says he didn’t intend any snobbery. “My process, the way I design—whether it’s a lamp or a chair or [I] take a photograph—is really the same. It’s about choices: this proportion instead of that; this lighting. Maybe I say [I’m not just a fashion designer] because I do other things that are creative. I use that as a catchall. My intent was not to diminish that I’m in the fashion world.”
Krakoff’s debut show, in February 2010, was highly anticipated and billed by the media as the most exciting event of that year’s winter Fashion Week. A glittering crowd that included Tory Burch, Tommy Hilfiger, Allison Sarofim, and Amanda Brooks was in attendance. But many in the audience were disappointed by the clothes, which looked dark and heavy and were eccentrically cut with odd patches of leather or fur. There were obvious influences from other spheres of design, but some felt these came at the expense of wearability. A common critique was that Krakoff didn’t really understand a woman’s body.
The critical response was, at best, lukewarm, as reviewers seemed to bend over backwards to say something nice: Women’s Wear Daily reported that “while the quality looked solid, the execution was a little off,” and noted “the absence of a clear point of view.” The New York Times’ Cathy Horyn called the show “a decent start,” but found Krakoff’s coats “sludgy,” and couldn’t locate “a specific design imperative.” Worse, she accused him of cribbing from Phoebe Philo at Céline, a view echoed by many at the show. “All you could think of was Céline, Céline, Céline,” recalls a fashion editor.
Krakoff said the reviews hit him “like someone punched me in the gut.” Not that there weren’t bright spots. “The handbags performed extremely well,” says Ron Frasch, a former president and chief merchandising officer at Saks Fifth Avenue. Anne Slowey, the fashion news director of Elle, recalls she liked “his knits and wrap skirts and paper-thin leathers. The stuff he got right he got really right.”
Few if any labels hit their stride straightaway, and as Krakoff plowed forward, there were more significant achievements. Michelle Obama wore Reed Krakoff, not only on *Vogue’*s April 2013 cover, but also for her second official portrait, in February 2013. That May, to mark the publication of Krakoff’s photo book Women in Art: Figures of Influence, Bergdorf Goodman featured his collection in its Fifth Avenue windows.
But it was not enough. “I don’t think he ever got that fashion support he wanted from the fashion universe and the real players who can make and break a brand,” says a fashion insider. In this she means key magazine editors and buyers, though she won’t name names.
And the reviewers never came around. Four years into the brand, the Times’ Cathy Horyn wrote, “Reed Krakoff is still trying to win over his audiences. . . . But if [he] is to be a designer on those terms he needs to put a more individual stamp on his clothes than he has done so far. . . . Mr. Krakoff can hire people to shape his world, but he still has to decide what exactly it is.”
By 2013, Coach was hemorrhaging money, with its stock down 37% from the year before. It was clear change had to happen. Krakoff’s exit from Coach is a matter of controversy. His advocates maintain that, with Lew Frankfort planning his retirement, Krakoff thought it was time to leave and make his eponymous brand truly his own. Others say that Coach was done with Krakoff, and, as one of his former lieutenants puts it, “They were parting ways with their designer.” Krakoff himself says, “I was the one who went to Lew, and Lew was incredibly supportive of the Reed Krakoff company, but over time I realized I really loved the company, and I’d been [at Coach] about 16 years and I made the decision I didn’t want to do it any more. I went to them to buy the company.”
In July, the press reported that Krakoff had found a group of new investors to buy the Reed Krakoff brand from Coach. While not named at the time, these investors were, in fact, Mark D. Ein (of Venturehouse), Mitchell Rales (of Danaher), Feroz Dewan (formerly of Tiger Global), and T. Rowe Price’s New Horizons Fund (an early investor in Twitter and Chipotle). The company moved from a building adjacent to Coach’s, on the western edge of 34th Street, to 40 West 25th Street, where it regrouped with a lighter staff and a tighter budget. But according to those who worked there Krakoff was still spending as if he had unlimited Coach money. “They were just spending like crazy on everything,” says one of Krakoff’s creative officers. “They never slowed down.” These indulgences extended to Krakoff’s office. “There was nonstop spending,” says the same witness. “Custom furniture from France, chairs that were made in $300-a-yard fabric. These were chairs for his office—just, like, in the corner. Why do you need that? A lot of priorities weren’t in the right place.”
Perhaps Krakoff did not fully understand he was now in a different world where his investors weren’t impressed by such things. In February of 2014 Krakoff unloaded his UES townhouse for $51 million and then, two months later, bought heiress Huguette Clark’s mansion in Connecticut. This raised eyebrows at the company, which was on track to lose $30 million a year. Krakoff had to be reminded that he was expected to be focused on the business.
Krakoff says charges of extravagance are completely untrue. “[The new offices were in] the least expensive real estate we could find, for the space. It was a new building. They needed an anchor tenant. . . . I had zero budget. No dollars. I couldn’t ask for [more] in the situation we were in. Starting with partners in a venture-capital situation, it would have been absolutely silly for me to ask. . . . I, myself, and the head of production [decorated my office]. My wife helped.”
Someone with knowledge of the business says it was possible that Krakoff believed in his heart of hearts he was economizing while the investors thought his spending needed to be reined in. “He’s coming from Coach which has huge amounts of resources,” says this source. “These [fashion] companies will spend $10 million on a fashion show. If he spent only $2 million and did not do it at some fancy venue that he built himself, that would seem thrifty to him. But the investors’s point of reference is a much leaner, much more conservative view of how to spend their money.”
The investors also felt Krakoff needed a businessperson working alongside him, but when president and C.E.O. Valérie Hermann departed in 2014, her successor, Stacy Van Praagh, lasted all of six months as president. (Krakoff installed himself as C.E.O.) The investors urged Krakoff to take the lead in finding a new business partner, but one never surfaced. “He dragged his feet,” says a person with knowledge of the situation. The company became a revolving door. “He went through people like crazy,” says a private-equity partner. It got to the point that those working with Krakoff felt he was constitutionally unable to build a team of talent around him.
Meanwhile, shifts in the market had made it harder for small companies in the luxury space. Krakoff and his business partners agreed to invest more money, and they finally brought in a new C.E.O., Harlan Bratcher, whose tenure at Armani Exchange had seen the company grow from $100 million to $800 million in sales. With Krakoff and the investors Bratcher hatched a plan to rebrand the line as “Reed” and sell only handbags, at a price point closer to the Michael Kors and Kate Spade purses dominating the market.
When Krakoff opened his new SoHo boutique that February, he alluded to the coming changes, talking to reporters about making his goods “available to a broader array of people.”
Then he bailed.
“One day he woke up and decided he didn’t want to go down that path,” says a person close to the situation.
“His ego just couldn’t take the comedown of being head of Coach, then head of his own brand, and then just having a handbag company,” speculates a fashion professional who knows him.
“It’s more that—it was essentially that I did not feel comfortable taking more capital,” Krakoff responds. “I was a big investor. I certainly showed my belief. I just felt that, for what we were doing, it wasn’t working.”
“I really feel today that it was the right decision. It wasn’t working on any level. And I felt irresponsible asking people to support it. And to the employees, and the investor group, which was made up of incredible people, incredibly bright—everyone had good intentions. But I saw it getting worse, and I decided to go to my investor group and talk about it. And we agreed to not go forward.”
People close to Krakoff say he was deeply affected by the company’s failure. “When I first met with him, it was definitely not the same Reed I talked to 18 months later,” says one such source. “It was a fundamentally different person. . . . It was hard for him to have any conversation that was not emotional.”
“Maybe he just aimed too high. Maybe he just had too much good taste,” says Slowey, who has seen other unhappy marriages between fashion’s creative types and private-equity money. “The private-equity guys fall in love with the fashion guys and then act like they were seduced.”
“The relationship between private equity and luxury is a complicated one, because essentially the time frames don’t match up,” explains Friedman. “Essentially a private-equity time frame is three to five years from entrance to exit. It takes 10 years to develop a luxury brand. Because luxury brands were traditionally dependent on stores it requires a huge amount of capital expenditure, and involves a lot of fixed costs, and so the return on that investment comes much later than most private-equity companies are comfortable with.”
Last November, Krakoff resurfaced when Women’s Wear Daily announced that he was creating a new line for Kohl’s department stores that would retail for between $15 and $129. (The magazine could not resist noting that his “signature collection included handbags priced in the $1,200 to $3,000 range.”) Krakoff calls this new, discount line “the new accessible luxury.” It is set to debut at 1,116 Kohl’s stores and on kohls.com this month and will include women’s wear and footwear, “as well as a strong handbag and accessories component.”
“When I had my first meeting with Kohl’s, I realized we were really in the same place,” Krakoff told W.W.D. “They wanted to change how people feel about handbags at this price point.”
Cynics speculated that the new deal might have more to do with the fact that the investors now own Reed Krakoff’s name than any sudden awakening on Krakoff’s part as to the virtues of big-box stores and rock-bottom pricing. But an inside source confirms that the plan was long in the works, even before the “Reed” rebranding. “The investors were not involved in making the deal at all,” says this person. “Reed really did embrace it and ran with it.”
“We always knew it was going to be part of the business,” says Krakoff. “It was a fun project to create something that was much more accessible.”
At the same time, word from inside Reed Krakoff indicates that the brand may be close to a sale—offering much the same model ($400 bags for the mid-priced market) that was restructured under Bratcher. While some have speculated that Krakoff favors the deal as a back-door to retrieving ownership of his own name, it’s possible that he’s realized that $400 bags isn’t such a bad place to be. In the March issue of Architectural Digest, you could once again find Krakoff and Delphine, posing with the Tiffany lamps and arts and crafts accents in their East Hampton mansion, as if the implosion of his brand had never happened (“Unbelievable,” was the reaction of one former colleague, upon seeing the article). It’s possible that, in the failure of the brand, Krakoff has found his place in the industry. He may finally have embraced the notion that his lofty aesthetic ambitions seem better suited to house-flipping than high fashion. In March, an invitation went out to celebrate the Kohl’s collaboration inviting press to come celebrate “Reed: the man behind a million bags.”
