Polo Exec to Take the Helm at Donna Karan

Donna Karan International Inc. said Monday that Donna Karan will relinquish daily oversight of the foundering retailer to a Polo Ralph Lauren Corp. executive and concentrate on designing her namesake clothes and accessories.

John Idol, 38, will become chief executive at Donna Karan International on Aug. 11. Idol was a group president at Polo in charge of the successful retailer’s clothing, home furnishings and product licensing.

Idol is expected to help the New York-based company rein in costs and build up revenue as the clothing maker transforms itself from a family-run business into one focused on boosting shareholder value, analysts said. Donna Karan’s spiraling costs have hurt its profit and stock price, analysts said.

“There are virtually no limits on what a company like Donna Karan--correctly managed--can do,” said analyst Laurence Leeds of Buckingham Research Group. It could “double in the next five years if it’s run intelligently.”

Donna Karan’s stock rose $1.31 to close at $11.75 on the New York Stock Exchange. The company, whose stock has lost half its value in the last year, went public in June 1996 at $24 a share.

“It became very obvious that I needed to become more involved in what I like to do best--focus on the creative vision of the company,” said Karan, 48, who will retain her title as the company’s chairman.

Idol is expected to build Donna Karan by developing licensing, expanding overseas and opening new stores, analysts said. Karan, who founded the company, will concentrate on the marketing and creative aspects of the business.

“There’s a clear definition of responsibilities that will enable Karan to do her creative work,” said analyst Walter Loeb of Loeb Associates.

Karan had been seeking a co-chief executive to share the duties. She said in an interview that the company had considered executives outside of the retail industry. She didn’t elaborate.

Karan said she sought an executive who has experience “working with a designer and who is able to . . . embrace who we are and help us build the future.”

Karan, Idol and President Stephen Ruzow will report to the company’s board. Idol will be nominated to Donna Karan’s board, the company said.

Idol spend 13 years at Polo, where he most recently was in charge of overseeing select wholesale and licensing businesses that accounted for about $1.7 billion in annual revenue.

Troubled by high operating costs, disappointing sales and lower profit at its beauty unit, Donna Karan’s appointment of Idol is part of a restructuring program aimed at reversing falling profit.

In May, Donna Karan’s first-quarter profit fell 93% to $806,000, or 4 cents a share, from $11.7 million, or 55 cents, in the year-ago period on delayed shipments and canceled orders.

Soon after, the company announced a cost-cutting plan aimed at saving about $4.8 million this year that includes reducing its work force by 4%.