Donna Inc. With talent, drive and a willingness to break the rules, Donna Karan has made a distinctive mark as a designer and built a formidable apparel empire

By Barbara Rudolph

"LET'S SPRAY THE MODELS! PATTI, COULD you get me some perfume?" Straight pins bristling from her mouth, safety pins stuck on the black cashmere sweater wrapped around her waist, designer Donna Karan is stalking the runway where she is about to present her spring collection to the fashion flock. She was up for most of the night, coping with the usual crises. The oversize linen hats, for instance. A nice theatrical touch, but they didn't fit through the entrance to the runway. (The models learned to take them off and put them back on, fast.) Then there was the jewelry. Karan decided she needed more gold. Fistfuls of silver pieces were hand-dipped in gold. All wrong. Back to silver.

As the models begin striding out for the show, Karan is in constant motion behind the curtain, tucking, smoothing, adjusting angles by an imperceptible (to anyone but her) fraction of an inch. Nothing escapes her eye. Everything has to be perfect. "Are you accessorized? . . . I told you I need a beret! . . . Lynn, move the belt!" From out on the runway comes the sound of Madonna singing her version of Peggy Lee's Fever as each model passes through Karan's last-minute scrutiny and touch-up. "Little black glasses! Who's next?"

Such painstaking, relentless attention to detail, fueled by an insatiable drive, defines everything Karan does. It has made her the powerhouse of Seventh Avenue, the darling of the fashion faithful, the quintessential stressed-out New York City career woman-cum-celebrity. She is the only female interloper in the all-boys club of leading U.S. designers, whose longtime members are Ralph, Calvin, Bill, Geoffrey and Oscar. The future of American retailing, though, may belong to Donna.

In the rag trade, where rivals try to rip one another to shreds every season and a designer is only as good as his or her last collection, Karan's performance has been virtually seamless. At 44, in business for herself for just eight years, she has not only shaped a distinctively comfortable, sexy style as a designer but has also amassed a formidable empire as a businesswoman. Her revenues this year should reach $268 million, up from $119 million in 1989. By 1995, with more and more sales coming from overseas markets, revenues might top the half-billion-dollar mark.

Karan has tailored a full-line apparel conglomerate. There is the Donna Karan collection for men and women, top-of-the-line fashion ($650 for a pair of woman's pants, $1,350 for a man's wool crepe suit). Then there is the exploding DKNY division, which showed other designers how to sell chic women's sportswear at relatively modest prices ($450 for a woman's wool blazer vs. - $1,100 for a comparable collection garment). Now DKNY has been expanded to include clothes for children and men. Karan also has licensing deals to make hosiery, a line of intimate apparel and eyeglasses. And a few months ago, she took the plunge into the highly competitive, celebrity-glutted fragrance market with the launch of her Donna Karan perfume.

The precedent, clearly, is Ralph Lauren. Lauren brilliantly created a multibillion-dollar kingdom by exploiting middle-class Americans' yearning for a patrician past they never had. As his empire grew, his vision stayed focused. No one admires the Polo king's achievement more than Karan, whose great ambition seems to be to repeat his success.

She has already become an established A-list name, a fixture at AIDS benefits and theater openings, often seen in the company of high-profile friends like Barbra Streisand ("There's probably no one I admire and respect more than Barbra"). Though older friends recall a time when she was "shy and introverted" at public functions, those days seemed long gone in September when Karan hobnobbed with Bill and Hillary Clinton at a Hollywood gathering. Still, Karan works too hard to spend much time on the social scene, or even at home in her sunny four-bedroom apartment on Manhattan's Upper East Side (lots of suede furniture and sweeping city views) or at her East Hampton beach house. When she travels to Italy several times a year, Karan spends more time looking at bolts of fabric than at Botticellis. Her world is fashion, and her place in that world is secure.

Some designers create beautiful fantasies, hopelessly beyond the reach of ordinary mortals. Karan's gift is that she makes wearable, flattering clothes for real women, whether they are corporate lawyers, Candice Bergen or the well-heeled wives of orthopedic surgeons. That sounds simple, but it is a rare talent on Seventh Avenue. "No one understands a woman's body better than Donna Karan," says Andrea Jung, executive vice president at Neiman Marcus. Harper's Bazaar editor in chief Elizabeth Tilberis points out that Karan's designs, unlike those of some of her rivals, work as well for a size 10 as a size 6. And while Lauren, say, can get away with minimal variation in his womenswear lines from year to year, Karan's customers look to her for a jolt of the new, season after season.

Karan proved her talent most assuredly in her spring womenswear collection, which she showed to the press last month. "I loved it," says Vogue editor in chief Anna Wintour. Virtually all the top spring collections are presenting a decidedly new look -- soft, fluid and romantic -- but Karan and Lauren showed the most imaginative interpretation of the change. Among the strong sellers in Karan's line: the poet's blouse, a white viscose creation with flared cuffs ($450); navy bell-bottom pants ($650); and an elongated wool crepe vest ($825).

If Karan seems right at home in the rough, insular world of Seventh Avenue, it may be because she was born into it. Her father Gabby Faske, who died when Donna was three, was a tailor. Her mother Helen worked as a sales representative and showroom model. Known in the family as "the Queen," Karan's mother was an imperiously demanding woman. Does Karan's childhood explain her drive? After 18 years of psychoanalysis, Karan has either found the answer or stopped asking the question. "I think I was born this way," she says. "I never feel I've done it right."

After studying at New York City's Parsons School of Design, Karan went to work at 19 for Anne Klein, another lady who was notoriously hard to please. "Donna idolized Annie, and she was afraid of her," recalls Burt Wayne, head of the Anne Klein design studio and a good friend of both women. Wayne recalls meeting Karan for the first time when he visited Klein at her apartment. Donna was standing on the terrace with Klein, showing her various fabrics. "Her hair was blowing, the fabrics were flying. You could instantly see Donna's enthusiasm -- and her tenacity." When Klein died in 1974, Karan took over the reins, just four years after arriving at the company. By this time she had married her first husband, Mark Karan, a clothing-boutique owner, and had given birth to their daughter Gabby. Donna later divorced Karan and married sculptor Stephan Weiss, whom she had known as a teenager.

At Anne Klein, Karan worked with her co-designer, Louis dell'Olio, to protect the legacy of the label while moving the business forward. In 1983 they launched Anne Klein II, a successful line of clothes for working women. But, ever restless, Karan was eager to assert her creative identity. Executives at Takiyho, the Japanese conglomerate that owned a majority stake in Anne Klein, urged her to start her own label, but she was uncertain. So in 1984 Takiyho fired her, simultaneously agreeing to back her new company.

Six months later, Karan mounted her first show. The eternally jaded fashion crowd gave her a standing ovation, whistling, wildly shouting her name. A month after that, she broke records at a special sale for customers of Bergdorf Goodman, the premier U.S. fashion retailer. Dawn Mello, then Bergdorf's president, recalls the scene when the sale ended: "Donna burst into tears and sat on the floor, weeping, amazed at what she had done."

Over the years, Karan has consistently demonstrated a golden commercial touch, but not by taking the predictable approach or by heeding conventional wisdom. As Vogue's Wintour says, "Donna quite enjoys breaking the rules." Before Karan, for example, most designers' second collections were watered- down versions of their high-priced lines. Karan did something entirely different when she opened her second line, DKNY, in 1989. She offered stylish, casual and affordable clothes without cannibalizing her main collection. Under the direction of Karan's advertising guru, Peter Arnell of the Arnell/Bickford agency, the new line was shrewdly marketed with a portfolio of black-and-white cityscapes that emphasized its distinctive urban persona. Its revenues should hit $185 million this year.

No less contrarian was Karan's approach to the hosiery business. In 1987 the designer became convinced that women would spend more money if they could find heavier, more opaque pantyhose to cloak the sags that most female flesh is heir to. The product that she and her licensee, Hanes, came up with was nearly twice as thick and twice as expensive as usual hose. "Everyone here thought we were on drugs," recalls Hanes vice president Cathy Volker. But the gamble paid off. Customers recognized the superior quality and paid for it. This year the business is likely to gross $30 million at wholesale.

Karan's boldest assault so far on Seventh Avenue tradition has been her move into men's clothing. Apparel experts scoffed at the notion of a woman designer's label inside a man's suit. American men are too insecure, said the insiders; they'll never accept it. Nevertheless, the first Donna Karan suits for men rolled off the racks last year. "We spent seven years building the name," Karan says. "The image says something." It does. Her men's clothes, like her womenswear, are known for their comfort and sensuality. Strong sellers include leather vests ($475) and cashmere crewneck sweaters ($600). Last month Karan won the prestigious Council of Fashion Designers of America award for best men's designer of the year.

Karan's venture into fragrance, on the other hand, may prove to be one instance where unorthodox methods fail her. Introducing a perfume is very expensive -- commonly around $10 million to $15 million for the first year of a no-frills national launch -- so designers typically hire a company to market the product and retain a small royalty (usually between 3% and 5%). But Karan and husband Weiss decided to sell her fragrance themselves. It is available in Bloomingdale's stores in the New York metropolitan area and through a toll- free number. But since the public has no idea what the perfume smells like, the 800 number has been a bust.

Meanwhile the perfume's bottle, designed by Weiss, has sparked controversy. The bottle resembles the back of a woman's body and is also vaguely phallic. Says Robert Lee Morris, a jewelry designer who worked with Karan for nine years until they broke off their partnership four months ago: "It looks like a ray gun." Karan has also come in for a fair amount of ribbing for her oft- quoted comment that she wanted the fragrance to smell like red suede, lilies and the back of her husband's neck. (At Karan's show last month, Kal Ruttenstein, senior vice president of Bloomingdale's, approached Weiss and said, "I want to smell your neck!")

This would not be the first time that Karan has stumbled, of course. The company has confronted perennial problems with quality control and late deliveries. Some licensing arrangements have foundered as well. Since late 1990 the company has been battling Erwin Pearl over the terms of Pearl's licensing agreement to produce and sell jewelry for the DKNY line. The dispute is in arbitration.

Karan would be the first to admit that her professional success has come at a real personal cost. "Looking back, it was the most horrible pain of my life," Karan says. "When your child says, 'Don't go, stay home,' and the office is calling and screaming, it's brutal." Now that daughter Gabby is an 18-year-old college freshman, Karan reports, "the guilt is leaving me." Gabby describes her mother as "my best friend. I idolize her, and I want to be like her."

A lot of young women who work for Karan feel the same way, much as the young Donna felt about Anne Klein. Karan attracts talented people who are famously loyal and willing to put up with her constant demands. The designer has been known to give employees a ride home in her limo just to keep a conversation going. "Donna draws you in. She's this irresistible force," says Beth - Wohlgelernter, who worked as her executive assistant for six years. The staff, in fact, amounts to something of a Karan cult. Says Jane Chung, the senior vice president for design at DKNY, who has worked for Karan for 10 years: "There's no question that everyone loves what she does and wants to dress like her and be like her."

Karan, fighting the constant deadlines, sometimes wonders what there is to envy. "I do love the ability I have to create something from nothing. What I hate is the pressure, the toll it takes on my physical being. Do I have to pay this price to do something I love?" The answer is yes, and she knows it.