Morris Goldfarb, chairman and chief executive officer of G-III Apparel Group Ltd., and recipient of the WWD Honor for Creative Leadership at the WWD Apparel & Retail CEO Summit, knows a thing or two about transformation.
Goldfarb was asked how he took a small leather company founded by his father, Aron, through the ups and downs in the fashion industry and came out with a $3 billion branded powerhouse with labels such as Marc Jacobs, Donna Karan and Karl Lagerfeld, among numerous other brands.
“So you want me to put 50 years, 54 years, into 15 minutes,” he quipped in a conversation with Evan Clark, WWD’s deputy managing editor. Goldfarb zeroed in on how he managed to so consistently keep up with the times.
“So I would say that this company was built with one intention originally. It was to make a livelihood for an immigrant. And as time passed, I joined the company, and I had a greater vision,” Goldfarb said. “I had a vision of building the biggest and the best. It has gone through many transitions and many transformations, quite honestly. Most of them came unexpectedly. Whether it was a political issue, a war, just changes that naturally occur and product changes, product demands drove us to transform our business. It’s an amazing case study where it started out as X, and it evolved to temporarily Y, with a long distance to go, the transformation’s occurred.”
He explained the company started as a monobranded business in the leather industry. The brand was G-III. The product was not well assorted. It was a ‘Top Gun’ jacket, in one color, brown, four sizes and that was it. “It wasn’t hard to design.”
He said they capitalized on the demand created through the movie, and through that, they took the company public. “The moment we did that there was a realization that this is not going to last forever. Either we transform the business into something broader than the one jacket or the one commodity, leather, or we lose,” he said.
They realized branding was their way into department stores. They knew how to service department stores and knew how to create great product. They had a strong team in place in South Korea. “We took a Liz Claiborne model. It was a company that was perfect in every form. Leadership was great, sourcing was great, sales were great. It was well positioned. I had a target of one day being like Liz Claiborne,” Goldfarb said.
So they built the company via sourcing, starting in South Korea, and had no boundaries with what they could create. He said his father had a factory in New York, and the limitations were extensive. “You could produce colored leather in a handful of styles, limited quantities and you couldn’t get too creative on your designs. In South Korea, you could do basically anything you wanted. Labor was malleable. The creative components that we could apply to creating products were endless. We took advantage of that and created other commodities in the coat business,” Goldfarb said.
The biggest transition came when G-III acquired Marvin Richards and Winlit, two coat companies. Through that, they picked up coat licenses for Calvin Klein and Guess, among others. “We took those relationships, we expanded classifications…and the rest is history,” Goldfarb said.
As G-III has gone through these different phases, Goldfarb was asked how his approach to leadership has changed.
“I don’t think my approach to leadership has changed at all. I have my own limitations. I have my own strengths, and I have my weaknesses,” Goldfarb said. “My leadership has always applied other skill sets or looked for other skill sets that complemented mine to enable this company to grow. Whether it was finance, design, sourcing, sales, I brought in the best that I could, and in fact, that’s what got us here. It’s not really a change in my leadership style.
“Strategies change, but my style has been consistent. Take the best. Give them freedom, guard them to the best extent to limit the failures and accept the failures and take ownership of the failures. That’s my job. I led the charge. If somebody fails, I’m your partner,” he said.
G-III recently partnered with WHP to acquire Marc Jacobs from LVMH Moët Hennessy Louis Vuitton. Marc Jacobs, the founder, is still on board, and Goldfarb was questioned how he is negotiating that transition and eases the integration process.
Goldfarb said there is more than one process. For the first time in his career, he has an outside partner, WHP, “which is an adjustment. You have a responsibility to your partner to share information, to share strategies. That’s one. The other is Marc Jacobs, the man, who’s incredibly smart, who’s been in the world of LVMH, which is unique in the fashion world and doesn’t get any better than LVMH. If I had a choice to work for G-III or LVMH, the quick response is…I don’t know why anybody’s laughing,” he said as the audience chuckled.
“Now I have to convince Marc Jacobs that this is a good place to be, and we respect you. We honor everything that you’ve created, your name. Most important, we’ve done that,” he said.
“You reach out and you explain who you are. We don’t have the luxury that LVMH does, which is maybe, pain tolerance to build a brand. We are a public company. We are more driven by decisions that are more quarterly than 10-year horizons, and Bernard Arnault has earned the right to build and take his time. We have not earned that right in the financial world because sometimes having the financial world expectant of particular results causes decisions that maybe a Bernard Arnault would not make. We’re the victims of being public. He’s not. He goes his own way, and if he goes down, he goes down. If our stock goes down, we do buy back stock but we make shorter-term decisions.
“We now have to convince Marc the man that his brand is well insulated from poor decisions, and we’re doing that. He understands that we do have a history of effectively building brands and having the respect of the founder Donna Karan is an amazing example.”
He said Donna Karan and DKNY both were not profitable businesses under LVMH. “They were great brands with global recognition and we recognized that when we bought them from LVMH. We put our own metrics in place as to what would constitute success, and we achieved it. And at the same time, respecting the integrity of the founder. Today, Donna is a great witness to what we accomplished. So Marc looks at that and says it’s in the right hands. The jury’s still out. Marc has some adjustments to make. G-III has some adjustments to make. So does WHP. In perfect candor, it seems like a great partnership, but adjustments are made when there are other people involved,” Goldfarb said.
Explaining how he keeps his enthusiasm while so many big changes are happening in the business, he said, “I have amazing partners. I have a wife. If you want to talk leadership, this all flows to her,” Goldfarb said of his wife Arlene. “At the end of the day, she’s been a driver of our lifestyle and our children, and I guess the heritage that has been created, she’s been an amazing partner. I would say I come home, and I want to achieve more for financial gratification, maybe status in the community, maybe as an example for my kids. The family is a driver.”
Fortunately for him, he said his son, Jeff Goldfarb, is very engaged in the business, “and it feels as if he’s next, and he’s got his own strategies and he’s got his own strengths. Setting it up where most of the problems are behind when I step away would be a wonderful thing,” Goldfarb said.
He was asked his secret for lasting through all the changes. “Staying interested and staying curious and not overstaying your welcome. Knowing that you’re productive and you’re responsible to your shareholders and the community you created, which in my world is approximately 15,000 people that you have an obligation to. So the moment that I feel that is done is the moment that I’ll step away. But it’s been amazing. I come in. I wake up early. I wake up happy, and I don’t always come home so happy. I start my day happy that I’m going to work. When that ends, I have other investments that I can stray to. If I’m having a bad day, I can focus on the multitude of deals that represent the family portfolio,” he said.
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