Rags To Riches

Hip-hop moguls use groundbreaking designs and star powerto challenge major clothing labels and become a forcein the $164 billion fashion industry

has generated about $8 million in sales. It’s projected to gross $22 million in 2002, and as much as $36 million in 2003. Asserts Tweedy: “It’s been an under-looked business that other designers have treated like a stepchild, so we’re bringing it to the forefront.”

PROFITING FROM THE NEXT WAVE
Sean John is not the only hip-hop fashion house targeting mainstream consumers. Designers have realized that their customers want to now dress more mature, but still want a bit of flava. For entrepreneurs such as Karl Kani (a.k.a. Carl Williams), among the first to enter the business when he opened a small Los Angeles-based storefront boutique in 1989, the hot-selling trend means new opportunities — and a bevy of new competitors.

After merging with Carl Jones and T.J. Walker of Cross Colours, the pioneering hip-hop designer clothing company, Kani became part of one of the world’s largest black-owned companies with sales hitting $89 million in 1992. (BLACK ENTERPRISE named Cross Colours the 1993 Company of the Year.) Kani then stepped out on his own after Cross Colours went belly up when it couldn’t keep up with demand. Today, Kani is credited with helping to spawn the urban wear revolution. “At first, we were just used as models…We didn’t have our own stores, [were] not in major stores, and didn’t even have our own companies,” Kani says. “It was my vision to see the business blossom like this…The growth has been, and will continue to be, phenomenal.”

Kani’s own company, which was BE’s 1996 Company of the Year, is fending off competitors by introducing new lines. He recently launched Life by Karl Kani, a European-styled men’s line that includes denim pants, suits, and T-shirts. And next spring, he will unveil Ikki B, a women’s apparel collection of suits and stretch garments. His investment in these new additions: $10 million.

He’s already seeing dividends: Kani projects that Life will produce $25 million in sales in 2002 and hit $50 million by next year. He expects overall revenues to surpass the $100 million mark this year, and currently plans to expand into home furnishings, fragrances, and music recording by late 2003. “These lines (Life by Karl Kani and Ikki B) are particularly designed to compete in today’s marketplace,” he said. “The customers we had 14 years ago have changed, and we’re trying to maintain ties to meet their current needs and lifestyles.”

POWER OF CELEBRITY
Developing new products takes money and marketing. For the most part, hip-hop entrepreneurs have effectively used their roster of rap artists, music videos, and movies as a way to promote their brands. To gain this competitive edge, one apparel company has developed an entertainment venture as a revenue source and cross-promotion vehicle. In 2000, 10-year-old FUBU (which stands for “For Us, By Us”), the clothing manufacturer that has grown as a major competitor of Donna Karan, launched a record division through a joint venture with Universal Records. At the time of the deal, Carl Brown, FUBU Records president and one of the founders of the

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