High

By Barbara Rudolph

America's retailers have precious little to cheer about these days. Many of the best-known U.S. department-store chains are up for sale. Garment sales have been stagnant, and profits are squeezed. But then there is Donna Karan, a women's-clothing designer whose creations send department-store executives into fits of giddy optimism. The Queen of Seventh Avenue, as the fashion press calls her, Karan is chief executive officer and head designer of a five-year- old company that expects to rake in $115 million in revenues this year. Her sportswear line arrived in stores eight months ago in one of the most successful launches in fashion history. Says Joan Kaner, senior vice president of the Neiman Marcus chain: "Donna's name is magic right now."

Karan, 41, has earned a reputation as the sartorial savior of the modern working woman who is fed up with floppy bow ties and sexless designs. Karan's clothes are comfortable and practical, stylish and feminine. Among her trademarks: one-piece silk bodysuits, easy-fitting jackets, wrap skirts. Fashion doyen John Fairchild, publisher of Women's Wear Daily, lauds Karan as the most important American designer. Says he: "Donna understands a woman's body the way Coco Chanel did." A size 12 herself, Karan boasts the rare and eternally marketable talent of cutting a skirt or a pair of pants so that they flatter a woman's hips even if she is not runway-thin.

The designer's main collection, called Donna Karan New York, is in demand among an elite crowd that seldom blinks at a $1,100 price tag for a cashmere blazer or $510 for a high-neck silk blouse. But it is Karan's more congenially priced DKNY wardrobe that has struck a popular chord. Among its current best sellers: plaid wool jackets ($395), denim jeans ($85) and merino-wool cardigans ($200).

As a hardworking woman in what is still a male-dominated star system, Karan is instantly simpatico to many of her customers. When she makes appearances at department stores, Karan acts like a wise older sister dispensing fashion tips and helping customers assemble her clothes into outfits. Says Karan, as she twirls her oversize black eyeglasses: "I am accessible. I see myself as a person who stays up all night and worries about her daughter ((Gaby, 15)) and her husband, and would like to get the carpeting ordered."

When Karan was growing up, the rag trade was a family tradition. Her father, who died when she was 3, was a custom tailor. Her mother worked as a showroom model and saleswoman. Her stepfather sold women's apparel. Karan studied at Parsons School of Design in Manhattan, then worked as an assistant to the legendary Anne Klein. When Klein died in 1974, Karan was named her successor. At that moment she was the 26-year-old mother of a week-old baby.

Karan and Louis Dell'Olio, a friend and classmate from Parsons, proved a formidable team at Anne Klein during their ten-year tenure. In 1982, when Karan launched Anne Klein II, a lower-priced line, she experienced for the first time the creative rush of designing an entirely new collection. She was restless but still afraid to leave the security of Anne Klein. Finally, her boss at the company, Frank Mori, pushed her out on her own. Recalls Mori: "It was like, 'The bad news is you're fired. And the good news is you have your own company.' " Takihyo, the Japanese textile conglomerate that owned Anne Klein, put up an initial $3 million to help launch Donna Karan Co. The designer and Stephan Weiss, her second husband and partner, got a 50% stake in the business.

Now the company is going through a challenging transition from a cozy, family-style operation to a more structured, hierarchical organization. Says Karan: "The growth is frightening. It truly is. My biggest dream is to allow this business to grow and not lose the integrity of what we have." Much of that task will fall to president Stephen Ruzow, a former executive at the Warnaco apparel company. Ruzow, 46, hired five months ago, is also attempting to smooth out production snags that have sometimes led to uneven quality in Karan's garments, which are mostly made in Manhattan and Hong Kong.

Like most successful designers, Karan plans to diversify into the lucrative accessory business. She already licenses her name for lines of hosiery, eyeglasses, jewelry, shoes and furs. The firm is planning to enter the enticing but highly competitive fragrance market. At the same time, her clothes have bright prospects overseas. Karan's lines, now sold in only one exclusive London shop, Browns, will appear next March in two leading London department stores, Harrods and Harvey Nichols.

As she contemplates her sprawling empire, part of Karan wants to pull back. The woman who says she designed her first solo collection for herself and "a group of us girls" seems unsure how she feels about becoming one of America's , best-known fashion labels. "I don't want everybody walking around in my clothes. It's a terrible thing to say," Karan muses. But the Karan look is already nearly ubiquitous. One of her devotees is Candice Bergen, whose TV character Murphy Brown seems to have a Karan outfit for every occasion.