Dooney & Bourke Inc.

1 Regent Street
Norwalk, Connecticut 06855
U.S.A.
Telephone: (203) 853-7515
Fax: (203) 853-9926
Web site: http://www.dooney.com

Private Company
Incorporated: 1975
Employees: 104
Sales: $100 million (2005 est.)
NAIC: 316993 Personal Leather Good (Except Women's Handbag and Purse) Manufacturing; 316992 Women's Handbag and Purse Manufacturing

Dooney & Bourke Inc. is a private company based in Norwalk, Connecticut, that makes fine leather goods—primarily handbags—as well as fabric bags, apparel, and accessories. Long devoted to an older clientele, essentially the country club set, since 2003 Dooney has made a concerted effort to appeal to a younger demographic, mostly by employing young actresses—Mischa Barton, Lindsay Lohan, and Emma Roberts—to promote a line of handbags aimed at the teen market. Nevertheless, Dooney continues to offer a wide range of women's bags and totes. Travel items include rolling trunks, distinctive duffles made from both fabric and leather, travel wallets, briefcases, and even a leather wine bottle picnic tote. Dooney also offers business-oriented leather backpacks, field bags, slings, and stylish phone cases.

In recent years Dooney has added apparel. For women the company offers quilted jackets, sweaters, gloves (both leather and fabric), hats, and scarves. Men's apparel include cashmere sweaters, quilted jackets, deerskin gloves, and driving gloves. Women's accessories include bracelets, watches, shoes, and iPod cases, while men can buy Dooney-designed wallets and belts. In addition, Dooney offers such miscellaneous items as key chains and fobs, wristlet bags, coin purses, a lunch bag, and even a Barbie Doll wearing items with a Dooney & Bourke motif. Dooney products are available at nine company-owned stores and a number of factory outlet stores. In addition to the Manhattan flagship store, other Dooney retail outlets are located in Los Angeles, Dallas, and Las Vegas, as well as Puerto Rico, Honolulu, and Tokyo. Dooney merchandise is also sold in such department stores as Bloomingdale's, Macy's, Nordstrom, and Lord & Taylor, select specialty stores, and is available through catalogs and the company's web site.

COMPANY FOUNDED: 1975

Dooney & Bourke was founded in 1975 by H. Peter Dooney and Frederic Bourke, Jr. Dooney served as designer and president, handling the day-to-day running of the business, while Bourke was the financier and chairman of the board. The company's original focus was on men's leather belts. "Since I was young," Dooney told WWD in a 1988 interview, "I've been attracted to leather because it's useful and classic." Eschewing college, he indulged his interest in leather at the age of 17 by going to work for Coach, Inc., the New York City maker of fine leather goods. There he learned the leather craft and business from owner Miles Kahn, who had transformed a family-run Manhattan workshop making wallets and other leather goods by hand into an internationally known manufacturer of leather women's handbags. After working for Kahn for six years, Dooney believed he was ready to launch his own business. He teamed up with another young man still in his twenties, Bourke, to establish Dooney & Bourke in Norwalk. His partner had grown up in Detroit in the orbit of the Ford family and eventually married into the Ford clan. He came to New York and earned an MBA from Columbia University in 1971. In addition to joining forces with Dooney, he also became involved in construction, establishing Bourke & Matthews, a Greenwich, Connecticut-based builder of expensive homes along the state's famed Gold Coast.

Dooney started out making expensive leather belts for men and added such exotic materials as snake, including anaconda, and alligator. Later, women's belts were added to the mix. In the 1980s the company began making suspenders for men as well, in response to the sudden surge in popularity for the item. In truth suspenders, or braces, had been the primary means men had used to hold up slacks until World War I. Just as cigarettes and wristwatches became acceptable to men because of their utility in combat situations, so did the belts the soldiers wore become acceptable fashion and soon superseded suspenders in popularity. Dooney rode the fad for much of the 1980s, offering a range of high-end items, including braces that used repeating dollar signs (finding ready customers with bankers) and ones just like those worn by Spencer Tracy in the film Inherit the Wind.

HANDBAGS ADDED: 1982

While the design of whimsical suspenders provided some diversion for Peter Dooney and his team, the designing of leather belts grew tedious and, like Coach, they naturally turned their attention to the production of leather women's handbags in 1982. Initially Dooney & Bourke relied on a hard English bridle leather in making the bags but soon came across an "all-weather leather," the use of which set Dooney bags apart from the competition and forged the young company's reputation.

The all-weather leather was a shrunken leather produced in a gradual, painstaking process, made from the skins of dairy cows—not cattle raised for beef—because the animals were kept mostly indoors, resulting in a higher-quality skin. Craftsmen in Denmark and Norway, and to a lesser extent in other parts of Scandinavia, specialized in making the shrunken leather. The bags produced from the material was not only waterproof but also stain resistant, and if cared for properly might outlast the owner.

As Dooney built up its handbag business, it would consume about 90 percent of the shrunken leather produced in the world each year. The leather was then fashioned into bags at the company's 80,000-square-foot factory in Norwalk. Handles and other details were made by a pair of small Puerto Rico factories and shipped to Connecticut. Dooney aimed for a classic look, one that defied changing tastes in fashion. With hand stitching and solid brass hardware, the bags were aimed at a more upscale market than Coach. In keeping with this approach, Dooney elected not to operate a midtown Manhattan showroom where accessory companies were typically located. Instead the company went uptown to Fifth Avenue and 57th Street, just shy of Central Park. As Peter Dooney explained to WWD, "We are not typical in that we do not change our line every season to follow the fashion trends—our collection is classic. We don't care what the rest of the market is doing."

In 1987 the company added a line of "cavalry bags," inspired by the look of military bags, as well as small leather goods and diaries, all using shrunken leather. Dooney elected not to sell to stores unless they carried the company's full line of products. All told, some 3,500 department stores and specialty stores offered the complete line, including such retailers as Bloomingdale's, Macy's, Saks Fifth Avenue, and Nordstrom. Limiting distribution was part of a strategy to create an air of exclusivity around the brand, an approach that served the company well. If anything, Dooney had a problem in keeping up with demand for its products. Not only was the all-weather leather a scarce commodity, the company had difficulty finding skilled factory workers in the affluent Norwalk area, and Peter Dooney made it clear that he would not take production overseas. "If I was forced to produce overseas I would close the company," he told WWD. "The fun of the business is seeing things made and solving production problems. It's a real hands-on business."

COMPANY PERSPECTIVES

Whether it's travel, leisure, business or everyday activities, Dooney & Bourke continues to develop fine handbags and accessories that are based in tradition and shaped by innovation.

Dooney & Bourke opened its first freestanding store in 1990, an 1,800-square-foot unit located on Madison Avenue in Manhattan, close to the Coach store at Madison and 63rd Street. The company continued to pursue its classic look, appealing mostly to older women with money, the country club set. Sales topped $100 million, reaching $118 million in 1995. In many respects, however, the brand was growing stale—yet it retained enough cachet that Dooney was an attractive acquisition target for a larger company. Peter Dooney told WWD in 1988 that he often received calls from people wanting to buy the business. But he insisted, "I would never sell it—it's too much fun. Besides I make handbags so that I don't have to work." In 1996, apparently, he changed his mind. In September of that year he reached an agreement in principle to sell the company to Liz Claiborne Inc. for an undisclosed amount. Apparel maker Claiborne was looking to flesh out its stable of brands and grow its accessories business. It also indicated that it hoped to use its marketing muscle and expertise to "refresh" the Dooney brand. But by early December the sale was off, both parties electing to terminate the deal after they "failed to agree upon mutually acceptable definitive terms." The nature of those terms were not spelled out, but both sides described their parting as amicable.

With the passing of a few more years, the need to refresh the Dooney brand became even more imperative, but rather than sell the business and turn over the task to others, the company took on the challenge itself as the 1990s came to a close. To spearhead the effort, Dooney hired a new chief operating officer, Tom Bendheim, who had a wealth of marketing experience with consumer products and had previously served as director of corporate strategic planning at PepsiCo. According to WWD, Dooney's typical customer was a "suburban, preppy type" between the ages of 30 to 45. Under Bendheim the goal for the brand was to "broaden its appeal to attract younger, trendy, urban women as young as 20," but without sacrificing its traditional core market.

Part of the strategy in repositioning the brand was placing less emphasis on the all-weather leather collection. In 1999 Dooney added a Cabriolet leather line of lighter-weight items. In addition, the company turned to softer leathers and fabrics, and adopted leaner silhouettes. Even the core bags made of shrunken leather were reshaped and trimmed, and shorn of excess hardware. Other product lines were added, including footwear, gloves, luggage, and men's wallets. The changes soon had an impact on sales, which enjoyed double-digit gains in 2000.

LARGER FLAGSHIP STORE OPENS: 2001

To help reinforce the shift in identity, the company relocated its flagship store to a larger space on East 60th Street between Madison and Park Avenues in Manhattan in June 2001. With 3,000 square feet at its disposal, the new store could display Dooney's expanded product lines. More new items were added in 2001: cashmere sweaters, leather outerwear, and gift accessories. The company also opened a design center in Florence, Italy, to stimulate further product development. As a result Dooney soon introduced leather travel bags, computer carriers, and business totes. Although the company had many opportunities to license its name, it continued to produce its products in-house to maintain quality control.

In addition to the flagship store, Dooney operated three other stores plus 11 factory outlets. In 2001 it began a push to add more retail units, starting in August with the opening of a 2,000-square-foot store in Las Vegas' Venetian Hotel. To help market the Dooney lines the company also increased its advertising budget, in 2001 doubling the amount it had spent the previous year. Moreover, the company's new fashion magazine ads for the first time featured models in sophisticated settings in an effort to relate an elegant lifestyle with the Dooney brand.

The next step in repositioning the brand was a direct appeal to the teen market. In 2003 Dooney teamed up with Teen Vogue, which helped to find young women to work with the company in designing a new teen-oriented handbag line. The idea was for teens to create bags for teens. Four young women recruited by Teen Vogue, plus one male and three female students from New York's Fashion Institute of Technology, were dubbed the It Team and sent to Italy with Peter Dooney to visit accessories shows and factories, and then work together to develop the line. The result was the It Bag, made of PVC (polyvinyl chloride) over cotton with colored zippers and, to set it apart from other Dooney lines, a pink heart-shaped hand-tag. The It Bag also featured interlocking D&B colored logos set against a white background, a look similar to the popular Louis Vuitton Takashi Murakami bag—perhaps too similar, in the opinion of Louis Vuitton lawyers.

KEY DATES

1975:: Company formed to make men's belts.
1982:: Dooney begins to make women's handbags.
1990:: First retail store opens.
1996:: Deal to sell company abandoned.
1999:: Brand repositioning is begun.
2003:: The It Bag is unveiled.

The It collection of four styles was unveiled in Teen Vogue, the first time Dooney had ever advertised in a teen magazine. Serving as the face of the line was actress Mischa Barton, a rising star on the new Fox television network series O.C. The It Bag proved popular with teens and slightly older women, and in April 2004 Louis Vuitton filed suit against Dooney, alleging that its intellectual property rights had been violated and contending that some consumers might think that the It Bag was a Vuitton product, but one that retailed at a much lower price than the Vuitton bag. A federal judge in the Southern District of New York did not agree and allowed Dooney to continue selling the It line. Not easily dissuaded, Vuitton appealed the matter.

In 2004 Dooney built on the initial success of the It Bag by assembling another eight-member design team, this time all young women, to create a pair of new bag collections. Actress Lindsay Lohan was contracted to serve as the new face of the lines, and was featured in an advertising campaign that began in August 2004 to launch the lines.

Long the silent partner at Dooney, Frederic Bourke made unwanted headlines in October 2005 in a matter that had nothing to do with the company but nevertheless caused some embarrassment. He was indicted on federal bribery and money-laundering charges and accused of making false statements to the Federal Bureau of Investigation regarding an $8 million investment he made in a consortium in oil interests in the Republic of Azerbaijan. Also implicated in the alleged scheme were co-investors insurance executive David Pinkerton and Victor Kozeny, a Czech national known as the "Pirate of Prague." They were accused of defrauding a number of wealthy investors, including U.S. Senator George Mitchell, and bribing Azerbaijan officials related to the privatization of the State Oil Company of Azerbaijan. Bourke maintained that he was one of Kozeny's victims, and according to Bourke's lawyers as soon as he began to have doubts about Kozeny, Bourke began to assemble copious materials to document his partner's misdeeds and support his own innocence. The defense attorneys also pointed out in court papers that Bourke was the one who tipped off Manhattan prosecutors to Kozeny's actions and then testified before a state grand jury. Moreover, his attorneys revealed that Bourke flew to Azerbaijan to warn the country's president about the scheme.

While Bourke's case made its way through the criminal courts, the Vuitton appeal proceeded through the civil courts. In July 2006 Vuitton won a round in its trademark infringement case. The district court's earlier denial of the preliminary injunction against Dooney & Bourke was reversed by the U.S. Court of Appeals. The case was sent back to the lower court for further consideration. Dooney's attorneys insisted that the company was using its own trademark logo, no elements on the It Bag were to be found on the Vuitton, and no one buying the It Bag thought they were buying a Vuitton bag by mistake. In the meantime, Dooney continued to build on its teen trend collection established with the success of the It Bag. A new collection was unveiled in September 2006. Replacing Lohan to represent the line was actress Emma Roberts, a star of the Nickelodeon series Unfabulous, and niece of movie star Julia Roberts.

Ed Dinger

PRINCIPAL COMPETITORS

Coach, Inc.; Etienne Aigner AG; kate spade LLC.

Dooney & Bourke Inc.

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Dooney & Bourke Inc.

1 Regent Street
Norwalk, Connecticut 06855
U.S.A.
Telephone: (203) 853-7515
Fax: (203) 853-9926
Web site: http://www.dooney.com

COMPANY FOUNDED: 1975

HANDBAGS ADDED: 1982

COMPANY PERSPECTIVES

Whether it's travel, leisure, business or everyday activities, Dooney & Bourke continues to develop fine handbags and accessories that are based in tradition and shaped by innovation.