Tahari on a Tear

By Kate Betts

When designer Elie Tahari landed in New York City at age 19 in 1971, he had $300 in his pocket and couldn't read English. After a "miserable" childhood spent in an Israeli orphanage, Tahari had only one dream, and that was the Big Apple--as he had seen it in the movies. With a plane ticket provided free by one of his brothers, then an airline employee, Tahari landed determined to make money.

"I was driven to be successful," he says, "but I didn't know what I would do."

Add him to the Immigrant Makes Good collection. Today, Tahari, 54, is the CEO of the $500 million Elie Tahari sportswear business. It's one of Seventh Avenue's most successful brands, with more than 600 points of sale in the U.S., including upscale department stores such as Neiman Marcus and Saks Fifth Avenue. At the opening of Bloomingdale's in San Francisco last month, Tahari says, the label was the top vendor, outselling Ralph Lauren by 30% in the first two weeks.

Tahari's initial connection to fashion was occupational but incidental. His first job was as an electrician at Nyborg Electric on 40th Street, in Manhattan's garment district. He was put in charge of servicing the showrooms of clothing firms, giving him a peek at fashion design in process. At night he moonlighted as a salesman at a Greenwich Village clothing boutique called Fig Leaf that was open until 2 a.m. Tahari began making suggestions to the owner about items that he thought would sell. Many of them, including the tube top, took off. Tahari realized he had an eye for fashion trends.

By 1973, Tahari had his own shop on East 53rd Street that catered to the disco crowd, and created two labels called Midnight Lady and Morning Lady. He peddled trends like handkerchief-hem dresses to the club crowd. In 1979, with disco losing its rhythm, he opened a shop on Madison Avenue and began selling suits with a trendy vibe, cashing in on the needs of working women.

It wasn't until a patternmaker in his office suggested he use his name on the label that Tahari the brand was born. "I came from a broken, poor background, so nobody in my family ever wanted to be associated with this name. But then someone told me it was a beautiful name," he says.

There's a bolt of pathos in that tale, but in truth it was accessible design that made the name famous. "Tahari's success comes from the fact that the look is not too fashion forward and not too conservative," says Dana Telsey, CEO of Telsey Advisory Group (TAG), an independent research firm. "They've also captured a very wide audience--both the upper-end consumer and the aspirational consumer."

Indeed, the price range--$147 to $598 for a jacket and $172 to $448 for a dress--means that Elie Tahari is within reach of more women than are designer tags like Prada or Gucci. But the real secret to Tahari's success, according to the designer's wife Rory, who is the brand's creative director, is the way the clothes fit. "Elie doesn't do fittings on models; he fits the samples on real women," she says. And customers respond. Ann Stordahl, executive vice president for women's apparel at Neiman Marcus, says that Elie Tahari is one of the store's best-selling contemporary brands because of its more universal fit.

Tahari's post-disco designs helped popularize what's known as the bridge category--less expensive career-based clothing--in the early 1980s. Then, responding to the demand for trendier, more comfortable clothing, he started Theory in 1997 with former Anne Klein executive Andrew Rosen. The idea was to base a whole contemporary collection around stretch fabrics, particularly pants. Tahari sold his Theory stake for $53 million in 2003 (He is now suing Rosen for $182 million claiming "fraudulent self-dealing." Rosen calls the suit "a fantasy ... created in total disregard of the facts") and in 2004 made an unsuccessful bid to buy Barneys, the fashion department store. "It was a bitter battle," Rory says. "He really wanted that. Most people think of Elie as a wholesaler, but he's really a retailer at heart."

Despite some of those more contentious dealings, Tahari describes himself as a shy, spiritual man (he practices feng shui and follows the teachings of philosopher Eric Butterworth). You won't see him taking a bow on the runway or featuring his homes in magazines (although he could: he recently bought News Corp. boss Rupert Murdoch's 9,300-sq.-ft. SoHo triplex for a reported $25 million). "My life is my work and vice versa," he says. "I told my wife that when we got married, she had to be involved with my work or we couldn't be together."

It's a deal. Since they married in March 2000, the Taharis have updated the label with plans to turn it into their version of a luxury brand--Rory calls it "Modern Luxury." For fall 2006, Tahari introduced shoes, handbags and menswear. Tahari says he is not abandoning the bridge business. Yet prices for some accessories such as handbags run as high as the $2,800 range. The goal is to make Elie Tahari into a $1 billion business in the next five years. Most brands move down the price curve to expand, not up. "Nothing Elie does is industry standard practice," says Rory. "He has always been ahead of the wave, not riding it."