BRAND STRATEGY

Insight: Every business built as a portfolio needs a business driver, where strong equity, long-term sustainability, global potential allows for continuous growth.

In our current group of brands, Donna Karan is it.

Detail of Key Initiative #1

Key activities that need to be implemented to support this initiative:

Financial impact FY09 to FY11:

Sales impact:– Franchise growth planned at 5.3% from

09 to 11, excluding color launch

– NOP margin impact:– 4.8% NOP in F’08 to 7.9% by F’11,

excluding Color launch– Color launch dilutive in first year, with

break-even after year 3, provided we reach a productivity per door of $350 k and we share demonstration with PX in half of our doors. $960 k per door required absent sharing arrangement

Detail of Key Initiative #1

FY08:

• Solidify our winning franchises (Delicious and Cashmere Mist)

• Expand distribution where relevant to generate profitable sales

• Invest to secure our visibility in media and at POS (# of doors)

FY09:

• Roll out DKNY Delicious Night and launch DKNY Man

• Continue to improve visibility and build “cathedrals” with exclusive DK properties

FY10:

• Launch new DKNY woman franchise (Pure)

• Introduce DKNY color in limited (or exclusive) distribution:

GLOBAL PRESTIGE FRAGRANCE COMPANIES

Men’s and Women’s Fragrances CY 2005 vs. 2006

CHANEL GIORGIO ARMANI

DIOR CALVIN KLEIN

HUGO BOSS

ESTEE LAUDER

LANCOME YSL JEAN PAUL GAULTIER

GIVENCHY0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2005 2006

$'00

0

Source: NPD CY05 & 06, Generations CY05 & 06, European Forecasts CY05 & 06 (Worldwide Net Sales)

ADF Overview

36%

38%

16%

5%4%1% 1%

Donna Karan Tommy Hilfiger Aramis Lab Series

% Contribution by Brand F'05

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