Diane von Furstenberg’s Brand Is Left Exposed by the Pandemic

But there are plenty of unhappy people, from employees who were let go without severance to unpaid vendors, for whom that explanation may not be enough.

According to Ms. von Furstenberg, the company’s financial problems began around 2015 — just after the 40th anniversary of her wrap dress and the publication of her memoir, “The Woman I Wanted to Be.” She had been thinking about her legacy and, she said, listened to advice that her goal should be “to build a big operating business” by following the luxury brand playbook developed by Gucci and Dior: Open flagship stores on important shopping streets in capitals around the world. Between 2013 and 2015, she nearly doubled her number of directly owned stores.

This move saddled the business with expensive rents and yearslong leases at a time when nimble digital brands were rising. The company was also in creative turmoil, with a revolving door of five designers — one of whom did two stints — in 10 years.

“There started to be a real inconsistency in creative direction, and that got very expensive, because we started losing customers,” said Sandra Campos, the label’s chief executive until she left last month.

The company was kept afloat by the wealth of Ms. von Furstenberg and her billionaire husband, Barry Diller. By 2016, Ms. von Furstenberg said, she realized she had made a mistake and began to pull back on retail, though it was not until 2018 that she hired Ms. Campos as chief executive and a restructuring plan was created.

“This is an emotional business, and emotional decisions get made — and she’s a great believer in all people,” Ms. Campos said of Ms. von Furstenberg. “It’s both a strength and a weakness in terms of making decisions that are smart business for the long term.”

They tried to renegotiate and surrender leases, gradually reducing the losses by 65 percent. Though there was more of a focus on e-commerce, it was still only 20 percent of the business. Sales, which had been about $300 million before the recession, had shrunk to half that, as costs rose.

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