POLITICIANS ON SALE A NEW WAY TO RETIRE TAX FREE

KATHY IRELAND OUTSELLS MARTHA STEWARTAND SHES RICHER, TOO.

THE STRANGE BUT TRUE TRIUMPH OF A SWIMSUIT ICON.
SUPERMODEL
SUPERMOGUL
FL8RUARY 27 2012 LD|T|ON
I
ts staff meeting time for the biggest
retail brand youve never heard of,
which at Kathy Ireland Worldwide
means marching up the hills outside
Santa Barbara to the eponymous
founders mission-style home for a corporate
version of Im OK, Youre OK. As the
coastal air tempers the bright California
sun, 15 staffers dressed in casual black sprawl
on the plush sofas or sit cross-legged on the
floor. An Academy Award rests nonchalantly
on an end table, lending a surreal touch.
Dont ask about the Oscar, one of Irelands
confidants says to me furtively. (It was from
another fashion diva with a flair for retail,
Elizabeth Taylor.)
The groups breathing golden idol sits,
chin in hand, in the middle of this group. At
48 Kathy Ireland is still as stunning as when
she appeared in 13 consecutive Sports Illus-
tratedswimsuit issues, including three covers
(albeit now with bigger hair). Thank you,
she says in her small voice as the group kicks
off a brainstorming session about social
media. Thank you, she repeats as ideas fly
about ways to gain her company a bigger
presence on Twitter and Facebook. Thank
you, the group responds, the only two
words invoked more over the next hour
than excuse me and please.
If this isnt how Americas best-known
licensor, the famously demanding Martha
Stewart, might do business, so be it. Kathy
Ireland sells more productsome $2 billion
at retailand shes worth more, too. If
Martha Stewart represents WASP perfection
(and those who aspire to it), then Kathy Ire-
land rules flyover country (and those content
to stay there), bequeathing her tasteand/or
slapping her nameonto more than 15,000
products, few of which jibe with the image
most people have of her.
This swimsuit model doesnt sell swim-
suits, and while many women may still as-
sociate her name with a clothing line at
Kmart, she barely sells clothes anymore, ei-
ther. The bulk of her success comes instead
from the kind of stuff that has likely never
seen a celebritys name adorning it: ceiling
fans, flooring, mattresses. And above all
theres furniture: desks, end tables, media
centers, beds, ottomans and bookcases.
There are area rugs, carpets and headboards.
And lots and lots of windows. One of the
biggest pieces of the Kathy Ireland empire
is her namesake vinyl and plastic replace-
ment windows, which purportedly insulate
heat inexpensively; a retail outfit called
Window World moves $400 million of
them a year.
If theres any consistency to this grab
bag that is Kathy Ireland Worldwide, its
the target audience: Middle Americas
moms. Theres a certain magic in placing
a glamorous supermodels name on mun-
dane products aimed at an everyday audi-
ence. I can see your compassion for
moms, tweeted one fan. Cant wait to
read your book! (Ireland has published
six.) With three children and four dogs,
Ireland fronts the brand credibly. When I
request a coaster before putting down a
glass on a rustic wooden table at her
house, Ireland waves her hand dismissively.
Stewart might create a Thanksgiving din-
ner spread worthy of a magazine; at Ire-
lands place dogs lounge on the furniture.
The ex-models elastic brand based
on what I saw, she would consider Kathy
Ireland toilet plungers or Kathy Ireland
roach motels if she could argue they help
busy momsproves a valuable trait in li-
censing, a strict volume business. That $2
billion at retail (for comparison, Martha
Stewart sells about $900 million at retail,
based on industry estimates) translated
into about $850 million in wholesale sales
last year, of which Ireland got a royalty
payment of roughly 6%. Thats around
$50 million in revenue for Irelands com-
pany, and with a meager staff of 42the
beauty of licensing, of course, is that every-
one else has to actually make and sell the
stuffthe vast majority of that is pure
profit, flowing straight into pockets of
Kathy Ireland Worldwides photogenic
100% owner.
KATHY IRELAND WAS an entrepre-
neur long before she was a model. As a
child in Santa Barbara, she painted
stones, and rather than place them on
her shelf to admire, she peddled them
door-to-door (her grandmother carried
one in her purse for protection) and
eventually sold other art projects at
weekly crafts fairs. At 11 Ireland noticed
an ad beckoning newspaper deliverers:
Are you the boy for the job? Ireland
wrote a note to the editor saying she was
the girl for the job, and she got it.
Ireland was earning $60 a month when
she decided it was time to get her own
bedroom. She rang up a contractor for an
estimate on what it would cost to add a
room to the modest house she shared
with her parents and two sisters. My
SUPERMODEL
SUPERMOGUL
FORBES
The strange but true story of how swimsuit icon Kathy Ireland turned
Americas most mundane products into a licensing empireand became
the first lady of flyover country.
BY DOROTHY POMERANTZ
PHOTOGRAPHED BY MICHAEL GRECCO FOR FORBES
ireland_LOnoPHOTO_Layout 1 4/25/12 11:08 AM Page 1
mom found me in the driveway showing
him where I wanted my room to be,
recalls Ireland. I knew exactly what it
was going to look like, what the furnishing
would be. Then he gave me his bid, and it
was something like $20,000.
The room would have to waitbut not
long. In 1980, at the age of 16, Ireland was
discovered at a finishing school (where
her parents were trying to clean up their
tomboy daughter) by the Elite Modeling
Agency. Within four years she was featured
in the Sports Illustrated swimsuit issue,
and in 1989, when she graced the cover for
the first time, it became SIs best seller
ever. Internationally famous, she was one
of the group, which included Christie
Brinkley and Cindy Crawford, that spawned
the term supermodel.
We joke that theres still the Kathy Ire-
land standard, says MJ Day, senior editor
of SIs swimsuit issue. Shes kind of the
complete package.
During her modeling period her entre-
preneurial side ventures were whiffs,
such as the time she became entranced
with making beer with a bunch of gradu-
ate students. In 1993 John Moretz, a mar-
keter who later bought Gold Toe socks,
approached Ireland with the kind of gig
that signals a models best years are
behind her: Did she want to model pedes-
trian socks?
Shes the girl next door who happens
to be beautiful, says Moretz. That forms
an emotional bond with the consumer.
Pregnant with her first child, rather
than shoot him down in a fit of celebrity
pique, she made a counterproposal. What
if they went into business together making
and selling Kathy Ireland socks? I wanted
to make it clear to them that I didnt want
to just put my name on it, says Ireland.
An endorsement wasnt interesting to me.
Moretz agreed. He bought the rights to
use her name on a line of socks, and he
agreed to pay for manufacturing and dis-
tributing the socks that Ireland would de-
sign and promote. In return Ireland would
get a royalty on every pair sold. She took
out a $50,000 personal loan to launch
Kathy Ireland Worldwide.
Moretz was able to get Kathy Ireland
athletic socks into sporting good stores
like Big 5. Intrigued, he quickly bought the
rights to license exercise clothes, bodysuits
and eventually swimwear. Moretz became
the master licensor for Kathy Ireland, sub-
licensing her name to companies that made
things besides socks and collecting 30% of
that revenue stream to Irelands 70%. His
biggest coup: helping her get an exclusive
deal in 1994 with Kmart, which envisioned
turning her into the apparel version of
their star, Martha Stewart.
While Moretz did the heavy lifting on
her clothing line, Ireland dabbled in fitness
videos (like 12 Minute Abs, Buns and Thighs),
nonprofit work (March of Dimes and AIDS
LA) and acting. She was making good
money but was far from a mogul.
That changed in 1998, when she decided
to expand into furniture. Warren Buffett,
who appreciated their shared experience
as newspaper deliverers, once told her
that fashion changes but the home remains
far more secure. In apparel every celebrity
with a Q rating above zero either had a
line or was pitching one. But precious few
celebrity licensors dabbled in home fur-
nishings, even though the dynamics of
buying a dresser are no different from
buying a dress. A known brand name
gives people a comfort level when buying,
says furniture industry analyst Wallace
Epperson.
In 1999 Ireland went to the biannual
furniture convention in High Point, N.C.
with a line of sofas, chairs and end tables.
She had a passion and she was very
smart, says Irv Blumkin, head of Berkshire
Hathaways Nebraska Furniture Mart, a
450,000-square-foot megastore that helps
drive the direction of the industry. As she
told me the stories of her different products
I felt we should give her a chance.
With furniture Ireland mandated that
her brand would mean something: Finding
solutions for families, especially busy
moms, which is now the companys motto.
So rugs were treated with a spill protection
chemical that also holds the colors and al-
lows the rugs to have longer lives. Tables
were designed with rounded corners so
running children dont get hurt falling on
the edges.
The furniture business showed potential,
and within a year Ireland signed with Berk-
shires Shaw Industries to expand into car-
pets, flooring and floor tiles. She remains a
staple for the company.
As the furniture side of her business
grew, so did Irelands confidence: She took
a more active day-to-day role, and Moretz
became more of an advisor, garnering an
increasingly smaller cut of her action. In
2003 she even found the gumption to
finally dump Kmart, which had come out
of bankruptcy. Its heroic for a busy mom
to go to a store, says Ireland, always quick
to lionize her core customer. If she goes
to a retailer and she has a bad experience
shes mad and rightly so.
The most audacious aspect of the Kmart
decision: She had no immediate plans to
get back into apparel. Kathy Ireland was
officially a brand, transcending the products
one would expect a supermodel to offer.
Accordingly, Ireland has spent the last
decade or so moving her company into
logical busy mom offshoots, sharing her
aura with field experts, as necessary. Her
ACafe brand, with chef Andre Carthen,
boasts kitchen candles, jewelry and kitchen
knives. Shes teamed with landscape artist
Nicholas Walker on Jardinwho also de-
signed Elizabeth Taylors gardenswhich
offers budget-minded outdoor products.
And in buying the Sterling/Winters pro-
duction and management company she
now owned the company that had produced
her made-for-TV Christmas movies (Once
Upon a Christmas and Twice Upon a Christ-
mas) and workout videos. The supermodel
had come full circle.
WHILE IRELANDS success is stagger-
ing, its also unconventional. She admits
that she barely graduated from high
school, and while her entrepreneurial
instincts have proven excellent, she hap-
pily delegates the nuts and bolts of the
business to others. Ask for financial
details and shes quick to insist that for
her business is more about investing in
people than profits, whatever that means.
And while shes happy to meet with
retailers, she assiduously avoids grand
openings, despite her drawing power.
Weve tried it, and it doesnt work, says
Ireland. What happens is the store gets
cluttered with guys who are there with
I WANTED TO MAKE
IT CLEAR TO THEM
THAT I DIDNT WANT
TO JUST PUT MY
NAME ON IT.
ireland_LOnoPHOTO_Layout 1 4/25/12 11:08 AM Page 2
the design of a bed headboard.
She designed one rug based on
shells she collected with her
children in Hawaii. Tough work
if you can get it.
Her design ideas are then
boiled into the companys eight
style guides, which are created
by the professional designers
within the company. So the
Ivory Coast guide features
animal prints, desert colors and
sun-kissed skies. A Russian
guide evokes snowflakes, bal-
lerinas and the peasant-chic
styling of Dr. Zhivago. Manu-
facturers like Vaughan and
Bonavista then take her ideas
and guides and design the final
product (with lots of input and
approval rights from Ireland
and crew). Her customers can
access the style guides as well,
positioning Ireland as their
tastemakerand, it is hoped, encouraging
them to buy more of her products, across
multiple lines.
There will be more to buy. Shes launch-
ing a new retail arm with her original part-
ner and on-and-off Svengali, Gold Toes
Moretz, with the goal of penetrating the
few busy mom categories she doesnt al-
ready have: things like shoes, hair care and
perfume, all of which will be offered direct
to consumers through her website in addi-
500-year-old copies of Sports Illustrated.
How does that help a busy mom? These
people are just in her way.
Instead, Ireland embraces her role as
chief designer. Every one of those 15,000
rugs, candles and windows originates from
something that struck her. So Ireland
spends part of the year traveling the globe,
looking for inspiration like some poet of
commercialism. A beautifully rusted gate
she saw in Liverpool once helped inspire
tion to selling at retail. Shes planning a line
of Kathy Ireland shops in Europe and Asia.
And shes even returning to her first busi-
ness, apparel. Although she already has a
line of furs at Macys and a new bridal line
at Mon Cheri, soon shell be selling every-
thing from bras to jeans to business suits.
All of this adds up to a very valuable
company. Given the likely cash flowfigure
$35 million on that $50 million or so in
royaltiesKathy Ireland Worldwide is
worth, based on public licensor compara-
bles, somewhere around $300 million.
(Martha Stewarts holdings in her company
currently sit at around $250 million.) And
remember that, other than around-the-
world forays, theres precious little need
for Ireland to reinvest her cash stream into
the business. So shes amassed a formidable
collection of jewelry, which she chose with
the help of her jewelry mentor, Elizabeth
Taylor. She considers the $25 million col-
lection too expensive to keep in her home,
so it stays in a bank vault in Los Angeles.
She also has properties in California, Nevada
and Israel (Ireland has been a devout
Christian since 18, whose first and last
meeting of every day is with God).
With a business spouting cash and a
staff ready to convene in her living room,
Ireland has no desire to go public or sell.
The prom queen of busy moms, in fact,
maintains that her brand remains an infant.
We have a long way to go, she says, flash-
ing a runway smile.
KATHY AND MARTHA
Stewart is the media powerhouse, but
low-prole Ireland has moved more
merchandiseand made more money.
AGE
48 70
HEADQUARTERS
CALIFORNIA NEW YORK
COMPANY
PRIVATE PUBLIC
ANNUAL MERCHANDISE SALES
$2 BILLION $900 MILLION
PERSONAL NET WORTH (ESTIMATE)
$350-$400 $300
MILLION MILLION
F
Reprinted by Permission of Media LLC 2012 - Reprints contact 212.620.2399
INSIDE IRELAND INC.
Yes, the former model once hawked clothes for Kmart. But now
shes behind 15,000 licensed productsand other ventures.
FURNITURE
Irelands biggest
category. You can buy
everything from
ceiling fans to
windows to flooring
designed by the for-
mer swimsuit model.
JEWELRY
Pal Elizabeth Taylor
trained her taste. Now
Ireland designs baubles
from $95 pendants at
Fred Meyer to a $14,000
gem necklace at Gearys
Beverly Hills.
STERLING/WINTERS
Talent management
rm that helped
produce Irelands
movies and exercise
videos now manages
celebrities like Janet
Jackson.
ACAFE SOCIETY
BY CHEF ANDRE
Her longtime friend
and cook helped write
recipes for Janet
Jacksons bestseller
True You. Next up:
NutriSystem menu items.
JARDIN
Ireland teamed with
Elizabeth Taylors
longtime landscape
designer, Nicholas
Walker, to form Jardin,
which sells outdoor-
inspired items.
ireland_LOnoPHOTO_Layout 1 4/25/12 11:08 AM Page 3