Keep 'Em Glamoring For More

"Overnight we were gone," Badgley says.

"We were going to the office and there was no one there but us," Mischka says. "Just us in a 25,000-square-foot office."

Enter a Shining Knight

Then along came Neil Cole, the chief executive officer of Candies Inc. The company was in the process of transforming its image, shifting from a manufacturer of cheap, faddish shoes to a marketing and licensing company now called Iconix Brand Group. Purchasing Badgley Mischka was a way to diversify.

The deal was sealed late last year. Now there's a shiny new business plan for Badgley Mischka, one that revives the expensive evening wear but supports it financially with a host of mundane, but lucrative, products such as shoes, eyewear and a fragrance. Most important, the company is introducing a bridge collection for spring -- a less expensive line to appeal to a broader audience.

The rise, fall and rebirth of Badgley Mischka exemplifies the deflating truth behind the frothy luxury of red-carpet gowns. There's no money in dressing Jennifer Lopez, Ashley Judd and Halle Berry. For all the attention the stars receive from magazines and TV shows, their dresses are loss leaders. Design houses such as Giorgio Armani, Oscar de la Renta and Chanel all make their money on sportswear, accessories, fragrances -- anything other than those celebrity ball gowns.

But there is a lot of money to be made dressing the average woman for her law firm's holiday party, her son's bar mitzvah or a family wedding. There's money to be made dressing plus-size women for charity galas and making them feel like the belle of the ball. And there's a lot of money -- millions of dollars, in fact -- in a single perfect cocktail dress that can magically smooth out the lumps and give a woman an hourglass figure.

The designer Carmen Marc Valvo serves as a perfect counterpoint to Badgley Mischka. Since establishing his Seventh Avenue company in 1989, he has found financial success in the evening-wear business. While Badgley and Mischka were becoming the go-to-guys for Hollywood glamourpusses -- and losing money in the process -- Valvo was quietly dressing everyone else . . . and building a privately owned empire that a spokesman says is worth $80 million. Valvo stands as proof that the right mix of glamour, accessibility and practicality can lead to profitability.

It took Mark Badgley and James Mischka almost 20 years to come to grips with what they were doing wrong and recognize what a designer like Valvo was doing right.

To revive Badgley Mischka, Iconix has laid out a three-point plan:

· Build the bridge collection into a high-volume department store business. To accomplish that, the company has hired Don O'Neill, who, as it happens, was Valvo's assistant for 10 years, to design the bridge line.

· Raise the designers' profile beyond the East and West Coasts. "I think more and more people have read about them in People, Us, not necessarily the fashion magazines, but the tabloid press," says Mitchell Hops, the new president of Badgley Mischka and a dapper Canadian in a crisp, pinstriped suit. "Certainly the Bush daughters was big."

· Package Badgley Mischka as a lifestyle company, as adept at selling a cocktail dress as a pair of blue jeans or sneakers.