October 19, 1998 12:00 PM

In the rag trade, longevity can be the most fickle fashion of all. So when Isaac Mizrahi, flamboyant darling of the designer set, announced on Oct. 1 that he was closing shop after losing the financial support of his backer, Chanel Inc., he seemed more sanguine than shaken. “I had three options,” Mizrahi, 37, told PEOPLE. “One was operating on a shoestring. Another was finding other backers. The third was closing. I thought, ‘Move on, darling. Move on.’ ”

That shouldn’t be hard for a man whose personality is as colorful as his collections. Since the documentary Unzipped brought Mizrahi’s hilarious repartee to the big screen in 1995, Hollywood has been nipping at his heels. He has a cameo role as an artist in Woody Allen’s new movie Celebrity.

DreamWorks SKG has hired him to produce a film based on his 1997 comic book The Adventures of Sandee the Supermodel. And come spring, film director Barry Sonnenfeld plans to produce Wild About Harry, a musical comedy Mizrahi wrote and hopes to star in.

Which is fine and dandy for the man himself, but what about his well-heeled clients? “I’m sad,” says Mizrahi’s pal Sandra Bernhard. “A lot of his stuff seemed tailor-made for me. It was fun, whimsical, original. I’m going to buy a bunch more of whatever’s left.” She may find slim pickings. Ironically, Mizrahi’s fall collection, featuring candy-colored cashmere twin sets, has been a hit. “We built a new [in store] shop for him in July, and he was selling extremely well,” says Bloomingdale’s fashion director Kal Ruttenstein.

But it was too little, too late for Chanel, which bought into Mizrahi’s label in 1992 only to see his much-touted, less-expensive “Isaac” line fail in 1997 after a slump in the retail market. Meanwhile, Mizrahi’s witty, often old-Hollywood-inspired collections (priced from $165 to $4,000 and including such jaw droppers as 1997’s $3,000 beaded, long-sleeved T-shirt) “were spectacular on the runway,” says Fern Mallis, president of the Council of Fashion Designers of America, “but somehow the excitement didn’t translate to the stores.” Despite an annual revenue estimated at $20 to $30 million, “it just didn’t work,” says Michael Rena, executive vice president of Chanel. “But he’s an extremely good designer.”

Mizrahi’s mother, Sarah, knew as much from the time her teenage son made her a skirt and plaid stole that she proudly wore on Rosh Hashanah. Both she and Isaac’s father, Zeke, a children’s clothing manufacturer, encouraged their son’s creativity as he spent long hours making puppet costumes in the basement of the family’s Brooklyn home. After graduating from the prestigious Parsons School of Design in New York City, he worked for Perry Ellis and Calvin Klein before branching out on his own in 1987. His first show, in a SoHo loft, was a hit.

“It was exciting fashion,” says Ruttenstein. “He was avant-garde with a lot of courage.” If the combo wasn’t enough to land him in the Klein/Karan/Lauren super-league, it should serve him well in future pursuits. “Isaac is a true original,” says actress Jennifer Tilly, a devoted customer, “and originals are the ones who survive in Hollywood.”

While Mizrahi doesn’t rule out a fashion comeback, his showbiz life has gotten off to a heady start. “I had so much fun” at Celebrity’s New York City premiere last month, he says, “I felt like I had finally come clean. This is where I want to be.”

Anne-Marie O’Neill

Sue Miller in New York City and Steven Cojocaruin Los Angeles

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