LVMH sells money-losing line Donna Karan to G-III Apparel
Steve’s breakdown: That is the New York Post business headline. But sometimes I think a brand’s new owner own wants to make a brand right again is the best kind of new opportunity.
NEW YORK, NY: One company’s problem child is another’s prodigy. French luxury group LVMH is dumping its money-losing Donna Karan International division, selling it to New York-based G-III Apparel, which is known for scooping up “businesses that are being abandoned in the marketplace,” as G-III Apparel Chief Executive Morris Goldfarb put it in a call with analysts on Monday.
The $650 million transaction ends LVMH’s 15-year struggle to squeeze growth out of the DKNY and Donna Karan brands, which generated $300 million in sales from wholesale channels and 50 retail stores, down from a peak of $700 million to $800 million, according to Goldfarb.
Karan left the company a year ago after butting heads with LVMH execs. Her eponymous designer brand was suspended shortly thereafter.
Known for her “seven easy pieces” for working women, Karan started her company in 1984, but later lost ground to newcomers like Tory Burch.
“This is G-III’s opportunity to get into the luxury space, and it makes sense that an iconic American brand be run by a company that understands the US markets,” said Richard Baker, executive chairman of Hudson’s Bay Company, which owns Lord & Taylor and Saks Fifth Avenue.
G-III portfolio brands include swimwear company Vilebrequin, G.H. Bass and Andrew Marc, and it holds licenses for Calvin Klein and Karl Lagerfeld.
Goldfarb said he plans to resurrect the Donna Karan label, selling it via luxury department stores like Neiman Marcus, while also expanding into home merchandise and footwear.
“There will be a huge opportunity in footwear,” Goldfarb said on the call. “It’s an area that we believe can be very dominant.”
G-III’s stock took a hit on Monday, closing down 14.5 percent, to $42.91.
“I hope this turns into a positive move for the brand — that someone will nurture it,” Fern Mallis, New York Fashion Week creator said.