LVMH Sells Donna Karan to G-III for $650 million

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LVMH Sells Donna Karan to G-III for $650 million

07/26/2016
French luxury group LVMH is selling Donna Karan International, the parent of New York label DKNY, to U.S. clothing firm G-III Apparel Group for $650 million. Donna Karan has not been profitable recently.

As reported by Reuters, the sale comes just over a year after a new design team had been put in place, showing how little patience LVMH has for underperforming businesses in the current tough trading environment.
Analysts estimate DKNY's annual sales at $450 million to $500 million, meaning G-III would be paying 1-1.5 times annual revenue, less than the 1.9 times LVMH paid when it bought the brand in 2001, according to Reuters.

Toni Belloni, Group Managing Director of LVMH, said, “Donna Karan International has a deep heritage, global recognition, and renewed energy. We believe the DKNY brand has a dynamic position in the market, and when G-III approached us about acquiring the brand, we concluded that the time was right and that G-III was the right steward going forward.”

Founded in 1984 by Donna Karan, the label came to define the professional working woman's wardrobe with its sophisticated mix and match pieces. The designer expanded the Donna Karan New York brand by creating a less expensive clothing line for younger women called DKNY.
Over the years, the Donna Karan brand lost touch with its customers as it expanded into brightly patterned African-inspired designs that were a far cry from the jersey dresses, bodysuits and wrap skirts on which it had built its reputation.

Sister label DKNY struggled to compete with accessible luxury brands Michael Kors and Tory Burch and edgier New York newcomers such as Alexander Wang.

G-III owns brands such as Vilebrequin and Andrew Marc and makes clothing for Calvin Klein, Tommy Hilfiger and Karl Lagerfeld, among others.