There’s been a lot of rumors flying out of French luxury house LVMH as of late. First talk that head honchos Bernard and Delphine Arnault have grown weary with Louis Vuitton designer Nicholas Ghesquière, which was quickly denied, and now via NY Post, chatter that the company wants to unload Donna Karan and DKNY, a U.S.-based company purchased by the conglomerate in 2001.
Reflecting some of Donna Karan’s struggles to remain profitable, LVMH last year put the higher-priced Donna Karan brand on hold, saying it would focus its efforts with the DKNY brand, while also discontinuing the DKNY Jeans and DKNYC lines. Changes included the departure of founder Donna Karan, who was replaced by Public School designers, Dao-Yi Chow and Maxwell Osbourne.
Despite being with the label for just seven months, hardly enough time to turn a brand around, LVMH has lost patience and is said to be talking to a buyer with negotiations ongoing, but no price yet agreed upon.
There’s no denying these are dark times in the kingdom of fashion, a segment that’s been especially hard hit by the emergence of e-commerce. Big brands not only don’t hold the same sway they once did in dictating trends to the masses, the places where they’ve traditionally sold their goods–department stores and malls–are hopelessly outdated as well.
Update: It’s official, LVMH has sold its Donna Karan line to G-III for $650 million dollars in a deal expected to close by the end of 2016 or early 2017. The New York-based G-III owns a combination of labels, including Andrew Marc, Marc New York, Bass, G.H. Bass and Weejuns, while holding licences for Calvin Klein, Tommy Hilfiger and Karl Lagerfeld among others.
As a solidly middle-of-the road-priced brand, DKNY is a perfect fit for the publicly-traded G-III, which will no doubt use its well established connections among manufacturers and retailers to expand maximize the brand’s profit and distribution potential, as well as expand licensing opportunities, in particular home, children and men’s.
As part of efforts to grow the brand, G-III CEO, Morris Goldfard, in a press call today, said while the brand is currently not making money, it expects losses will temper in 2017 and by 2018 it expects to be profitable. G-III said it plans to revive the Donna Karan brand and expects to double the brand’s revenue in “less than three years.”
In a press release, Goldfard added, “Donna Karan International is an iconic global fashion company. Its lifestyle aesthetic resonates well with consumers throughout the world. We are excited to build upon its strong foundation as we seek to capitalize on a significant market opportunity. Donna Karan brings increased scale and diversification, while providing incremental growth on top of our portfolio of some of the best fashion brands in the world. We believe we are well positioned to create and sustain additional value for our shareholders, partners, and customers.”
LVMH Group Managing Director, Toni Belloni, added, We are grateful to CEO Caroline Brown, creative directors Maxwell Osborne and Dao-Yi Chow, and the entire management and design teams for the strategic actions that created a platform to support DKNY’s continued growth.”