French luxury group LVMH Moët Hennessy Louis Vuitton SE is selling Donna Karan International, the parent of New York-based label, DKNY, to U.S. clothing firm G-III Apparel Group in a deal valuing the brand at $650 million. The sale comes just over a year after a new design team - consisting of buzzy design duo Maxwell Osbourne and Dao-Yi Chow of Public School - was been put in place, "showing how little patience LVMH has for underperforming businesses in the current tough trading environment," per Reuters.
In acquiring DKNY, G-III is paying $650 million for the troubled brand. That’s not much more than the $643 million that LVMH paid for the company in 2001. Analysts estimate DKNY's annual sales at $450 million to $500 million. "Selling DKNY is a way to get rid of a problem, at a time when the market is tough and luxury companies would be right to show less leniency with underperforming businesses," said Exane BNP Paribas analyst Luca Solca.
Founded in 1984 by Donna Karan, the label came to define the professional working woman's wardrobe with its sleek and 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, which has struggled to compete with so-called 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. It will fund the deal through new debt and $75 million of G-III common stock to be issued to LVMH.