LVMH to sell Donna Karan International for $885m

Ms Karan transformed professional women's wardrobes with her "seven easy pieces" design philosophy.
Ms Karan transformed professional women's wardrobes with her "seven easy pieces" design philosophy.

PARIS • LVMH agreed to sell Donna Karan International to G-III Apparel Group for an enterprise value of US$650 million (S$885 million), a rare disposal for the French luxury-goods maker, which failed to turn around a label that once defined workplace attire for successful women in the United States.

The sale reflects LVMH's inability to generate profitable growth from the labels, which have counted former United States secretary of state Hillary Clinton and US First Lady Michelle Obama among their fans. Co-founder Donna Karan transformed professional women's wardrobes in the 1980s and 1990s with her design philosophy of "seven easy pieces" that could be mixed and matched, but the spread of casual workplace dressing has proved a challenge.

"When G-III approached us about acquiring the brand, we concluded that the time was right," LVMH managing director Toni Belloni said in a statement yesterday.  

G-III will gain the Donna Karan and DKNY brands, the companies said in the statement. They said they expect to complete the transaction by early next year. 

LVMH shelved the Donna Karan line after Ms Karan departed last year, with plans to focus on the DKNY brand, the New York Post reported last Wednesday. It also said that the company had decided to sell both brands after seven months of "disappointing performance" under new designers Maxwell Osborne and Dao Yi Chow.

"Selling DKNY is a way to get rid of a problem at a time when the market is tough," wrote Exane BNP Paribas analyst Luca Solca. "Getting rid of loss-making businesses is second best to turning them around, but better than keeping them in the group as a perpetual drag."

Shares of the French company, whose full name is LVMH Moet Hennessy Louis Vuitton, rose 0.4 per cent as of 9.08am in Paris.

Ms Karan founded the Donna Karan fashion label in 1984 with her late husband, Stephan Weiss. She stepped down as chief designer last year to focus on other projects such as Urban Zen. G-III makes dresses, suits and sportswear under brands like Calvin Klein and Vince Camuto.

The sale is "a good deal for LVMH, considering the brand has been under considerable pressure, not only in the US but in Europe over the past 12 to 18 months", said MainFirst Bank analyst John Guy. 

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A version of this article appeared in the print edition of The Straits Times on July 26, 2016, with the headline 'LVMH to sell Donna Karan International for $885m'. Print Edition | Subscribe