LMVH to sell Donna Karan

LMVH has agreed to sell Donna Karan International Inc to G-III Apparel Group Ltd for an enterprise value (i.e. the market value of the business) of $650 million.  G-III makes apparel for the likes of Calvin Klein. The deal is set to close later this year or the beginning of 2017.

This sale marks LMVH’s first sale of a big brand since 2005 when it sold Christian Lacroix. The sale was likely driven by LMVH’s inability to generate a profit from Donna Karan. This is despite LMVH’s efforts such as stopping lines like DK Jeans and DKNYC. Tony Belloni, the managing director for LMVH said that when G-III approached LMVH for the sale he felt that the ‘time was right’ to divest the brand. This is likely to be because for the past 12 months LMVH has been under considerable pressure both in the US and in Europe. Tough market conditions, as well as Donna Karan being available in most department store when LMVH tends to sell costlier goods in its own stores, could have contributed to Donna Karan’s under-performance.

Donna Karan defined successful women’s workwear for almost two decades and built up a cult following in many high profile politicians. However this has not been enough to sustain the brand as times have changed and so too has women’s taste in what defines work wear. Some may recall that year Donna Karan left the brand she founded. Under her successors, Maxwell Osborne and Dao-Yi Chow the brands sales have not been promising. The sale of Donna Karan makes it more likely that LMVH will announce a 1 billion Euro shares buyback.

LMVH to sell Donna Karan

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