G-III Buys Donna Karan from LVMH, Plans to Build Billion Dollar Business
Celebrity businesses under the G-III umbrella include the Jessica Simpson and Ivanka Trump collections.
Of the many industry rumors making the rounds last week, one has proven to be true: LVMH announced that it has sold Donna Karan International, parent company of DKNY and Donna Karan, to G-III apparel company for $650 million.
G-III Apparel, which also owns Calvin Klein, Tommy Hilfiger and Nine West, has apparently had its eye on the company for quite some time. In a conference call with investors Monday morning, CEO Morris Goldfarb revealed that the deal was two years in the making, as the company sought out a "dominant power lifestyle brand" to add to its portfolio.
The deal is expected to close in late 2016 or early 2017, and it's full speed ahead from there. "Our goal is to double the size of this business in less than three years," noted Goldfarb of the $350 million business which is currently "losing money."
In order to make the ambitious plans a reality, the company has laid out a global strategy which is built upon the potential of the DKNY brand to be "a billion dollar business." Goldfarb emphasized room for growth specifically within the footwear and menswear categories, noting that the company "recently picked up capability for designing and producing footwear" in Southeast Asia. Handbags, intimates, home and children's apparel were also mentioned.
Though Dao-Yi Chow and Maxwell Osborne, the Public School designers who were tapped as the creative directors of DKNY in 2015, were not mentioned on the call, Goldfarb praised current team under CEO Caroline Brown's management and noted that "the new product is doing well."
Celebrity businesses under the G-III umbrella include the Jessica Simpson and Ivanka Trump collections, so it's not inconceivable the brand could tap a celebrity to front (or design) DKNY.
G-III's plans also include the resurrection of the Donna Karan luxury line, a red-carpet favorite, which was halted following the departure of Donna Karan (the designer) in June of last year. "The opportunities of Donna Karan the brand are endless. It’s not distributed, it’s not licensed," he said of the "aspirational luxury tier" brand, which the company plans to retail in Neiman's, Saks, Bloomingdales and Nordstrom.
Overall, however, Donna Karan is not the star of the show. As Goldfarb noted, "it’s not a billion dollar business."
"The billion dollar trophy will be DKNY," he said.