LVMH Sells Donna Karan To G-III In A $650 Million Deal

DKNY Resort '17.
DKNY Resort '17.
REX Shutterstock.

After 15 years of ownership, LVMH Moet Hennessy Louis Vuitton is ready to part ways with Donna Karan International Inc.

In a rare move for a company that has only sold one other label in its nearly 30-year history, LVMH announced Monday that it has entered into an agreement to sell the fashion company — parent of the Donna Karan and DKNY brands — to G-III Apparel Group in a deal valued at $650 million. The transaction is expected to close in late 2016 or early 2017.

Donna Karan International has a deep heritage, global recognition, and renewed energy. We believe the DKNY brand has a dynamic position in the market, and when G-III approached us about acquiring the brand, we concluded that the time was right and that G-III was the right steward going forward,” Toni Belloni, group managing director of LVMH, said in a statement. “We are pleased to have reached an agreement with G-III, a company that has the expertise and capabilities to broaden the brand’s distribution and take it to its next level of success.”

LVMH had worked aggressively over the years to turn around the faltering Donna Karan and DKNY brands. Under LVMH, the company had seen management changes — most notably the departure of creative chief Donna Karan in June 2015 — and launched several new product-related initiatives. Last year, LVMH suspended production on the high-fashion end of the label as it ramped up the efforts on the DKNY side.

G-III Apparel Group, which owns, licenses and markets brands such as Marc New York, Calvin Klein, Karl Lagerfeld and Guess, said it expects to “capitalize on a significant market opportunity” for Donna Karan.

Donna Karan International is an iconic global fashion company. Its lifestyle aesthetic resonates well with consumers throughout the world,” Morris Goldfarb, chairman, CEO and president of G-III, said in a statement. “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.”

Both companies’ stocks appear to have reacted to the news, with LVMH getting a more than 1 percent boost, to $144.15, and G-III’s shares slipping nearly 4 percent, to $48.34 (as of 10:50 a.m. ET).

LVMH will announce its second-half earnings results on Tuesday.