Donna Karan brand sold to to G-III for $650 million

GENEVA: LVMH agreed to sell Donna Karan International to G-III Apparel Group for an enterprise value of $650 million, a rare disposal for the French luxury-goods maker, which failed to turn around a label that once defined workplace attire for successful US women.

The sale reflects LVMH’s inability to generate profitable growth from the business, which has counted Hillary Clinton and Michelle Obama among its fans. Co-founder Donna Karan transformed professional women’s wardrobes in the 1980s and '90s 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," Toni Belloni, managing director of LVMH, said in a statement Monday.

G-I II will gain the Donna Karan and DKNY brands, the companies said. The transaction makes it likely that LVMH announces plans to buy back 1 billion euros ($1.1 billion) of stock, wrote Fred Speirs, an analyst at UBS. LVMH is scheduled to report results on Tuesday.

LVMH shelved the Donna Karan line after its founder departed last year, with plans to focus on the DKNY brand, the New York Post reported on July 20. 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 Luca Solca, an analyst at Exane BNP Paribas. "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."