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Report: LVMH to Sell Off DKNY

Citing anonymous sources, the New York Post is reporting that French luxury giant LVMH is looking to sell off its Donna Karan business.
DKNY's Dao-Yi Chow and Maxwell Osborne | Source: Courtesy
By
  • Limei Hoang

NEW YORK, United States — Citing anonymous sources, the New York Post is reporting that French luxury giant LVMH is looking to sell off its Donna Karan business, less than a year after the fashion designer stepped down from her namesake brand.

LVMH, which has owned Donna Karan since 2001, is reported to be targeting an unnamed “single, specific American buyer” for both the DKNY and Donna Karan International businesses after several “months of disappointing performance” under its new designers Dao-Yi Chow and Maxwell Osbourne, according to the Post.

Negotiations are reported to be “ongoing, but a price has not yet been agreed,” the article said. LVMH declined to comment, and a PR rep for DKNY said they have no official comment.

In April, LVMH partially attributed its disappointing first-quarter sales figures in its fashion and leather goods division to the discontinuation of some of its DKNY lines and lower tourist spending. The company said it had stopped its DKNY Jeans and DKNY C lines, which represented lost income of around $200 million and that the impact would be felt throughout the year. In a statement, the company said that DKNY continued to work on the evolution of its product lines.

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The luxury giant was rumoured to have paid as much as $700 million for both DKNY and Donna Karan International back in 2001, but clearly the brand has proved to be a challenge for the group, which last year said it would put the Donna Karan International brand on hold, suspending its runway shows and focusing instead on the lower-priced DKNY brand, targeted at younger consumers.

The decision coincided with Karan's departure from her post as chief designer of Donna Karan International. Karan's efforts are now focused on Urban Zen, a standalone project she founded in 2007 that sells apparel, accessories, jewellery and home décor.

Donna Karan founded the fashion label in 1984 with her late husband Stephan Weiss. The company made its debut on the New York Stock exchange in June 1996.

However its business struggles began long before LVMH acquired it, after the designer adopted a more experimental style in the 1990s that alienated the brand from its core fan base of professional women who liked her “seven easy pieces” of interchangeable items of dress.

A rapid expansion of its global presence through a vast array of licensing deals clearly did not help its standing either, with DKNY becoming over-distributed and its products destined for outlet stores that took the shine off its standing as one of New York’s top designer labels. What's more, the Donna Karan brand itself never found its footing in the accessories space, which is now an essential pillar of any successful luxury label.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.

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