What Is The Status Quo Of DKNY That Was Abandoned By LVMH And Acquired By G-III?

According to the world clothing and shoe net, it was first released in July 25th last year.

Group buying for $650 million

After Donna Karan, it has been a year now. G-III group announced the first two times yesterday.

Performance data.

According to data released by G-III group in the second quarter and the first half of the year, its second quarter sales rose 21% to 538 million US dollars, a new high.

The group said sales growth was mainly due to the revenue contribution of DKNY and Donna Karan, and the two brands had a total of 45 million US dollars in the second quarter.

However, during the period, the G-III Group continued to lose money and its net loss expanded to US $8 million 600 thousand over the same period last year of 1 million 300 thousand US dollars.

In the first half of July 31st, G-III Group sales increased 18.6% to 1 billion 67 million US dollars compared to the same period last year. Net losses were recorded at US $18 million 959 thousand, compared with net profit of 1 million 478 thousand US dollars in the same period last year.

G-III group, founded in 1956 by the Polish people Aron Goldfarb, is mainly engaged in clothing wholesale and retail business. At present, its own brands include Vilebrequin, Andrew Marc, Marc New York, Bass, G.H.Bass and so on.

G-III chairman and chief executive officer Morris Goldfarb pointed out that including China's Asian market will be the first important strategy for G-III group to go global through DKI.

In order to better develop the group's business in Asia, G-III group announced earlier that it will establish a joint venture with Amlon Capital, a private equity fund founded by Tommy Hilfiger former executive Fred Gehring, to jointly operate its brand DKNY and Donna Karan in Hongkong, Macao, Taiwan and the mainland.

The G-III group will own 49% of the joint venture, while Amlon Capital will own 51% of the shares and will become the sole distributor of two brands in Greater China. Tommy Hilfiger, the chief executive of China Steve Shen, will be the CEO of the joint venture.

In addition to DKNY and Donna Karan, the licensed business of Karl Lagerfeld and Tommy Hilfiger owned by G-III group has also become the main growth engine of the group. The sales of Tommy Hilfiger are expected to double to 250 million US dollars in the second half of the year, and the Morris Karan said that the annual sales volume of the brand is expected to exceed $1 billion in the next few years, and the annual sales volume of the company will reach a target of $500 million.

However, other business performance of G-III group is not optimistic. Last year, the group closed 60 stores with poor performance and closed 113 by the end of 2019.

After the release of the earnings report, G-III group's share price surged 10% to $30.29 per share, and its current market value is about $1 billion 500 million.

In fact, in the global fashion retail downturn, DKI has been in an awkward position in recent years. Although LVMH group has never released the financial situation of its subsidiaries alone, luxury market analysts predict that DKI's sales last year were about 450 million dollars, while that of G-III group was 1.4 times that of its annual sales, while the acquisition cost of LVMH group in 2001 was 1.9 times that of brand annual sales.

Earlier analysts pointed out that the initiative of DKNY and Donna Karan is probably a win-win deal by being familiar with the G-III group in the US market.

Donna Karan, also known as Calvin Klein, Ralph Lauren and the three largest designer of the United States, founded the brand of personal identity in 1984, and expanded its brand business to perfume in 1992.

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In 1996, Donna Karan International was listed on the New York stock exchange.

In 2001, LVMH Group acquired all the outstanding shares of DKI with us $243 million.

DKI's series includes DKNY, DKNY cowboy series, DKNY vitality series, DKNY underwear series and DKNY children's wear.

In July 2015, Donna Karan, founder and chief designer of DKI, the parent company of DKNY, decided to resign from her post of over 30 years of work. At that time, the news was that the Donna Karan brand was merged to DKNY. The company no longer sought the successor of Donna Karan as the chief designer of Donna Karan, and suspended the brand clothing show and clothing series.

Subsequently, LVMH group invited Public School two designers Dao-Yi Chow and Maxwell Osborn to take the post of DKNY creative director.

However, in the seven months that Maxwell Osbourne and Dao-Yi were in charge, the performance of the DKNY brand failed to satisfy the LVMH group and was eventually sold to G-III group.

Some analysts pointed out that the key reason for the failure of DKNY is the lack of understanding of the US market by the LVMH group.

"DKNY is a large fashion brand in the United States, but all efforts made by LVMH group to improve the brand value are not effective."

One insider said.

After being bought by G-III group, despite the repeated retention of Morris Goldfarb, Maxwell Osbourne and Dao-Yi still decided to quit the position of DKNY creative director to focus on developing their personal brand Public School.

Morris Goldfarb has tried many times to persuade the brand founder Donna Karan to return, but failed.

The two brands of DKNY and Donna Karan are currently in charge of the G-III group's internal design team. The team will redefine DKNY and Donna Karan on the basis of preserving the characteristics of Donna Karan designers as much as possible.

In March this year, G-III group sold Donna Karan and DKNY's license for women's clothing to Messi department store, and signed a licensing agreement with CK's parent company PVH group for DKNY men's license in the United States and Canada.

Robert Burke, chief executive officer of Robert Burke Associates, believes that G-III group is right with PVH group because DKNY has many synergies with CK and Tommy CK of PVH group, so that the group can also focus on producing products.

Robert Burke also believes that the exclusive licensing agreement signed between G-III group and Messi department store will help Messi to compete with Amazon and other e-commerce giants.

However, Neil Saunders, managing director of GlobalData Retail research company, is not optimistic about the agreement. He said the exclusive agreement greatly restricted the exposure rate of DKNY women's clothing in the market, which is not necessarily a good thing in the long run.

DKNY franchise partners of other categories will remain unchanged. At present, the brand perfume business is represented by Estee Lauder group, the watch business belongs to the Fossil group, the glasses business is owned by Lu Xun Tai card group, the underwear products are responsible for the Hanes group, and these products of DKNY can also be sold in Messi department store.

In the most concerned price, Morris Goldfarb has revealed that the retail price of DKNY ordinary garments will be lowered by a total of 129 to 179 dollars, the price of the coat is between 260 and 500 dollars, and the price of handbags is between 148 and 348 dollars.

The price of Donna Karan will also be lower than the previous price attributable to the LVMH group, but the price will still be higher than DKNY. The price of the brand ordinary clothing will initially be 180 to 350 dollars, the price of the coat is between 350 and 800 dollars, and the price of the handbag is between 198 and 498 dollars.

Morris Goldfarb said in a conference call after the earnings announcement that G-III has become a global multi brand group.

In view of the performance of DKNY and Donna Karan in the second quarter, Morris Goldfarb expects that the two brands will continue to generate 200 million dollars for the group in the next 6 months.

He said earlier that after a strategic adjustment, DKNY will be able to sell $1 billion in the next three to four years, while sales of Donna Karan will reach US $500 million in five years.

For the 2017 fiscal year, G-III group increased its target sales to US $2 billion 800 million in the report, and net profit rose to US $60 million from 4000 to 50 million US dollars.

Morris Goldfarb believes that although the global fashion retail environment is still volatile, it is also the best time for G-III group to break through and move towards the world.

"No one can predict the future, and one step out may succeed or fail, but no matter what, it is definitely the best node to seek breakthroughs."

Morris Goldfarb said so.

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