LVMH is on a shopping spree but first it needs to unload some unwanted brands to raise cash the cash it hopes to spend. According to sources at an investment firm, Donna Karan's DKNY brand is up for sale. LVMH bought Donna Karan International in 2001, five years after she took it public. Donna Karan Collection is not believed to be on the block. Sources say the clothing brand is no longer the right fit for LVMH as they are trying to focus more heavily on their super high-end luxury products with a strong international brand. Donna Karan admits on her website “DKNY is the pizza to Collection’s caviar.” It's thought that while DKNY carries a lot of weight in New York, it doesn't have the same luxury pull internationally.
But how much is it worth? “They might be able to get a few hundred million for it, but it’s not at the top of the fashion food chain right now,” says an investment professional who was asked to review and evaluate the brand, speaking on the condition of anonymity. Some think a retailer would pick up the label. Or might Donna buy it back herself? Could she afford LVMH's asking price even if she wanted to? A DKNY representative had not returned a call for comment at press time. Additional chatter within European private investment firms is that LV’s Moet Hennessy is also on the block. Why? Well, the company has recently reported a 17 percent fall in revenue in its wines and spirits division for the first half of 2009. And because selling both these brands would allow CEO Bernard Arnault to raise extra cash and make a bid for a golden goose like Hermès. “By spinning off DKNY a likely complement to fit LVMH’s portfolio would be a brand with the cache of Hermès. With Hermès' market cap down (it's trading at around $100/share which is much less than its 52-week high of $131.89) this is a beautiful time to make a run for the brand,” said a private equity investor who invests in fashion companies. Stay tuned as the story develops. --TERI BUHL