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G-III Plans to Relaunch Donna Karan Collection, Double Size of Entire Business in 3 Years

The CEO of Donna Karan International's new parent company laid out an ambitious plan for the brand.
Models walk the runway at the fall 2014 Donna Karan runway show. Photo: Neilson Barnard/Getty Images for Mercedes-Benz Fashion Week

Models walk the runway at the fall 2014 Donna Karan runway show. Photo: Neilson Barnard/Getty Images for Mercedes-Benz Fashion Week

News of G-III's acquisition of Donna Karan International from LVMH was confirmed just this morning, and already CEO Morris Goldfarb has laid out plans to hit the ground running once the deal closes by early 2017.

It marks G-III's biggest acquisition ever, and during a conference call Monday morning, Goldfarb explained that he and his team had been considering a purchase of DKI for two years as it looked for the right "dominant power lifestyle brand" to bring to its portfolio.

And the company's goals for that brand are ambitious. Goldfarb said that DKI currently makes $350 million in revenue, a number he plans to double in three years with expanded categories and licensing agreements. "Historically, it was a $700 to $800 million-dollar business," he said. As for the Donna Karan luxury line LVMH put on pause after Karan, the woman, departed a year ago, Goldbarb says he and his team "plan to relaunch very quickly." It will still be in the "aspirational luxury tier" and he sees it sold at Neiman Marcus, Saks Fifth Avenue and Nordstrom, while DKNY remains in the Macy's, Lord & Taylor and Dillard's market.

"The opportunities on Donna Karan, the brand, are endless — it's not distributed, it's not licensed," said Goldfarb. "We can only imagine how big that can be... [But] that will not be the billion-dollar business; the billion dollar trophy for us, I believe, will be DKNY." 

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G-III is eager to turn DKNY into a giant business by being "aggressive in finding opportunities in licensing and global initiatives," said Goldfarb. Currently, a third of DKNY's sales are through direct retail (it has about 50 company-owned stores), while wholesale accounts have diminished during the brand's repositioning. By the time G-III officially takes over, several of those stores will have closed and Goldfarb says he plans to expand the wholesale side of the business.

Goldfarb also praised the business strategy that DKI CEO Caroline Brown is in the midst of implementing. "The current management team is in the process of repositioning the brand," he said, adding that he is "not certain they are down the wrong path" because comparable sales have increased in the high single digits in the past few weeks. "They planned on losing money, they are losing money," said Goldfarb. "The direction they chose is being well executed... We are going to modify it."

G-III will be reviewing the strategy in the coming months and will present a more detailed plan to investors in the future. "We will collaborate with Caroline Brown and her team and decide the appropriate direction and the appropriate timing of executing that direction," said Goldfarb. He didn't mention DKNY creative directors Dao-Yi Chow & Maxwell Osborne by name, but said G-III will be interviewing the current talent pool over the next few months and he's pleased so far with the team throughout the company. 

So what might G-III's era of DKNY look like? Goldfarb is eager to expand categories through licensing partnerships, including footwear, handbags, intimates and childrenswear. He also wants to greatly expand the menswear offerings. "DKNY jeans and C might be resurrected in special form," he said, referring to lines LVMH shut down in April. 

"There's a great appetite for a brand like this," said Goldfarb, adding he'd already received several calls Monday morning about potential licensing and distribution agreements. "The doors are wide wide open for both of these brands."

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