3 hours ago | By WGSN Insider
Normally it would have all been about the not-so-hot Q3 results and outlook. But late Thursday G-III Apparel’s headline story was the departures of three very key personnel at its latest star brand DKNY.
The brand, the main label in the Donna Karan International fashion house it bought from LVMH this year, sees its top trio, CEO Caroline Brown and both co-creative heads Maxwell Osborne and Dao-Yi Chow leaving. And it all happening on the day G-III completed its $650m acquisition.
There was no news on any replacements and G-III’s share price plunged almost 10% in after-market trading as investors and analysts also took in a set of trading figures that failed to impress.
Osborne and Chow depart their co-creative roles after nearly two years and said they made the decision to leave.
“Given the company sale and subsequent change in strategies, we have decided to step down and focus on our own business Public School,” they said in a statement.
CEO Brown, meanwhile, said: “As Donna Karan International transitions to new ownership and therefore new directions, I have decided it is the right time to step down and explore new possibilities.
“I know the company rests in good hands under the new leadership of G-III for the next stage of its development.” There was no news on whether she is moving to another role within the group.
G-III’s purchase of Donna Karan International began last summer when it made LVMH an offer it couldn’t refuse. G-III noted it saw “a significant market opportunity” in the brand that would work well with its existing designer licenses for big American names like Tommy Hilfiger and Calvin Klein.
G-III was obviously convinced it could turn around the fortunes of the brand in a way LVMH had not been able to do and yesterday its CEO Morris Goldfarb was upbeat. He thinks DKNY can reach $1bn in annual sales and said the firm was “working closely with our partners and through our strong licensing network, [and] we are confident we can quickly bring to market a comprehensive and compelling lifestyle offering that will restore the Donna Karan International brands to prominence and excite consumers.”
Apart from addressing the DKNY issues, G-III also reported Q3 results that missed analysts’ estimates and lowered its full-year forecast again.
Goldfarb cited “conditions in our industry have been and remain challenging” for its ongoing plight.
Net profit fell 19% to $70.6m/$1.50 a share while sales fell 2.9% $883.5m. Analysts had expected earnings per share of $1.54 on revenues of $937.6m.
G-III also revised its prior full fiscal guidance to January 31, now forecasting net sales of $2.43bn and net income ranging $67m/$1.41 per share to $72m/$1.51. The revision includes some costs in connection with its Donna Karan acquisition.
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