LVMH (LVMUY) Stock Falling After DKNY Sale

LVMH (LVMUY) stock is slipping in pre-market trading on Monday after the company announced it would be selling DKNY to G-III (GIII) for $650 million.
By Annie Palmer ,

NEW YORK (TheStreet) -- Shares of LVMH Moet Hennessy Louis Vuitton (LVMUY) are down 0.27% to $31.16 in pre-market trading on Monday after the French luxury goods retailer announced it would be selling Donna Karan International, the parent company of DKNY, to the New York City-based clothing company G-III Apparel Group (GIII) in a deal worth $650 million.

Analysts estimate DKNY's annual sales at $450 million to $500 million, placing G-III's acquisition at just 1-1.5 times DKNY's annual revenue, a value that's less than the 1.9 times LVMH paid when it purchased the brand in 2001, Reuters reports. 

The purchase comes after DKNY has fallen below competitors such as luxury retailers Michael Kors (KORS) and Tory Burch.

Still, JP Morgan analysts believe the brand's departure doesn't call for an overhaul of LVMH. The company owns a total of 70 brands and generates $4.39 billion in annual profit, Reuters reports.

"We think it was opportunistic and that the offer from G-III came at the right time and the right price," JP Morgan noted according to Reuters. "This disposal will also free up management time to devote to other assets."

G-III makes clothing for Calvin Klein, Tommy Hilfiger and has its own brands, including Bass and Andrew Marc, among others. 

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