Dive Brief:
- G-III Apparel is betting on growing its Donna Karan and Karl Lagerfeld brands to make up for expiring licensing deals that allow the company to make Calvin Klein and Tommy Hilfiger’s apparel.
- The company has also struck a five-year licensing deal to produce Nautica products, starting with jeans and eventually expanding into sportswear, suit separates and dresses, according to G-III Apparel CEO Morris Goldfarb, who spoke about the deal Thursday during a call with analysts. The license begins January 2024 and will include three five-year extensions.
- The moves aim to diversify G-III Apparel’s business to avoid taking a major hit from the impending loss of the Calvin Klein and Tommy Hilfiger brands, which accounted for 50.7% of the company’s net sales in 2022. The licenses — which include women’s clothing, handbags and luggage — have staggered expirations from 2025 to 2027.
Dive Insight:
G-III Apparel’s moves are in response to PVH Corp.’s announcement in late 2022 that it planned to bring the Calvin Klein and Tommy Hilfiger women’s wholesale business back under its own roof. The strategy is part of PVH Corp.’s multi-year plan to focus on growing its own brands and building out its direct-to-consumer channels.
In response, G-III Apparel is focused on growing other parts of its business, including expanding its Donna Karan label. In 2016, G-III Apparel acquired Donna Karan International Inc. — the parent company of the upmarket Donna Karan brand and DKNY, its younger mass market sister brand — from luxury powerhouse LVMH for around $650 million.
Since then, the company has doubled DKNY’s annual net sales to $600 million, according to a Thursday news release.
The company has “turned it from the unprofitable business we acquired into one of the most profitable brands,” Goldfarb said during the call.
G-III Apparel is hoping to see similar growth with the Donna Karan brand, which it is planning to expand aggressively beginning next year. Although the brand is small today, G-III Apparel executives are confident its net sales could soon approach $500 million annually if it gets distributed more widely in department stores and through digital channels.
The company is taking a similar approach with the Karl Lagerfeld brand, which it acquired in June 2022 for around $214 million. G-III Apparel is planning a massive marketing campaign for the middle-market brand around the annual Met Gala, one of the fashion industry’s biggest nights.
This year’s theme will honor the 65-year career of Karl Lagerfeld, who died in 2019.
“This is one of the greatest honors for a designer,” Goldfarb said. “The Karl Lagerfeld name will appear extensively in global news stories, social media and throughout the museum itself, significantly benefiting our global brand reach and our business as well.”
G-III Apparel is plotting its “largest marketing campaign” ever for the brand, as well as lining up celebrity collaborations, Goldfarb said.
Meanwhile, G-III Apparel executives are planning to focus on building out the women’s side of Nautica, which isn’t a large part of the brand, Goldfarb said.
“Our forte is women,” Goldfarb said. “We’re capable of making the appropriate product for it. We have the sourcing in place, we have the design in place, we have the distribution in place, and I think the odds are stacked in our favor to make this a very, very important brand in our portfolio.”
The company clocked $3.2 billion in net sales in fiscal 2023, up 16.6% from the year before. It recorded a $134.4 million loss for the year, compared to a $200.1 million profit last year. The loss was partly due to the company lowering the value of its assets.
