French luxury group LVMH is selling Donna Karan International, the parent of New York label DKNY, to US clothing firm G-III Apparel Group in a deal valuing the loss-making fashion brand at $650 million.

The sale comes just over a year after a new design team had been put in place, showing how little patience LVMH has for underperforming businesses in the current tough trading environment.

Analysts estimate DKNY’s annual sales at $450 million to $500 million, meaning G-III would be paying 1-1.5 times annual revenue, less than the 1.9 times LVMH paid when it bought the brand in 2001.

“Selling DKNY is a way to get rid of a problem, at a time when the market is tough and luxury companies would be right to show less leniency with underperforming businesses,” said Exane BNP Paribas analyst Luca Solca.

Founded in 1984 by Donna Karan, the label came to define the professional working woman’s wardrobe with its sleek and sophisticated mix and match pieces. The designer expanded the Donna Karan New York brand by creating a less expensive clothing line for younger women called DKNY.

Over time, the Donna Karan brand lost touch with its customers as its brightly patterned African-inspired designs confused an identity based on jersey dresses, bodysuits and wrap skirts, fashion editors said.

And sister label DKNY struggled to compete with so-called accessible luxury brands Michael Kors and Tory Burch and edgier New York newcomers such as Alexander Wang.

LVMH publishes first-half figures today, which analysts expect will provide further evidence of the slowdown affecting the global luxury goods industry, caused in part by lower tourist spending in Europe following militant attacks.

The luxury conglomerate also faces pressure to turn around Marc Jacobs, which has seen its sales dive in the past two years. Analysts estimate Marc Jacobs makes even bigger losses than DKNY.

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