NEW YORK — Donna Karan International Inc. said Monday it plans to license new lines of jeans-wear and active-lifestyle clothing to Liz Claiborne Inc. as part of a restructuring plan.
The deal gives Liz Claiborne exclusive rights to the DKNY Jeans and DKNY Active trademarks, including the right to source, market, distribute and sell the lines.
Donna Karan International, a prominent design house that has stumbled recently, is in the midst of a corporate reorganization. Last month, the company announced plans to cut its work force by 15%, consolidate its fashion divisions and license or contract some of its business. Donna Karan expects to report a loss of $100 million for 1997.
The company is scheduled to announce further details of its restructuring at a news conference today.
"We believe we have formed a strategic alliance with the best company in the better-sportswear business to grow the DKNY jeans and DKNY active brands and generate substantial licensing royalties," Donna Karan Chief Executive John Idol said of the deal, which covers North, South and Central America but not Europe and Asia. "This agreement is a key part of our overall licensing strategy, which is based on forming relationships with world-class partners."
This is the second major licensing agreement Donna Karan has entered in the last three months. In September, the company announced plans to license some fragrances, beauty products and cosmetics to Estee Lauder.
Licensing pacts involving big-name designers are very common. Calvin Klein, for instance, licenses its jeans, underwear and accessories through Warnaco Group.
Such deals relieve designers of the need to develop and maintain manufacturing and distribution arms for their clothing lines.
For its part, Liz Claiborne--which markets an extensive line of better sportswear for men and women--sees its agreement with one of the country's premier designers as a way to expand its portfolio of brands.
"This alliance is central to Liz Claiborne Inc.'s growth strategy," said Paul R. Charron, Liz Claiborne's chairman and chief executive. "DKNY is an important international name with exceptional cache and represents a significant addition to our growing brand portfolio."
Liz Claiborne is also restructuring. After becoming the hottest women's apparel brand in department stores nationwide in the '80s, the company began to struggle in the early '90s. But with a new strategy in place, Liz Claiborne posted record earnings in the third quarter, its 11th consecutive quarter of earnings improvement.
In addition to its arrangement with Donna Karan, Liz Claiborne announced Monday that it has agreed to license tabletop accessories from Brownstone Gallery Ltd., a subsidiary of Town & Country Living.
The company has also formed an alliance with Swank Inc. to license its men's accessories under the Claiborne label. Swank markets men's and women's accessories under several designer and brand names.
Liz Claiborne shares fell 38 cents to close at $49.25; Karan shares added 13 cents to close at $13.69. Both trade on the New York Stock Exchange.