NEW YORK — Donna Karan International is not renewing its licensing agreement with Liz Claiborne Inc. to design, manufacture and sell better women’s sportswear under the City DKNY label.
The license expires at the end of the year and Claiborne will deliver the last shipment to stores in December.
Claiborne’s licensing agreements for the DKNY Active and DKNY Jeans lines will continue. Those licenses run through 2012, with a 15-year renewal option.
DKI and Claiborne launched City DKNY for spring 2001 retailing in about 200 department store doors. It soon expanded, selling in more than 600 doors. But with the flood of designer names entering the better sportswear arena, City DKNY felt the heat, competing with brands such as Calvin Klein, Michael Michael Kors and Lauren Ralph Lauren.
The company won’t try to license City DKNY to another firm, a DKI spokeswoman said.
“Our strategy is very focused on our product offerings,” the spokeswoman said. “We are focused on DKNY Jeans, Active and the DKNY bridge line. This gives more clarity to the brand.”
Jeffry Aronsson, chief executive officer of DKI, could not be reached for comment. He said in a statement: “Based upon our business strategy for DKNY, we and Liz Claiborne Inc. have mutually agreed not to continue the license for City DKNY. We look forward to continuing our strong business relationship with Liz Claiborne with respect to our other ongoing licenses for DKNY Jeans and Active.”
Paul Charron, chairman and ceo of Liz Claiborne, said the firm is developing a line targeting the same customer as City DKNY.
“Liz Claiborne Inc. associates working on the City DKNY business will be reassigned to work on a new updated better sportswear brand that we are developing internally and will launch in 2006,” Charron said. “The City DKNY consumer is a desirable one and we are determining ways to address this target market with this new brand.”
Further details on the new line, such as what it will be called, were not disclosed.
“We greatly value our partnership with Donna Karan International and overall our DKNY licensed business is sizable and profitable,” Charron said. “We will continue to collaborate with Donna Karan International to maximize the potential of the brands. We do not believe that the termination of the City DKNY license will have a material impact on our 2005 financial results.”
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Claiborne does not break out revenues for the DKNY licenses. In its 2004 annual report, Claiborne cited DKNY Jeans as among its brands that experienced sales increases last year and is expected to have gains this year, but made no mention of City DKNY.