Donna Karan International Inc reported financial results for the second quarter and six months ended July 1, 2001.

Net revenues for the second quarter of 2001 were $123.9m compared to $120.5m in 2000, an increase of 2.8 per cent.

Net loss in the second quarter of 2001 was $12.0m, or $0.55 per share on a diluted basis, compared to a net loss of $7.0m in 2000, or $0.32 per share on a diluted basis. Included in the net loss for the quarter ended July 1, 2001 were $0.6m on a pre-tax basis of costs related to the pending merger with LVMH Moet Hennessy Louis Vuitton ("LVMH").

Net revenues for the first six months of 2001 were $297m compared to $293.3m in 2000, an increase of 1.3 per cent.

Net loss in the first six months of 2001 was $9.4m, or $0.44 per share on a diluted basis, compared to a net loss of $3.7m in 2000, or $0.17 per share on a diluted basis. Included in the net loss for the six months ended July 1, 2001 were $2.3m on a pre-tax basis of costs related to the pending merger with LVMH.

Joseph B. Parsons, chief financial and operations officer, said: "We are operating in a challenging retail environment which, along with merger related costs and higher interest expense, has impacted our results. In particular, our wholesale segment and the outlet business have been difficult.

"On a positive note, revenues in our licensing segment have increased 35.6 per cent and 35 per cent for the quarter and six months, respectively, from the comparable prior year periods. Additionally, in our full price retail business, we experienced mid-single digit increases in the second quarter as compared to negative comparable store results in the first quarter."

Merger agreement with LVMH
As previously announced, on April 2, 2001, the company and LVMH announced that they had entered into a merger agreement providing for the acquisition of the company.

Under the terms of the agreement, LVMH will acquire Donna Karan International for $10.75 a share in cash. The company stated that the process relating to its acquisition by LVMH has taken longer than anticipated, but that it expects to file its amended proxy material with the SEC early next week and to complete the merger early in the fourth quarter.

Consummation of the transaction is subject to the approval of DKI shareholders, receipt of all necessary government approvals, and other customary conditions.


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