LVMH Goes Kors Light

Continuing to undo a spending spree, LVMH Moët Hennessy Louis Vuitton SA (Paris) announced the sale of its 33 percent interest in Michael Kors, one of its American fashion brands.

Sportswear Holdings, an international company controlled by Silas K. F. Chou and Lawrence Stroll, acquired the Kors label. It has in the past been involved with such fashion brands as Asprey and Garrard, Tommy Hilfiger and Polo Ralph Lauren Europe. Sportswear Holdings is purchasing LVMH's stake and the interests of John Orchulli, Kors' longtime business partner, and Onward Kashiyama, which holds the worldwide license for the Michael Kors secondary line. The terms of the agreement were not disclosed.

LVMH has been eliminating some of the less-productive of its 50 brands. Earlier this week, the international fashion and luxury company disposed of a 27.5 percent stake in an auction house, Phillips de Pury & Luxembourg, and confirmed that it had sold two beauty brands, Hard Candy and Urban Decay.

Kors said he had come to feel neglected by LVMH. “For us this is a win-win situation,” he said, adding that although the acquisition of his design house by LVMH in 1997 initially helped its expansion, it had not thrived as he had hoped. “Quite honestly, LVMH was a minority shareholder,” said the designer. “They were not really involved in the day-to-day business.” Kors will keep an ownership stake in his company. He will also continue as creative director and designer at Celine, another LVMH division, through March 2004.

In a conference call last week, Patrick Houel, LVMH cfo, had disclosed that similar transactions were being contemplated. Nonetheless, an LVMH spokesman insisted this was “not part of a grand strategy to sell off brands. But when Michael Kors came to us and asked to buy back its share, we understood the rationale.”

During a period of maximum expansion, before the worldwide economic slowdown, LVMH had acquired Donna Karan, Thomas Pink and Sephora, among others.