By and  on June 21, 2007

FLORENCE — Roberto Cavalli has glammed up celebrities like Charlize Theron, Gwyneth Paltrow and Madonna, and now he wants to make every woman feel like a Hollywood diva.

Cavalli is the latest designer to join forces with Hennes and Mauritz for a one-off collaboration. The 40-plus piece collection will launch Nov. 8 in about 200 H&M locations around the world.

The tie-up was revealed as H&M on Wednesday said store openings and trendy designs by pop icon Madonna lifted second-quarter profits 31 percent to 5.13 billion Swedish kronor, or $742 million. Sales for the three months through May 31 improved 18 percent to 20.05 billion kronor, or $2.9 billion, helped by the M by Madonna line that H&M launched in March. Pop chanteuse Kylie Minogue also bolstered sales by serving as the muse for the H&M Loves Kylie swimwear collection.

Nils Vinge, H&M head of investor relations, said both of the celebrity lines had a "meaningful impact" on sales, but were equally valuable for driving traffic into the stores and drawing media attention.

But the Swedish fast-fashion giant missed analysts' consensus expectations and said same-store sales in May dropped 2 percent. H&M shares lost 1.5 percent to close at 416 kronor, or $60.18, in trading on the Stockholm Bourse. Dollar figures for quarterly results are at the average exchange rate.

To unveil the deal with H&M, Cavalli summoned journalists to his sprawling Tuscan estate.

"Young people come up to me with these big eyes full of desire to wear a Cavalli dress and often they can't because of the price," Cavalli told WWD as his personal collection of parrots squawked in the background. "I dedicate this collection with Hennes and Mauritz to them, to give them the possibility to wear a Cavalli dress, whether it's for New Year's or another occasion and feel like they are on a red carpet."

Margareta van den Bosch, H&M's head of design, said she and Cavalli had spent the last two days on fittings and she's eager to see customers' reactions. H&M and Cavalli are planning a party to fete the collaboration sometime in the fall. The timing and location of the event are still being determined."I think it was unexpected and something very different," van den Bosch said of the Cavalli agreement. She doesn't see the momentum of designer collaborations waning anytime soon, noting consumers' warm reception to the retailer's previous initiatives with Karl Lagerfeld, Stella McCartney and Viktor & Rolf.

"I think people are crazy about this. I don't know how we could stop," she laughed.

Both Cavalli and van den Bosch declined to talk design specifics, but Cavalli said he is focusing on partywear for the winter holiday period. Van den Bosch said the line, featuring many of Cavalli's signature prints, has a "very Latin mood… kind of a luxurious feeling."

The collection will consist of 25 apparel and lingerie pieces for women and another 20 items for men. Van den Bosch said the Cavalli line will feature higher quality materials than those traditionally used in H&M clothing, including cashmere and 100 percent wool. Cavalli and H&M are also rolling out an accessories collection. A price range was not yet available but H&M representatives said the most expensive pieces would be around 200 euros, or about $265 at current exchange.

When Cavalli organized the press conference a few weeks ago, the company declined to specify the nature of the announcement. The tight-lipped tactic sparked fresh speculation Cavalli was preparing to sell his company.

On Wednesday, Cavalli reiterated he's received several attractive offers from private equity funds, but none of them have persuaded him thus far.

"I think that [private equity] funds are too concentrated on financial results….I don't know if a fund is an ideal partner," he said.

The designer said that if and when he sells a stake in his company, he wants to maintain control over the creative aspects of the house. But the designer is open to a financial partner with funds and management skills to develop his business.

"If there was the right person or company who could help me to grow the brand more quickly than I have done so far on my own, then why not?" Cavalli said. "But definitely nothing is happening immediately."As reported last month, Roberto Cavalli SpA is considering listing its shares on the stock market at some point in the future, another option that would generate funds for future development.

Regardless, the business is growing. Cristiana Cavalli, Cavalli's 40-year-old daughter and the company's newly tapped ceo, said sales of Cavalli-branded products worldwide are expected to rise 30 percent this year to reach 710 million euros, or about $945 million. That figure includes revenue from diffusion line Just Cavalli, which is produced by licensee IT Holding SpA.

As for the top Roberto Cavalli ready-to-wear line, the only collection the designer produces in-house, 2007 sales are seen rising about 25 percent to 220 million euros, or $293 million. Cristiana Cavalli said new stores as well as the brand's growing momentum in men's wear and accessories are propelling sales growth.

Since last season, cruise has become a full-fledged stand-alone collection that can count on a streamlined process between the various departments of design, communications, production and marketing.

Sales for the cruise 2006 season were up 50 percent with the same growth expected for the 2007 collection that start selling to retailers earlier this month. Fashion-wise, the designer said he went back to sexy and to animal prints — lynx is the recurring motif — because he feels that's what women want. "The past season I opted for more solid and more sensual clothes, but now I sense there is desire for color and prints even on denim and sexier looks in general," said Cavalli.

Silhouettes are short, soft and billowy with lots of short hems and shrunken trenchcoats.

Retail prices range from $1,750 to $8,000 for gowns and from $1,150 to $4,000 for cocktail dresses.

For the first time, Cavalli also introduced gold-detailed Christmas ornaments and horn-shaped decorations for the trees in Murano glass.

But the H&M deal takes him into a whole new market. The retailer has ramped up its celebrity collaborations ever since it enlisted Karl Lagerfeld in 2004 to design a collection for the chain. Since then, H&M has inked deals with Stella McCartney and Viktor & Rolf. Madonna did a first collection for H&M last summer.Vinge said total first-half profit advanced 29 percent to 8.5 billion Swedish kronor, or $1.2 billion, on sales of 36.82 billion Swedish kronor, or $5.3 billion, an improvement of 15 percent.

Comparable store sales in the six months gained 6 percent, he said. For the second quarter, same-store sales improved 7 percent.

The numbers underlined a healthy environment for Europe's key fast-fashion players.

Vinge said the second quarter was particularly eventful in terms of openings for H&M. The chain inaugurated its first stores in China, Hong Kong and Shanghai. Vinge said initial sales exceeded expectations. He said H&M would open an additional three stores in Hong Kong and another unit in Shanghai this fall.

H&M also debuted its COS chain, a brand meant to be a more upscale counterpart to H&M. Vinge said H&M was satisfied with early results and that another two COS stores, in Copenhagen and Berlin, would open this fall.

Overall, Vinge said H&M planned to open another 95 stores by yearend, with most of the openings slated for the fourth quarter. H&M had 1,420 stores at the end of May.

Vinge said a deal had been signed for a store in Ginza, in Tokyo, paving the way for H&M's introduction into Japan in 2008. — With contributions from Alessandra Ilari, Milan

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