WWD.com/beauty-industry-news/financial/a-slimmer-karl-hilfiger-cuts-lagerfeld-contemporary-line-staff-532690/
government-trade
government-trade

A Slimmer Karl: Hilfiger Cuts Lagerfeld Contemporary Line, Staff

After a much ballyhooed launch, Tommy Hilfiger Corp., which acquired Lagerfeld's business in January 2005, pulled the plug on Lagerfeld's New York operation on Thursday.

NEW YORK — So much for the love affair between Tommy and Karl.

After a much ballyhooed launch, Tommy Hilfiger Corp., which acquired Lagerfeld’s business in January 2005, pulled the plug on Lagerfeld’s New York operation on Thursday.

Hilfiger, which was bought for $1.6 billion by Apax Partners last month, said it plans to consolidate the Lagerfeld operations into a sole Paris headquarters. As a result, the highly anticipated Karl Lagerfeld women’s and men’s contemporary collection, based here, will be discontinued following its fall 2006 retail debut. The Paris headquarters will continue to design, produce and sell the Lagerfeld Collection designer line (formerly called Lagerfeld Gallery).

The abrupt closure of the Karl Lagerfeld line, which was headquartered at 601 West 26th Street, will result in the elimination of 25 jobs, including that of Ann Acierno, president of new business development at Hilfiger, who oversaw the Lagerfeld business. Melanie Ward, who served as creative director of the Lagerfeld contemporary line, was a consultant, and her role may be ending along with the collection.

All global licensing will continue to be managed from New York by Hilfiger’s established licensing organization. Lagerfeld will remain a wholly owned subsidiary of Hilfiger.

The designer’s arrival in New York was heralded by a major fall runway show in February at the close of fashion week. Karl Lagerfeld offered a limited-edition capsule group this spring exclusively to Neiman Marcus and Bergdorf Goodman, consisting of about 28 women’s and 23 men’s styles, with denim as a key component. The Neiman’s and Bergdorf’s line was created to build excitement for the larger fall launch.

Hilfiger and Lagerfeld originally had high hopes for the Karl Lagerfeld line, which was expected to be a big-volume business. “I’m very much into large distribution,” said Lagerfeld last year. “With haute couture, I proved that I can design the most expensive things, and with H&M, I can do the less expensive things. This will be in the middle of all that.”

Fred Gehring, chief executive officer of Hilfiger, couldn’t be reached for comment Thursday, but said in a statement: “We believe strongly in the enormous potential of the Karl Lagerfeld brand. Karl is one of the great design icons of our time. However, the management of dual headquarters in both Paris and New York is complex and specifically at odds with the company’s core mission following the acquisition by Apax Partners to focus resources on our core activity of further developing the Tommy Hilfiger brand.”

This story first appeared in the June 9, 2006 issue of WWD.  Subscribe Today.

Further, he added: “We believe that Paris as the sole creative and organizational base will provide the focus necessary to further develop Lagerfeld Collection, while allowing the company to continue to assess future growth opportunities.”

Lagerfeld also couldn’t be reached for comment, but said in a statement: “I am pleased to be focusing all my creative energies at this time on the global Lagerfeld Collection designer line from Paris, which has always been the heart and soul of my atelier. While Tommy Hilfiger Corp. focuses more intensely on its name brand, the power and energy that I have experienced with our recent presence in New York will continue to drive and grow the spirit of the Lagerfeld Collection around the world.”

Indeed, the designer has been much more visible in New York during the last year. He presented the accessories designer of the year award with Lindsay Lohan at the CFDA Awards Monday night, and last month flew into town for a Chanel cruise collection runway show — taking over Grand Central Terminal for the event.

Hilfiger acquired Lagerfeld’s trademarks, consisting of Karl Lagerfeld, Lagerfeld Gallery (now Lagerfeld Collection), KL and Lagerfeld, for an estimated $30 million in January 2005. In addition, the agreement included two Lagerfeld Gallery stores in Paris and Monaco, as well as Lagerfeld’s fragrance business, which is licensed to Unilever Ltd.

At the time he sold his business to Hilfiger, Lagerfeld said he was enjoying establishing a New York presence.

“My idea was always New York, Paris and Rome,” said Lagerfeld in 2005, describing his design roles for Chanel in Paris, Fendi in Rome and the new, less expensive Karl Lagerfeld line, which was geared to contemporary departments at high-end department stores.

“There’s some excitement in the air in New York. You have to be here. I hated it in the Eighties. Suddenly, I think you should have an American base,” said the designer, who recently bought an apartment in Gramercy Park.

Lagerfeld signed a five-year contract with an automatic three-year renewal with Hilfiger, under which Lagerfeld would continue to design and provide creative direction for his brands.

“I’m not a businessman,” said the German designer at the time, explaining that he would rely on Hilfiger’s firm to run the business end and set the direction in terms of distribution, production, marketing and licensing.

The changes at the Lagerfeld business come shortly after Gehring detailed major restructuring at the Hilfiger brand. Some 230 jobs were eliminated at the company’s New York and New Jersey offices in an effort to restore the position of the Hilfiger brand in the U.S. Meanwhile, Hilfiger’s headquarters are being moved to Amsterdam, where Gehring is based, from New York.