Karl Lagerfeld SAS, a wholly owned subsidiary of Tommy Hilfiger Group since 2005, is not part of Phillips-Van Heusen’s $3 billion acquisition of Hilfiger’s company.
Lagerfeld’s business will be retained by Apax Partners, the private equity firm that owned Hilfiger, according to Christian Stahl, partner in Apax.
“We didn’t sell it along with the business,” Stahl said. “We’re going to take it out at the closing and put it into a separate company that we’ll continue to own. We believe it’s one of the best designer brands in the world, and we will put new management in place.”
Stahl said a new management team hasn’t been appointed.
“It’s not commercially the best brand in the world, but in terms of appeal and recognition, I think it’s a great brand. We’re going to focus on it and develop it,” he said.
Asked if Apax will try to eventually sell the business, Stahl replied: “Every company we own is for sale.”
Lagerfeld couldn’t be reached for comment Tuesday.
Presently, Lagerfeld’s businesses consist of Karl Lagerfeld Collection, designed by Lagerfeld and manufactured and distributed by Vaprio Stile; Lagerfeld’s men’s collection, licensed to F.D. Fashion Design in Germany; Karl Lagerfeld Eyewear, licensed to Marchon Eyewear, and Karl Lagerfeld fragrance and beauty, licensed to Coty.
Initially, there were big plans for the Lagerfeld business, which Hilfiger purchased in January 2005 for an estimated $30 million. At the time, Lagerfeld told WWD, “I can make an Empire dress, but I can’t make an empire. I’m not a businessman.” He said he would rely on Hilfiger’s firm to run the business end and set the direction in terms of distribution, production, marketing and licensing.
Hilfiger moved quickly to build the Lagerfeld business, staging a major fashion show in New York, and launching a contemporary Lagerfeld collection. But after Hilfiger was sold to Apax in 2006 and taken private, there was some major cost cutting, and among the casualties was Lagerfeld’s New York operation. Lagerfeld’s business was transferred to his Paris office. As a result, the Karl Lagerfeld women’s and men’s contemporary collection was discontinued following its fall 2006 retail debut, and 25 jobs were eliminated. Lagerfeld’s global licensing continued to be managed by Hilfiger’s licensing organization.
Fred Gehring, chief executive officer of Hilfiger, explained Tuesday that when Apax bought Hilfiger’s company in 2006, it set up Karl Lagerfeld as a separate business from Hilfiger. “It was originally part of the Tommy Hilfiger Group, but we reorganized it to hang side by side to allow for this type of scenario, so their futures can be determined on a brand basis.” Gehring said Lagerfeld’s designer collection does a few million dollars a year, and Lagerfeld men’s wear does around $20 million.
“There have been a significant number of potential discussions,” said Gehring. Hilfiger has been so focused on its own turnaround the last few years, “we didn’t spend the time that was needed” to develop the business, he said. Gehring believes Apax will develop the business further before trying to sell it.
Meanwhile, Wall Street continued to give a thumbs-up to PVH’s $3 billion acquisition of Hilfiger, sending the apparel giant’s shares up another 2.6 percent to close at $53.78 Tuesday on the New York Stock Exchange.