By  on October 5, 2007

PARIS — Adding more fuel to an incendiary designer, Italian powerhouse Diesel is teaming up with John Galliano to launch a children's wear line next year, WWD has learned.

The collection is the latest in a flurry of brand extensions for fast-growing Galliano — and another sign that powerful designer brands are heating up all consumer segments and categories.

"The premium world is generally booming, so it's no surprise that it also touches the kids' wear business, a market which has been experiencing amazing growth year-on-year," Diesel chief Renzo Rosso said in an exclusive interview. "Galliano likes to play and create fairy-tale worlds even for adults. Imagine what he can do for kids."

To be unveiled today, the five-year licensing pact between the children's division of Diesel SpA and Les Jardins d'Avron SA, the company that produces and distributes John Galliano ready-to-wear, comes on the eve of Galliano's spring-summer show and at a time of rapid expansion for his 23-year-old fashion house.

The new children's wear line — the name of which is still undecided — will be unveiled to the trade in January for the fall selling season. In addition to that brand extension, Galliano fragrances and watches are coming to the market next year, along with a slew of freestanding stores and shop-in-shops.

Galliano president Sidney Toledano described the company's potential as "huge," considering it has yet to seriously enter the handbag business and given rapid growth for designer fashions in Asia and emerging markets like China and India.

Sales of Galliano products are already approaching $200 million at retail this year, and are targeted to reach $300 million next year given the flurry of new products and stores, said Toledano, who was accompanied in an interview by managing director Fabrizio Malverdi, who joined Galliano in June 2006 from Italy's Mariella Burani Fashion Group.

At present, about 60 percent of the Galliano business is concentrated in Europe, 15 percent in Asia, 15 percent in the Middle East and 10 percent in North America, Malverdi noted.

For Diesel, the pact with Galliano brings another highly creative designer into the Rosso fold, which also includes Martin Margiela, and through his Staff International arm, Sophia Kokosalaki, Dsquared and Vivienne Westwood."John's work reflects entirely my idea of 'premium' — fresh, modern, creative, innovative and fun," Rosso said. "In fact, our ways of thinking and working are in many cases similar. We think out of the box. [We] like to surprise and entertain. Our companies, markets and products might in appearance look different, but we think very much alike."

The partners declined to give sales projections for their children's wear — for girls and boys ages 4 to 14 — but said the line would likely be distributed in about 350 doors in the first year in Italy, France, the U.K., Russia, the U.S., Japan and Eastern European countries. The goal is to build international distribution to about 550 doors.

Diesel, a pioneer in bringing its denim know-how to the children's market, already generates volume of about 70 million euros, or $98 million at current exchange, in its kids division, the company said.

A personal fan of the Diesel brand, Galliano said he's "very excited at this opportunity to expand our product base and to collaborate with a world leader like Diesel."

While the Dior couturier has been at the forefront of 60th anniversary celebrations for the Paris house this year, his signature business has also been on the move.

Galliano has stepped up the pace of brand extensions in the past 12 months, starting with this spring's debut of Galliano, a women's sportswear line produced by Italy's IT Holding SpA with a potential to generate wholesale volume of 100 million euros, or $140 million, in three to five years. This is distinct from the company's John Galliano designer collection.

In March, he signed an 11-year worldwide fragrance licensing agreement with Selective Beauty, with the first Galliano fragrance expected to come to market in fall 2008.

And just last month, the designer inked a deal with Italy's Morellato SpA for luxury watches, with the first collection to be unveiled at April's watch fair in Basel, Switzerland.

Malverdi cited strong market reaction to the Galliano second line, already in 700 doors worldwide. Shop-in-shops — boasting a playful, recycled decor incorporating such raw materials as unpolished metal, painted wood and bicycle tires — have already bowed in Printemps in Paris and Harrods in London, along with three locations in China, one in Athens and one in a resort location in Sardinia, off the coast of Italy. Five more are slated for 2008, including at Galeries Lafayette in Paris, with freestanding stores to follow starting in 2009.Galliano already has licenses for several important categories, mostly with Italian partners: Gibo for men's wear, Iris for women's shoes and Albisetti for swimwear and men's underwear. The French firm SIL does Galliano's lingerie and Diptyque produces a scented candle.

And a host of new Galliano licensing pacts is in view, including ones for leather goods, eyewear, men's and children's footwear, fine jewelry and home textiles, Malverdi said

Toledano said licensing key categories to top industry partners, while maintaining tight creative control, is a valid model for a prolific, creative designer like Galliano, who also has the professional experience, after 10 years at Dior, to deal with production and marketing people, for example.

"These are the reasons he is ready now, not before," Toledano said. "John was really excited by the prospect of working with partners like Diesel, like IT Holding....This kind of licensing agreement with high-caliber partners gives new opportunities for this kind of brand."

Galliano's high profile in the industry, thanks to Dior, has fueled the notoriety of his own brand, and attracted many potential licensing partners, he added. Still, Galliano's signature rtw line, produced in-house, remains the chief image vehicle for the brand, and has been moved upscale now that the designer can funnel his more streetwear and casual ideas into the second line.

The top collection is sold in some 200 doors worldwide, and at least three freestanding John Galliano stores are slated to open next year — in Dubai, Kuwait and Jeddah, Saudi Arabia — the latter in partnership with Saks Fifth Avenue, which is also planning a shop-in-shop in Saudi city Riyadh.

Malverdi is also in discussions with potential partners to open a freestanding store in Moscow next year.

These will be the first John Galliano boutiques to open since 2003, when his glass-walled Paris flagship opened on Rue Saint-Honoré, juxtaposing gleaming silver with ancient stone and plasma-screen televisions with elaborate Belle Epoque moldings.

Toledano noted that investments in development have dented profitability at Galliano, but the company is on track to enter the black in 2008. Meanwhile, Rosso has an ambitious expansion program of his own, including a Milan megastore for Diesel bowing next year, the first of five concept stores in key international cities. He's also investing in a retail expansion for Margiela.

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