By  on October 29, 2007

PARIS — Angling to expand the reach of the Karl Lagerfeld brand, parent Tommy Hilfiger Corp. has licensed the designer's top collection to Italian manufacturer Vaprio Stile.

The production and distribution agreement takes effect with the fall 2008 collection Lagerfeld is slated to show on the Paris runway next February.

"At the designer level, the potential of the brand is very big," Vaprio chairman Robert Zanetto said in an exclusive interview. "The brand awareness and reputation is very high in the market and can support an exciting development."

Zanetto said he sees particular expansion potential in America and the Far East, and noted the company would work to improve delivery times, merchandising and price positioning.

According to market sources, Hilfiger has also been exploring the possibility of a Lagerfeld collection for mass distribution in the U.S., eager to duplicate the frenzy that ensued three years ago when H&M launched a one-off Lagerfeld collection for holiday retailing. Further details have not been disclosed.

Regatta Pacific Alliance has recently been working on a Lagerfeld collection at a time when U.S. retailers are keen to use proprietary brands to draw consumers into their stores.

Based in Milan and Bergamo and controlled by Switzerland's Arner Private Equity Fund, Vaprio Stile has 80 employees and annual revenues of about 24 million euros, or $33.8 million at current exchange, Zanetto said. Vaprio holds the license for Emanuel Ungaro's collection, manufactures Givenchy women's ready-to-wear and produces the Ken Scott rtw line.

An affiliate company, Faenza Stile, specializes in jersey and collaborates with a range of design houses, including Versace, Jil Sander and Dsquared, Zanetto added.

Anne Marino, president of licensing for Karl Lagerfeld, told WWD that Vaprio has the "economies of scale" and commercial network "to do the brand... justice." She declined to give figures, but said, "We continue to believe that volumes are far from what they should be. Karl Lagerfeld is a much smaller business than what the name would suggest. There is a big job to be done to grow the business to its proper potential."

At present, the Karl Lagerfeld collection is sold in about 50 doors around the world, she noted.The deal with Vaprio Stile is the latest in a string of licensing pacts for Lagerfeld. Coming to market next year is a collection of signature women's and men's eyewear by Marchon Eyewear and a collection of handbags, small leather goods and luggage by Accessory Network Group's prestige brands division. In July, Lagerfeld also formed a strategic alliance with Coty Inc. for a signature line of fragrances, although details are pending.

Marino said she expects to sign more licenses in the future as Hilfiger pursues a new model for the Lagerfeld business.

"We intend to control the brand, the creative direction thereof, the marketing and licensing activities, but we plan to license the commercial activities for the various product groups, in several tiers of the business, to various specialists," she said.

It is understood a reorganization at Lagerfeld involving some layoffs will come in tandem with the outsourcing.

Earlier this year, Hilfiger denied speculation that owner Apax Partners was looking to sell off its Lagerfeld division. Two Apax funds acquired Hilfiger for $1.6 billion in May 2006, and there has been speculation recently that Apax might be looking to float Hilfiger.

On Friday, Marino said, "We are very committed to the business, and recognize it is an attractive opportunity."

In fact, she said management could envision opening stores for Lagerfeld. "We first need to make sure that a complete offer of product is available," she said. "It will take one to two years to get that organized. Then we will start considering options."

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