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Tommy and Karl: Fashion’s New Couple

Bringing together two of the highest-profile names in fashion, Tommy Hilfiger confirmed it was buying the Karl Lagerfeld trademarks.

NEW YORK — When it comes to steering his namesake brands, Karl Lagerfeld will leave the driving to Tommy Hilfiger Corp.

“I can make an Empire dress, but I can’t make an empire,” joked Lagerfeld, sitting in the Soho Grand here Monday. He and Hilfiger were interviewed together about their new deal, which they signed over the weekend.

 Confirming an exclusive report in WWD Monday, Hilfiger will acquire Lagerfeld’s trademarks — Karl Lagerfeld, Lagerfeld Gallery, KL and Lagerfeld, for an undisclosed cash sum. In addition, the agreement includes two Lagerfeld Gallery stores in Paris and Monaco, as well as Lagerfeld’s fragrance business, which is licensed to Unilever Ltd.

 “I’m not a businessman,” said the German designer, explaining that he will rely on Hilfiger’s firm to run the business end and set the direction in terms of distribution, production, marketing and licensing. Lagerfeld has signed a five-year contract with an automatic three-year renewal with Hilfiger, under which Lagerfeld will continue to design and provide creative direction for his brands.

Ann Acierno, president of new business development at Hilfiger, will oversee the Lagerfeld business from New York. She previously worked at Victoria’s Secret Direct, the Internet division of Estée Lauder, InStyle.com and Saks Fifth Avenue’s Folio. The company intends to find showroom and studio space here, preferably downtown, said Lagerfeld.

Investors seemed to like Hilfiger’s purchase of the Lagerfeld trademarks, sending the shares of Tommy stock up 40 cents, or 3.8 percent, to close at $11 in trading on the New York Stock Exchange on Monday.

So how did two seemingly opposite personalities ever come together in the first place? “I photographed him in Paris last summer. We never thought we’d go into business together, but we had lunch the next day,” said Lagerfeld.

 Hilfiger explained that Lagerfeld invited him to his home after the magazine photo shoot “and we chatted about everything.”

“We talked about other businesses, and Tommy suggested we should do something together,” said Lagerfeld.

“He was talking about Chanel and Fendi, and that he hasn’t focused on his own brand,” added Hilfiger.

This story first appeared in the December 14, 2004 issue of WWD.  Subscribe Today.

Lagerfeld said what prompted him to make this deal is that he has never had enough time to concentrate on his own brands.

“I’m known for designing Chanel, and I can’t juggle three balls at the same time,” he said. In fact, he noted, the reason he launched Lagerfeld Gallery in the first place was that he wanted to keep his seamstresses employed.

 The global expansion plan calls for Lagerfeld’s brands, especially Lagerfeld Gallery, to be developed, primarily through the upscale department and specialty store channels and across multiple categories. The Lagerfeld collections currently consist of licensed women’s, men’s and accessories collections and are distributed within select European and Asian markets.

Hilfiger said the first priority is to set a strategy. He will rely on Acierno to develop a business plan and determine the best channels of distribution, categories of business they want to go after and where they want to focus their energies. “[Acierno] has a true understanding of the business,” said Hilfiger. “She’ll lead it. We’ll all be involved in guiding it. We think it’s a precious gem and we want to polish it very carefully and allow it to grow.”

Lagerfeld declined to comment on how much volume Lagerfeld Gallery and Lagerfeld generate, but commented, “It’ll be a substantial business in the future.”

Both Hilfiger and Lagerfeld declined to say how much Hilfiger paid for the Lagerfeld business. “It’s not about the money, but what you make of it,” said Lagerfeld. “I’m from Hamburg and you don’t talk about money or health. I believe in agreements.”

One thing Lagerfeld’s very happy about is having a New York base of operation.  “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.

Furthermore, Lagerfeld said he never has a lot of time to travel here for pleasure, and now he’ll have a legitimate business reason to come. “I needed a professional reason. I’m not a holiday person. I hate to be a tourist and feel like I’m part of nothing. I love to spend two days here shooting at Pier 59. I want to be part of the scene in the city. Visiting, I don’t do. I have to be involved,” said Lagerfeld, who added that he’d someday like to build a home in Los Angeles.

But with all of his assorted projects, Lagerfeld said it was imperative that he be given a lot of freedom. “Without freedom, I wouldn’t function. Birds without wings don’t fly,” he stressed.

Lagerfeld admitted that his previous associations with Bidermann U.S.A., Klaus Steilmann GmbH and Co. and Vendome for a less-expensive line never worked out. “They thought they knew better,” he said, adding that the lines never had a clear identity and looked like other designer lines. “It wasn’t my name, my label or my identity.”

Lagerfeld said he’s never had an identity problem not having his name over his own shops, and has loved designing Chanel for the past 22 years. “It was dead when I took over,” he said, adding that it survived because it was managed by the right people. “You can build a good global and strong business if you have the right people to manage it,” he said.

Lagerfeld said what attracted him to the deal was the prospect that Hilfiger has the infrastructure to expand his labels globally. “It worked for H&M. I have an appeal for large distribution. Look at what happened with Chanel in Tokyo. People in sleeping bags waited until [the Chanel store] opened,” he said.

Meanwhile, Hilfiger hopes that having Lagerfeld aboard will have a positive impact on his own sportswear business. “I have the opportunity to work with the master of design in the world and will give it tremendous global growth. Lagerfeld Gallery will be the collection that will inspire everything we do,” said Hilfiger. In fact, both executives said they’re considering showing Lagerfeld Gallery during New York Fashion Week in February.

Lagerfeld wouldn’t comment on how much time he plans to spend here a month. “I can do three things in the same day. I have a strange way of working,” said Lagerfeld, who’s known for juggling design and photography assignments with ease.

Lagerfeld explained that his designs for Lagerfeld Gallery are a lot different from what he designs for Chanel. “It’s me. It’s sharper, tougher, more graphic. It’s sexy in a harsher way.”

He has some licensing deals in Germany and Japan for the Lagerfeld lines, and the men’s Lagerfeld line is designed in Europe by a stylist, according to Lagerfeld. “We will reestablish many of the licensees,” said Hilfiger. “And we’re excited about the opportunity to do men’s and women’s.”

Hilfiger said he would keep the same production people who currently manufacture Lagerfeld Gallery.

“It’s very well made. It’s in my shops in Monaco and France,” added Lagerfeld.

Lagerfeld said he’s admired Hilfiger’s company from afar. “I’ve admired what Tommy has done, and he did what I’ve never done. I’ve been dancing so much in other boats,” said Lagerfeld.

Both Lagerfeld and Hilfiger agreed that they’d like to have the designer appear in his own ads for Lagerfeld Gallery, and have him photograph it, as well. Besides H&M, Lagerfeld shoots his ads for Chanel and Fendi.

But when it comes to what channel of distribution he’d like to see for his namesake lines, Lagerfeld will defer to Hilfiger’s company. “I like expensive clothes and well-designed affordable clothes. Words like cheap and mass shouldn’t be used…. In the past, with ready-to-wear and couture, you’d hear the poor lady was not rich enough. Two words I hate are condescending and patronizing.”

Hilfiger said he’ll keep Lagerfeld Gallery as the luxurious high-end line, and will continue to sell it to better department and specialty stores.

Lagerfeld said he’d love to do sheets and towels, and “table-cloths I also adore.” In fact, he said he recently threw a dinner party for Nicole Kidman and had 60 tablecloths. “Every linen was old and antique and my own,” said Lagerfeld. Another category he’d love to launch is a stationery collection. “I’m a paper freak. I have a book shop,” he said.

As for which business categories will be launched first, Lagerfeld said: “If we have the right opportunity, we’ll do it,” to which Hilfiger added: “We want to do everything right.”

“We’re going to invest in this business,” said Hilfiger.

Lagerfeld said he had no qualms about the fact that Hilfiger’s firm is presently being investigated by the U.S. Attorney’s office for its commission rates. “I don’t know anything about that. I know they have enough money to pay whatever they have to pay,” he said.

Lagerfeld said he didn’t need to get anybody’s blessing for the deal, but asked Alain Wertheimer, chairman of Chanel SA, for his advice. “Mr. Wertheimer said Tommy is the best, and the only one who could do it. He’s the right person. And Fendi, I don’t have to ask.” Lagerfeld has been designing the Fendi collection for the past 40 years, and he said he has a contract to design another two collections, and then he’ll see where it goes.

Francoise Montenay, president of Chanel SA, said the fact that an American company bought Lagerfeld’s company underscores his stature as the pre-eminent “global” designer.

“It’s really Karl’s era,” she said, citing his recent collaboration with Swedish fashion giant H&M and the pandemonium his recent visit to Tokyo created as examples of his stature.

“It’s very good for Chanel because everything that is good for Karl is good for Chanel,” said Montenay.

Hilfiger, whose firm has been looking at acquisitions for about three years now, said, “For the first acquisition, we think it’s the best possible one. Being in tier one is very good. It’s a global brand that has never been taken out globally to the extent we will. To have a creative genius like Karl is very unique. It gives us great growth. It’s going to be over time, not initially, accretive to earnings. It won’t be profitable overnight. We think it’s a long-term business. It’s a luxury brand that’s never been tapped.”

But if Lagerfeld never had the time before to devote to his own brands, why does he think he’ll have the time now?

“It has to be something I believe in, and I believe in it,” said Lagerfeld.