By  on December 13, 2004

New York — Karl Lagerfeld has a surprising new parent — and it’s none other than Tommy Hilfiger.

Fresh off his wildly successful collaboration with H&M and a trip to Tokyo where he inaugurated the opening of the largest Chanel store in the world, Lagerfeld is turning the spotlight on his own brands. He is expected to announce today that he has sold the Karl Lagerfeld trademarks to Tommy Hilfiger Corp., the $1.88 billion apparel firm, for an undisclosed amount of cash.

 The deal will allow Hilfiger’s firm to globally expand Lagerfeld Gallery, the women’s luxury ready-to-wear collection that encompasses the Karl Lagerfeld trademark, and the Lagerfeld brand women’s, men’s and accessories lines, which are licensed; add apparel and accessories categories, and open retail stores worldwide, according to sources close to the company. The transaction also includes the two Lagerfeld Gallery stores in Paris and Monaco.

 WWD has learned that Hilfiger has signed a five-year contract with Lagerfeld, who will design and provide creative direction for his brands. It reportedly includes automatic three-year renewals.

Neither Lagerfeld nor Hilfiger executives were available for comment Sunday.

Hilfiger intends to open a New York showroom for the Lagerfeld business, which will continue to be based in Paris and will operate as a separate company under the Hilfiger umbrella. The Lagerfeld business will reportedly be run by Hilfiger’s president of new business development. The acquisition fulfills Hilfiger’s desire to create a multibrand company with multichannel distribution, a strategy that has been set forth by David Dyer, chief executive officer of Hilfiger.

Hilfiger has been on the acquisition hunt for several years, having looked at Calvin Klein, Marc Ecko Enterprises and Rocawear. But the Lagerfeld deal comes at a difficult time for the company, which is being investigated by the U.S. Attorney’s office for its commission policies. The probe is still in its investigative stage and, while criminal in nature, no indictments have been issued against any individual or entity. Analysts have predicted Hilfiger could end up with more than $100 million in tax liability. Approximately 10 lawsuits have been filed against the firm and former and current employees have received grand jury subpoenas.

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