NEW YORK — Eve’s Fetish has a new partner — and it’s none other than hip-hop entrepreneur Marc Ecko.

The rapper-turned-designer has signed a licensing deal with the $350 million Marc Ecko Enterprises after becoming unhappy with her previous licensee, Innovo Group Inc. Innovo had launched the Fetish line at retail last fall.

This story first appeared in the May 17, 2004 issue of WWD. Subscribe Today.

Ironically, the deal with Eve comes only two weeks after Ecko Unlimited was said to be near an agreement with Beyoncé. Those talks broke down over financial terms of a license, sources close to the singer and her mother, Tina Knowles, said. The Knowleses last week signed a licensing deal with New York-based Kids Headquarters to launch a series of fashion collections.

“Signing with Ecko [Unltd.], for me, it’s a no-brainer,” Eve said in an exclusive interview with WWD on Friday. “They know quality, they are young and hip and Marc [Ecko] gets it. They are going to give us what we need for longevity, they are going to give it the quality and attention it needs. That’s always what I’ve wanted for my brand.”

While Eve said she couldn’t divulge all the details of the split with Innovo because of legal issues, she said her time with the company “was a learning experience and I’m happy we caught the problems while it’s still in its first year.”

Executives at Innovo Group could not be reached for comment.

Under the aegis of Marc Ecko Enterprises, the new collection of women’s sportswear, headwear, footwear and luggage will debut for fall 2005 retailing. Eve said it is too early to describe the new Fetish collection, but said it would be “more designed and better quality.”

“We foresee many synergies between Marc Ecko Enterprises and Eve as a brand and think she’s got an amazing fashion approach and vision, which will be reflected in the new Fetish line,” Marc Ecko said in a statement. “In the next few weeks, we’ll be putting the right team in place to make it happen.”

Fetish will be housed in Marc Ecko Enterprises’ expanded space on 23rd Street here and, according to Anthony Ottimo, division president of Fetish, he and designer Peter Lee and vice president of marketing Dana Hill also will leave Innovo to run the Fetish brand under the Marc Ecko Enterprises umbrella.

Sources close to Eve said Innovo was having problems producing the amount of product needed for Fetish’s deliveries. The company was set to deliver $7 million worth of orders in its first season, but with the demands of Innovo’s other brands, such as Shago and Joe’s Jeans, the load was reportedly too much for its factories to handle.

Fetish also switched designers after the fall season when Eve didn’t like what the original designer was creating. That was when the company hired Lee, a designer in whom Eve has confidence and Ottimo said is able to design clothes that represent the rapper’s image and style.

“Innovo has been great and they are really good at what they do, but they just signed on too much at one time,” Ottimo said. “There is a lot of opportunity on the junior floor and Ecko [Unltd.] really does understand that.”

Marc Ecko Enterprises includes the men’s line Ecko Unltd.; the G-Unit Clothing Co., which produces a men’s line for the rap group G-Unit; Zoo York, a line of skateboards and skate-influenced clothing and accessories; Femme Arsenal, an upscale line of women’s clothing, accessories, and cosmetics; the junior label Ecko Red (produced under license), and Marc Ecko, a premium collection of men’s clothing and accessories. It also plans to launch a junior line for G-Unit for fall.

The company also publishes Complex magazine, a young men’s consumer magazine with a rate base of 315,000. Ecko Unltd. products are available in more than 5,000 stores domestically and in more than 45 countries internationally. Ecko Unltd. runs more than 25 of its own retail stores across the country.

This deal is just the latest move in the celebrity-as-designer craze, which seems to gain a new entrant every week. The JLo by Jennifer Lopez brand is expected to bring in $375 million in retail sales by year’s end, Sean “P. Diddy” Combs’ Sean John is a $350 million company aiming for a major rollout of its own stores beginning this fall and Rocawear, which is run by Damon Dash and rapper Jay-Z, is a $500 million brand. Missy Elliot signed a deal with Adidas last month for her own line, which company executives predicted would reach sales in the multimillions in the first year at retail. Then there’s the new Beyoncé line, which will launch next year.

“I am sure Beyoncé’s line will be great, but who knows — I haven’t seen anything yet,” Eve said. “For me, now, this just means that there are more reasons for us to make sure our product is as great as it can be.”

While some of the celebrity fashion lines continue to build momentum, even Ottimo admits the business isn’t one to enter into lightly.

“The celebrity business is a tough one to get into,” Ottimo said. “You can’t just sign anyone, but when the celebrity you do sign is hot, you have to be ready to produce a large volume.”

Innovo is coming off a rough fourth quarter. The cost of launching two major brands, Fetish and Shago, pushed the company into the red for the quarter and the year. For the three months ended Nov. 29, Innovo posted a loss of $5.8 million, or 27 cents a diluted share, compared with earnings of $41,000, in the year-ago quarter. Costs of goods sold jumped $28.6 million, reaching $37.9 million, or 93.5 percent of sales. Comparatively, the company recorded cost of goods sold of $6.3 million, or 66.3 percent of sales, in the year-ago quarter.

Further complicating matters was an unexpected Fetish and Shago inventory excess at the year’s end. According to Jay Furrow, Innovo’s president, the company was unable to sell the excess at full price, which ended up as a writedown of $4.3 million.

Still, Fetish and Shago spurred Innovo’s sales to triple-digit growth, with a 294 percent jump in the fourth quarter to $37.3 million from $9.5 million in the year-ago quarter.

For the year, losses mounted to $8.3 million, or 49 cents a share, against earnings of $572,000, or 4 cents, the previous year. Sales rose 180.8 percent to $83.2 million.

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