MILAN — Karl Lagerfeld, who showed his latest ready-to-wear collection for Fendi here on Thursday, also welcomed a new investor in his signature fashion house, WWD has learned.
G-III Apparel Group Ltd., the designer’s joint-venture partner for his push into North America, has taken a 19 percent stake in Karl Lagerfeld Group BV via a capital increase that will help the German designer speed his global development. Financial terms were not disclosed.
“We believe it is one of the most iconic designer brands in the world,” said Morris Goldfarb, chairman, president and chief executive officer of G-III, who did not rule out increasing its stake in the future. “We think we can contribute to the business in many ways, distribution in North America being a key component.”
Last year G-III forged a joint venture with Lagerfeld to introduce a new Karl Lagerfeld Paris range, initially focused on women’s apparel and handbags, plus men’s outerwear — all positioned in the burgeoning “affordable luxury” category and tailor-made for the North American market.
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Shipments of sportswear started last November to all Lord & Taylor and The Bay locations, plus various classifications in about 150 doors of Dillard’s.
Goldfarb described the initial reception — without any marketing or substantial signage — as “very good.” Leather goods and footwear dropped more recently, but already the executive is bullish.
“We see this as having potential within five years of being a $300 million to $400 million business at wholesale,” he said. “That’s without opening stores and without opening online components of the business.”
The first complete Karl Lagerfeld Paris collection, backed by a major marketing campaign, is to be introduced for fall retailing.
“The man and the brand are recognized throughout the world. Who doesn’t know the profile of Karl Lagerfeld?” Goldfarb marveled.
Still, he acknowledged that “not everyone knows the product and what it looks like,” especially in North America, where the brand has been absent since a Karl Lagerfeld contemporary label was discontinued shortly after its fall 2006 debut.
Under the joint venture agreement, G-III acquired a 49 percent interest and became Lagerfeld’s first licensee, securing a renewable five-year pact for the initial categories. The deal covers all consumer products and apparel in the U.S. and Canada, excepting those held by Karl Lagerfeld Group: eyewear, fragrance, watches, jewelry and hospitality services. It also grants an exclusive, royalty-free license to use the trademarks in Mexico for the same products.
Goldfarb noted he would soon reveal a license for men’s tailored clothing, and would also begin importing limited quantities of the European products, mainly handbags and accessories, which will have a “halo” effect on the brand.
Pier Paolo Righi, president and chief executive officer of Karl Lagerfeld Group, characterized G-III’s investment as a “logical consequence” of its initial partnership. “We saw the opportunity to make this a broader collaboration and get them closer to the development of the brand on a global level,” he said in an interview.
Righi said having G-III as a shareholder helps align the partners on the overall strategy of the Lagerfeld company, while also creating greater synergies for distribution and sourcing.
Righi was introduced to G-III as a proven partner of PVH Corp., which in 2014 became a minority shareholder in the parent company of the Karl Lagerfeld brand. (The Karl Lagerfeld company, previously owned by Tommy Hilfiger, was not part of the deal in 2010 that saw Hilfiger’s company acquired by Phillips-Van Heusen, now PVH Corp.) Other shareholders in the Lagerfeld business include Fred Gehring, vice chairman of PVH; the family of Silas Chou, and private-equity fund Apax Partners.
G-III, a New York-based outerwear and sportswear firm, does business under a series of licensed names, including PVH-owned Calvin Klein — which Goldfarb pushed past $1 billion in wholesale — along with Kenneth Cole, Cole Haan, Guess, Jones New York, Jessica Simpson, Vince Camuto, Ivanka Trump, Ellen Tracy, Kensie, Levi’s and Dockers. It also owns the Vilebrequin, Andrew Marc, Marc New York, G.H. Bass and Eliza J brands and retail nameplates including Wilsons leather.
“We’ve stated for years that the future of our business is to own brands,” Goldfarb said.
Re-launched by Apax Partners in 2011, the Karl Lagerfeld brand initially focused on online selling, eventually layering on boutiques across Europe. In 2013, the fashion house began a rollout in China, and it began setting roots down in the Middle East last year.
Righi said the brand counts 25 directly operated stores and 27 franchise locations. Recent openings include Kuwait and Dubai, while next month will see openings in Seoul and Frankfurt.
Righi said the G-III investment would allow the company to “accelerate growth” in new geographies and product categories.
Other recent product volleys include a signature kids’ wear collection with France’s Groupe CWF for spring retailing. Last November, Lagerfeld expanded its online presence to 96 countries thanks to a new six-year partnership with Yoox Group for the launch of karl.com in Europe, the U.S. and Japan.