June 8, 2015

Karl, G-III Sign Deal to Expand Lagerfeld Line in U.S.

Karl, G-III Sign Deal to Expand Lagerfeld Line in U.S.

Karl Lagerfeld and Pier Paolo Righi

WWD – PARIS — Get ready for the second coming of Karl Lagerfeld in America.

The designer, whose New York-based Karl Lagerfeld contemporary label was discontinued after its fall 2006 debut, is returning to the U.S. with a new partner in tow, having formed a joint venture with G-III Apparel Group Ltd.

The duo plans to introduce a new Karl Lagerfeld Paris range for spring 2016 retailing, 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.

“We’re very confident there will be a strong foothold from the start,” Pier Paolo Righi, president and chief executive officer of Karl Lagerfeld Group BV, said in an exclusive interview. “It can potentially become the biggest geography for us very soon.”

While distribution will initially be concentrated in better department stores, plans call for a New York flagship to open as early as next year and “we definitely see the potential for several flagship stores,” Righi said.

“We believe there’s an opportunity for another power brand today, and I can’t think of a better vehicle to fill that void than Karl Lagerfeld,” said Morris Goldfarb, chairman, president and ceo of G-III, which has helped push Calvin Klein past $1 billion in wholesale. “I don’t think there’s a woman [who] dresses in fashion that doesn’t know what he looks like. I think they’re in awe of the talent of this man and definitely will follow his leadership in fashion.”

To be sure, the partners plan to capitalize on the German designer’s fame — fanned by his very visible work for Chanel and Fendi over decades — and tap into curiosity about his signature label, still sparsely available Stateside.

“I don’t think there’s any preconceived notion of what the style should be,” Goldfarb said, explaining that the plan is to “translate his iconic DNA into product that is commercially viable in the U.S. – fashion right and priced appropriately for the target audience.”

Some classifications might arrive in time for holiday selling, working up to more complete assortments with the fall 2016 collection, which should be unveiled to retailers in November, said Goldfarb, who is targeting between 250 and 350 doors for the latter season.

He declined to identify the players in question, but hinted, “We have three retailers that are very much behind us.”

Relaunched by owner 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 collections for North America would be developed under the artistic leadership of Lagerfeld, in tandem with creative teams in Paris and Amsterdam, with the aim of delivering styles that are adapted to market and “consumer relevant.”

Asked how the apparel might differ from what’s sold in Europe, Righi said it would be targeted to a broader audience, with a wide range of products given multiple exposures in department stores.

The range is to echo the core of the business in Europe — women’s apparel and bags — with the men’s outerwear “the first step in a broader men’s wear proposition,” Righi said.

He noted footwear would likely be the next product volley in North America, with the joint venture agreement allowing additional category licenses over time to G-III or other parties.

At present, Lagerfeld’s clothing lines are primarily available to American consumers via Net-a-porter. Licensed products, including eyewear, fragrances and watches, are also distributed in North America, with the future flagships billed as showcases for uniting Lagerfeld’s diverse product universe. (Stores in Europe also stock small selections of photo books, figurines and gadgets.)

Under the joint venture agreement, G-III acquired a 49 percent interest and becomes the 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.

Righi was introduced to G-III as a proven partner of PVH Corp., which last year 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.)

G-III, a New York-based outerwear and sportswear firm, owns the Vilebrequin, Andrew Marc, Marc New York, G.H. Bass and Wilsons Leather brands and retail nameplates and does business under a series of licensed names, including PVH-owned Calvin Klein and Tommy Hilfiger, along with Kenneth Cole, Cole Haan, Guess, Jones New York, Jessica Simpson, Vince Camuto, Ivanka Trump, Ellen Tracy, Kensie, Levi’s and Dockers.

Lagerfeld’s expansion into North America comes at a time of rapid growth for the business, which has been logging “high double-digit growth,” according to Righi, as it continues to expand its retail presence independently and with various partners.

Openings scheduled for this year include five freestanding boutiques and one shop-in-shop in the Middle East; a Dusseldorf location, plus men’s shops in Berlin and Hamburg, and a flagship in Seoul, replacing a temporary store. The company should end the year with 10 directly operated stores and three franchises in Europe, and it has forecast as many as 40 stores for Greater China. Plans for 2016 include locations in Singapore and Kuala Lumpur.

New product volleys include a signature kids’ wear collection with France’s Groupe CWF for spring 2016 retailing, with Righi citing a “great response” from retailers, with several committing to shop-in-shop formats. The objective is 300 doors for the first season.

Meanwhile, in November, Lagerfeld will expand 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. www.wwd.com