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Karl Lagerfeld to be Fully Owned by G-III in $210 Million Deal

G-III Apparel Group is set to acquire the remaining 81 percent stake in Karl Lagerfeld for 200 million euros ($210 million) in an all-cash deal.

In a conference call to Wall Street investors Monday morning, G-III chief financial officer and treasurer Neal Nackman said the company plans to expand Karl Lagerfeld’s reach and bring the label into new product categories. The imprint has a “very small footwear component” right now and jeans will liven up its category mix “shortly,” he added.

One analyst already sees an upside opportunity for G-III, whose portfolio includes DKNY, Tommy Hilfiger and Calvin Klein. “While legacy operations have been mostly licensing-related, the company’s global success with ownership of DKNY in recent years give us confidence in its ability to execute and grow established labels,” Steven Marotta, analyst at CL King & Associates, said, adding that the additional stake combined with the existing $175 million in revenue should “add $200 million in incremental top-line sales.”

The deal marks G-III’s first acquisition since it snapped up Sonia Rykiel in September, and Nackman suggested the company’s appetite for M&A is alive and well. “We continue to be well positioned from a financial standpoint,” he said, adding that G-III’s “debt levels are very much under control.” The company “will continue to look for good opportunities,” he said.

G-III executive vice president Jeff Goldfarb highlighted Karl Lagerfeld’s “expansive portfolio” of men’s, women’s and children’s products and footprint in ready-to-wear, home furnishings, eyewear, jewelry, fragrance and footwear, at both accessible and aspirational prices.

Karl Lagerfeld’s outperformance in North America last year laid the groundwork for G-III to fully own the high-potential label. Goldfarb said G-III plans to increase the brand’s digital direct-to-consumer sales and add new locations to the 120 mono-brand company and partner-operated stores it currently has in Paris, London, Berlin, Dubai and Shanghai. G-III will also figure out how to get Karl Lagerfeld into more doors with new wholesale partners and licensees, building on a distribution network across the U.S., Europe, Middle East, Asia, and digital retail platforms.

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Given our track record of watching and growing this business and others in North America, combined [with] the global demand for Karl Lagerfeld products, we are confident in the runway ahead,” he said.

“Fully owning this visionary brand is a continuation of our successful partnership with the Karl Lagerfeld management team,” Morris Goldfarb, G-III’s chairman and CEO, said in a statement. “Importantly, the addition of this iconic fashion brand to the G-III portfolio advances several of our key priorities, namely an increase in the direct ownership of brands and their licensing opportunities and further diversification of our global presence.”

Karl Lagerfeld CEO Pier Paolo Righi will continue running the brand as it joins G-III along with the rest of the label’s leadership as the imprint chases a “$2 billion” opportunity, the chairman said.

After taking a 19 percent stake in Karl Lagerfeld in 2015, G-III is now acquiring the rest from investors led by Fred Gehring of Amlon Capital BV. The transaction is expected to close in the second or third quarter of Fiscal 2023.