GIII Apparel Group takes over Karl Lagerfeld completely

Born in Germany, Karl Lagerfeld has dominated the fashion world for decades, working for Fendi, Chloé and more than 40 years for Chanel. He had been selling fashion, perfumes and interiors under his name for many years, with interruptions. The brand took off in 2010, when Pier Paolo Righi came into the company and has been running it ever since. The icon Karl Lagerfeld died in 2019, but his company and the brand are constantly growing.

In the past financial year, sales increased by 40 percent and amounted to around 200 million euros, Righi told the Handelsblatt. Karl Lagerfeld’s vision was to create a global brand, says Righi. “We pass on his ideas. We carry out what he imagined.” Karl Lagerfeld has achieved the greatest thing that can be achieved in fashion, namely to become a brand.

Righi, 55, will continue to lead the company. The head office remains in Amsterdam. Righi and GIII CEO Morris Goldfarb have been working together for seven years. GIII had previously held the licenses in the USA and, alongside the Amlon Group, Apax Partners, PVH Corp. and Silas and Veronica Chou are already shareholders. Now GIII has taken over the shares of the other investors for 200 million euros.

GIII had sales of more than $2.7 billion in 2021. For the coming year, Goldfarb and Righi are aiming for sales of 375 million euros for Karl Lagerfeld, and they see a much larger potential of two billion US dollars in the future.

In an interview, Goldfarb explains: “After the pandemic, we are only just starting with Karl Lagerfeld, the demand is very high. I even believe that we could also achieve sales of three billion dollars,” says the 71-year-old. “Ask me again in three years.”

The Karl Lagerfeld brand is to be expanded further: further hotels and residences are planned

There is potential above all through expansion in Asia, but also through digitization, sustainability and new lines. Righi announces that there will also be sportswear and jeans from the brand in the future.

When it comes to sustainability, the Karl Lagerfeld company is very committed: the headquarters in Amsterdam does not use gas, the packaging is FSC-certified, more than 50 percent of the fashion is sustainable and 80 percent of the shops are run in an ecologically responsible manner. In total, Karl Lagerfeld has 120 mono-brand shops and wholesale distribution in 60 countries.

Together with the sustainability ambassador, former top model Amber Valetta, Righi is also considering taking back and renting clothes.

The reason for the rapidly increasing commitment of the fashion industry to sustainability are the high CO2 emissions. It is estimated that the fashion industry emits 1.2 billion tons of CO2 every year, which is more than international air and shipping traffic.

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But Righi and Goldfarb have other plans for Karl Lagerfeld: “Karl was more than a fashion entrepreneur,” says Righi. This is what the first five-star Karl Lagerfeld hotel in Macau stands for. “He designed the hotel himself, and we also have luxury residences in Marbella that have been created according to sustainable principles.”

He currently has a longer list of inquiries for further projects worldwide. GIII CEO Goldfarb also has personal experience with investments in hotels and residences in the most beautiful places in the world. He now wants to bring this into the real estate market as Karl Lagerfeld expands.

The share peaked after the announcement of the cooperation with Karl Lagerfeld

GIII was founded as a family business by Holocaust survivor Aron Goldfarb, his son Morris has been with the company for almost 50 years. In 1989 the company went public on the Nasdaq stock exchange. Most recently, the price was around $ 26.50. The GIII share peaked in 2015, shortly after the cooperation with Karl Lagerfeld was announced: it cost more than 70 dollars at the time.

Goldfarb currently still holds 7.8 percent of the shares, his son Jeff is also in the management of the company as Executive Vice President and holds around one percent of GIII. Goldfarb therefore also feels like a family business.

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Righi also sees Karl Lagerfeld associated with the values ​​of a family business. When Karl Lagerfeld hired Righi twelve years ago, there were only a few employees; today there are 500. You feel like Karl Lagerfeld’s family.

“In 2018, at the Christmas party at the headquarters in Amsterdam, Karl whispered to me that he felt so comfortable and at home,” says Righi. Lagerfeld used to work on behalf of others. “We work on his behalf – he really liked that.”

Righi, who has worked in the fashion industry for 30 years, knows his way around family businesses. The German-Italian sits on the supervisory board of the eyewear chain store Fielmann and has also been on the advisory board of Tengelmann since autumn 2021.

When asked when he learned the most over the past 50 years, Goldfarb says: “In the mid-1990s, some of our major customers went bankrupt. When our most important customers suddenly disappeared, we had to show great flexibility. We reinvented ourselves back then, changed the business model and were able to be successful in the market. In such crises, you learn the most as an entrepreneur.” At that time, Goldfarb also started the business with the licenses for the big brands.

But Goldfarb is also involved in new developments: “I’m currently learning a great deal about digitization, sustainability and new types of business – and the company is doing very well right now.”

Despite the good growth momentum, he also keeps an eye on the risks: inflation and supply chains. “These are challenges for a company that lives from people buying fashion.”

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