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May 3, 2022

G-III Apparel to acquire Karl Lagerfeld for EUR200m

Branded apparel and accessories maker G-III Apparel Group has struck a deal to purchase the remaining 81% interest in fashion brand Karl Lagerfeld in a move it believes represents a retail sales opportunity in excess of US$2bn.

By Beth Wright

G-III Apparel will purchase the additional stake in the brand for EUR200m (US$210m) from a group of private and public investors, led by Fred Gehring of Amlon Capital BV.

G-III currently owns 19% of the brand and, through the transaction, will become the sole owner of the Karl Lagerfeld brand. The all-cash deal has been approved by the board of directors of both companies and is expected to close in the second or third quarter of fiscal year 2023.

Morris Goldfarb, G-III’s chairman and CEO, says: “This transaction marks yet another significant milestone for G-III. Since acquiring a stake in the brand in 2015, G-III has built Karl Lagerfeld into an important and rapidly growing part of our North American business. Fully owning this visionary brand is a continuation of our successful partnership with the Karl Lagerfeld management team. 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.”

The Karl Lagerfeld brand’s global digital and retail presence includes about 120 mono-brand company and partner-operated stores, with key locations in Paris, London, Berlin, Dubai, and Shanghai. The brand further boasts a wholesale distribution network in the United States, Europe, the Middle East, and Asia.

Its near-term expansion strategy focuses on growth in geographic regions through both owned and partner-operated channels spanning digital, retail, wholesale, new product categories, and increased licensing opportunities.

Karl Lagerfeld transaction and financial details

G-III Apparel will purchase the remaining 81% of Karl Lagerfeld for EUR200m in cash, subject to certain adjustments and customary closing conditions, funding the acquisition with cash on hand. G-III currently owns 19% of the brand and, through the transaction, will become the sole owner of the brand. The acquisition includes Karl Lagerfeld’s existing 10% stake in its established joint venture in China. G-III believes that the acquisition enhances the company’s overall economic value and is expected to drive improved long-term shareholder value. Additional transaction benefits include:

  • The acquisition adds approximately $200m in initial annual sales. Combined with G-III’s revenues of $175m in its fiscal 2022 year ended 31 January 2022, from its existing Karl Lagerfeld business in North America, the acquisition will result in a business expected to generate an initial annual revenue base of about $375m. G-III believes that the combined revenues of G-III’s Karl Lagerfeld business and the acquired Karl Lagerfeld business represent an annual net revenue potential of approximately $1bn or in excess of $2bn in sales to end consumers, and that this acquisition will expand G-III’s global presence.
  • The acquisition is expected to be modestly accretive in our fiscal 2023 year ending 31 January 2023, and incrementally more accretive thereafter.

The transaction is expected to close in the second or third quarter of fiscal year 2023, subject to certain adjustments and customary closing conditions, including the receipt of required regulatory approvals.

G-III Apparel Group added Sonia Rykiel to its portfolio in September 2021.

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