giii apparel group ltds chief executive says further acquisitions are in the companys plans for expansion after it agreed a deal to become the sole owner of luxuryfashion brand karl lagerfeld the new yorkbased fashionlicensing group said monday that it will pay 200 million euros 2215 million for the 81 of karl lagerfeld that it doesnt already own giii has held a 19 stake in the brand since 2015 and also owns a north american affiliate karl lagerfeld paris giii ceo morris goldfarb said he was confident of the brands growth potential its an amazing brand that has a large fan base that is finally becoming aware that there is a product offering in north america mr goldfarb told the wall street journal increased marketing including north americaspecific campaigns led by giii could lead to retail sales reaching close to 3 billion within three to five years mr goldfarb said excluding the north america brand karl lagerfeld currently makes annual sales of some 200 million and is growing rapidly according to chief executive pier paolo righi it booked 40 organic growth in the most recent fiscal year and has recovered to well beyond prepandemic levels mr righi told the journal further growth can be achieved through digital acceleration and category expansion in areas including jeans and hospitality as well as geographic expansion into latin america and asia he said wholesale currently makes up around twothirds of karl lagerfelds sales and slightly more than that in north america but the plan is for retail sales to grow as a proportion of the total mr goldfarb said this would entail higher operating margins he added the numbers you see today are just the starting point this is not yet a mature business he said the acquisition of karl lagerfeld could also herald further ma activity ahead for giii mr goldfarb said we have a balance sheet that can support additional acquisitions we have the ability to grow to what i would describe as a fairly large business he said i would expect that we make other acquisitions whether theyre europeanbased or americanbased he added owning brands offers a higher multiple than operating licensing agreements with them as giii does with us fashion players including calvin klein inc and tommy hilfiger mr goldfarb said this is especially true for luxury brands with a more international slant he added the acquisition of karl lagerfeld as such indicates the groups shift toward direct brand ownership and diversification in geography and product category he said trends toward casualization in fashion had helped the company achieve strong growth in revenue and earnings for its most recent fiscal year mr goldfarb said at the time but as the pandemic eases the company is focusing more on the polished piece of the business he said our consumer is going out to dinner shes going to the theater shes traveling the polished piece of the business is more dominant than the athleisure piece of the prior 18 or 24 months he said indeed the company could in the future look to separate its luxury division from its midmarket business mr goldfarb added theres nothing to preclude us somewhere down the road spinning off the luxury from the moderate he said the acquisition of karl lagerfeld will be paid by existing cash and should subject to closing conditions and regulatory approval be completed in the second or third quarter of fiscal 2023 which ends jan 31 next year giii said alongside giii the brands existing owners include privateequity firm apax partners and fashion group pvh corp it is incorporated in amsterdam but retains an operational headquarters in paris at the townhouse of its late founder karl lagerfeld was established in 1984 by the eponymous designer who died in 2019 lagerfeld served for decades as creative director of parisian fashion house chanel sa and was credited with turning it into a brand with more than eur10 billion in annual revenue by the time of his death he was also creative chief at italian brand fendi part of french luxurygoods giant lvmh moet hennessy louis vuitton se