Lagerfeld stays at Fendi

Karl Lagerfeld's contract with Fendi expires later this year causing rumours about his approaching departure to spread like wildfire. Fendi CEO, Michael Burke, has denied the gossip. "I am functioning as if it were being renewed. Karl and I agree things have to change. We're working on find a better way to go forward," he told WWD.

Lagerfeld had voiced his frustration with the way Fendi was being run but revealed he believed a change could bring about a better future for their collaboration. 'If they organise (Fendi) to work the way I want, it can continue. I know what I need. There is no hostility between me and LVMH, no tension at all," he said.

Burke indicated that changes had been made within the company and the future was looking rosy. "It's our coming out, having fixed everything. We did some major restructuring." A new flagship store is opening in Rome on 18 May and Burke said that sales of Lagerfeld's furs had shot up 250 per cent, while handbag orders had increaded 60 per cent and Ernesto Esposito's footwear had grown 80 per cent.

Of the accessories, Burke said: "I'm sure they will sell out. We have no price resistance. We can sell the most expensive things." He denied the rumours that Fendi was courting Gucci's new womenswear creative director, Frida Giannini.

Market sources have estimated Fendi's losses last year at approximately GBP 17 million. LVMH expects the house to break even by 2007 at the latest.