After the H&M collection, he sold his brand to Hilfiger (at the time it was similar to the Versace/Kors thing). His own line that he relaunched in 1999, Lagerfeld Gallery, was fairly successful but very small. He had a lot of licensing deals and stuff and Hilfiger wanted to have a foot in the luxury market.
Karl at that time wanted to follow up on the H&M thing and give a new direction to his own brand. They settup a studio in NYC with Melanie Ward to design a accessible line of his signature collection, designed in Paris.
The collection in question, (Karl Lagerfeld) FW 2006, was presented in NYC but soon after was scrapped when a company bought Hilfiger. They decided to continue with the luxury aspirations but as Karl said, « if you want to be Chanel or Fendi, you needs to put Chanel & Fendi money ».
So, this collection and the collections after are the result of that. Eventually, they finally understood and followed the vision he wanted since 2004. The last few years of his life, the Karl Lagerfeld brand was a cash-cow that made him even richer and gave jobs to his close collaborators.