Stella McCartney to design range for H&M

Marc Jacobs allegedly had his eye on the job. Jean Paul Gaultier and Vivienne Westwood both claimed it would be a mistake to turn it down. Yesterday, however, Swedish high street chain H&M announced that Stella McCartney would be the designer to follow in Karl Lagerfeld's footsteps and produce a collection for its stores.

"Designing a one-off collection for H&M is one of the most exciting and innovative ways to introduce my clothes to a broader range of women," McCartney said, in a press release issued by the chain.

The partnership is likely to reap considerable benefits for both parties. The link-up with Lagerfeld caused H&M stores to be over-run last autumn by sartorially discerning bargain hunters. And small wonder, considering the range in question retailed from $19.90 (£10.60) to $149, a fraction of the price of either Lagerfeld's own line or the ultra-expensive collection he designs for the French fashion superpower, Chanel. Lagerfeld meanwhile, already famous in fashion circles, became a household name overnight, not least for an outburst in which he declared British women were too fat to wear his clothes. "What I really didn't like was that some sizes were made bigger," he said of H&M's attempts to up-size his pencil-thin offerings to a British 14 and 16. "What I created was fashion for slim people."

H&M's marketing director, Jorgen Andersson called on Lagerfeld to apologise, but - perhaps predictably - the designer did no such thing.

Mr Andersson need have no fear over McCartney who refuses to use leather and fur for her collections, prizes the more "womanly" form and is rather more politically correct than her serpent-tongued predecessor.

The younger designer also has considerably more to gain. It's no secret that McCartney, who, in 2001, sold a 50 per cent stake in her company to the Gucci Group, is struggling to stay ahead financially. Her brand, Stella McCartney, is still very small, compared to the majority of internationally recognised names with whom she is now forced to compete: names that include Gucci-owned Balenciaga and Alexander McQueen.

Gucci Group has set a deadline of 2007 for all three companies to break even - and the deal with H&M ensures McCartney receives a vital injection of cash and raises the profile of both her eponymous line and the collection she designs for Adidas.

For H&M's part, the tie-in with McCartney is the latest in a long line of carefully considered moves that has transformed it during the past decade from a mainstream clothing supplier to a fashion force to be reckoned with.

Last month the chain, founded in 1947 and estimated to be worth $7.3bn, spent millions on a fashion show in New York's Central Park with a 240ft catwalk and 145 models, including faces like Karen Elson and Jessica Stamwho normally wouldn't get out of bed for anything less than Dolce & Gabbana or Christian Dior. At around the same time a deal with Elio Fiorucci was announced. The Italian designer's beach range goes on sale in 1,000 H&M stores this summer.

McCartney's rock royalty status and cool London girl credibility is likely to be even more of a hit with H&M's core female market, however, a fact that the powers-that-be are more than happy to acknowledge. "Her clothes are modern and cool yet classic and wearable," said H&M's head of design Margareta van den Bosch. "We have long admired her sense of tailoring and femininity. Consumer research further confirmed the strong appeal of her brand."