Karen Walker approaches each season almost like a jazz musician. She introduces an idea, evolves it in a few directions, and then loops it back around to a fully formed composition. She called the Fall collection Salzburg, USA—an imaginary place where an American take on old-world European wardrobe traditions resides.

She opened with a matched look of puffy jacket, blazer, button-front shirt, and skinny cuffed pants all cut in a faded floral that looked like a descendant of the Von Trapp children's curtain couture. The looks that followed seemed to ask, "Just how would Americans dress for the Alps?" Well, if they had Walker's quirky-smart sense of chic, in oversize sheepskin collars, matched jacquard sweater-and-skirt sets, or a kicky, boyish loden suit. Or perhaps they'd turn the tables with a college sweatshirt, corduroys, and a balaclava that approximated either an old-school football helmet or a medieval hood. That last look is from Walker's brand-new casual line, called Runaway, which now encapsulates all her denim, T-shirts, and, from Fall, corduroy pants and sweatshirt pieces with wild, woolly fringe. About half the clothes on the runway were from Runaway.

But this isn't Walker's only bit of business news. She recently opened an alternative department store in her native Auckland, New Zealand, that stocks her collection, among others, as well as beauty and housewares. She's also looking to open a second store in Asia. This being her eighth season in New York, perhaps the next stop is Manhattan.