The next occupant of Rodeo Drive’s largest retail space the two-story store vacated earlier this year by Tommy Hilfiger Corp. might be Coogi Australia, a Melbourne-based company best known for its expensive men’s sweaters with wild colors and swirling designs.

The company is negotiating to lease the entire 20,000-square-foot building and convert it into its first U.S. flagship, as part of a major expansion.

Currently, Coogi has seven stores in Australia but only one U.S. location, a 2,000-square-foot space in Carmel, Calif. For the past 15 years, its expensive line has been carried by high-end retailers such as Bernini on Rodeo Drive and Blue Stone in Pasadena.

But for the past two years, instead of concentrating just on expensive men’s sweaters that retail for around $350, Coogi launched six new lines of women’s dresses, casual wear, sportswear, denim, shoes and accessories, and housewares.

The company envisions the two-story Hilfiger store as a grand showcase for its expanded product lines. The store could be open as early as this fall, according to industry sources close to the negotiations.

Some real estate observers had speculated that the neoclassical-style Hilfiger store located at the corner of Rodeo Drive and Little Santa Monica Boulevard would have to be broken up into smaller spaces to be leased. But Coogi is planning to keep the structure intact.

Under Coogi’s tentative plan, the ground floor would house the retail operations while the second floor would be used for offices and a showroom, sources said.

Coogi is also planning to open a flagship store in New York’s trendy SoHo district, said Bob Sliter, president of retail and marketing of Coogi’s U.S. operations.

The move to Beverly Hills’ most fashionable street may be a smart one for the Australian retailer, whose wild sweaters were mentioned by the late rapper Notorious B.I.G. in one of his songs.

“(Coogi) is very much like St. John Knits, which has its independent stores but sells at Saks Fifth Avenue and Neiman Marcus,” said Ilse Metchek, executive director of the California Fashion Association. “It finds the need to have its own freestanding representation, so the breadth of the line is made clear. You will never get that from having your goods in another retail store.”

But some industry observers wonder if Coogi, a relative unknown, could be successful on a street that has been tough for even such brand-name retailers as Hilfiger.

Hilfiger moved to Rodeo Drive in late 1997, but the store didn’t do well, and was closed in February. Hilfiger is planning to open two smaller stores on the Third Street Promenade in Santa Monica.

Possibly making Coogi’s Rodeo Drive venture even riskier is that overall competition on the street has been increasing.

Prada, the ultra-chic Italian purveyor of men’s and women’s wear, expects to begin construction this summer on a 14,000-square-foot flagship store at 339 N. Rodeo Drive. Just doors away, Dior is constructing a new store, and across the street, Valentino is putting the finishing touches on a large new store next to the Luxe Hotel Rodeo Drive.