What a difference a year makes. Last year, Jennifer Lopez's show for her Sweetface fashion line was the highlight of New York Fashion Week. Some of the biggest names in the industry clamored for a chance to gape at the diva's collection as one of her models strutted around Bryant Park in a pair of $2 million diamond-studded jeans.

Now many of those same insiders are whispering that Lopez's line is struggling—and that rival diva Beyoncé may be partly to blame. Beyoncé's House of Deréon has ripped off several key executives from Lopez's line, including the company's creative director and licensing chief. "Right now, Beyoncé's label is really starting to build up steam," notes a fashion designer. "I'm getting phone calls every day about them. The J.Lo line has been losing it."

But the most damaging loss has been that of Andy Hilfiger, a well-connected Seventh Avenue veteran who left the company in May to go back into business with his brother Tommy. Despite a torrent of early orders when the company was launched, the excitement didn't last. Sources say Sweetface's outré oufits—which range from rabbit-trimmed jackets to floppy mink hats—seemed "too cheesy" and "garish" for Hilfiger, who complained about Lopez's inability to focus on the line. "Andy was embarrassed," sniffs a source. "Sweetface is supposed to be a high-end line, but these clothes look like something you'd find at Strawberry." Hilfiger did not return calls for comment.

J.Lo herself is increasingly bored by the business—sources say she visited her company only six times last year. Employees complained that nobody is minding the store. That thankless task has fallen to Sweetface's new president, Andrea Scoli. She spent the summer cleaning house and working to revitalize the line.

Not everyone is ready to count J.Lo out. "Sweetface is still an entity to be reckoned with," says Tom Julian, a trend analyst at McCann Erickson. "Its sales are in the several hundred million range, it's got several licensing partners, and it appears to continue to grow."

Still, the firm has undeniably lost momentum, as evidenced by the recent dismantling of the much-ballyhooed "World of J.Lo" shop at Marshall Field's in Chicago. Last summer, Lopez sauntered up the carpet, smiling for the cameras at the launch party for her store on the second floor. Now, her "boutique" has been split up into "pieces," and the few stray items have been relegated to bargain racks. "Her line used to have its own area," says a saleswoman at the store. "But we rolled up the pink carpet about a month ago." Adding insult to injury, in two weeks the store will launch a House of Deréon mini-store—complete with a deep aubergine purple carpet, customized wrought-iron New Orleans-style fixtures, and signs emblazoned with Beyoncé's flossy logo.