Calvin Klein | Tommy Hilfiger | PVH (US)

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Calvin Klein built his name into a global brand which came to define a particular form of elegant and understated American style. Yet Calvin Klein products have had nothing to do with the man himself since the mid-2000s. By then the jeans, underwear, fragrances, eyewear, home furnishings and other goods which bore his name were already being produced under license by other companies, although Klein himself was usually involved in their marketing and design. In 2002, he surrendered control of his name altogether, selling the trademark to US clothing manufacturer Phillips Van Heusen. As a result PVH took control of all higher-priced apparel, while key bridge, sportswear and underwear lines were produced under license by another company, Warnaco. In 2012, PVH agreed to acquire Warnaco as well in a $2.9bn deal that united ownership of the Calvin Klein brand under a single roof for the first time. Combined retail sales of branded Calvin Klein products in 2016 were estimated at $8.4bn. Calvin Klein is now partnered in the PVH portfolio by Tommy Hilfiger, which the company acquired in 2010.

Selected Calvin Klein advertising

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Advertising

Who handles advertising for Calvin Klein? Click here for Agency Account Assignments. PVH said that more than $330m was spent in 2016 on marketing of the Calvin Klein brand by its various licensees and owners. PVH declared advertising expenditure of $416m in 2016 across all its brands.

Contact

Calvin Klein Inc
205 W 39th Street
New York, NY 10018
United States
Tel: 1 212 719 2600

PVH
200 Madison Ave
New York, NY 10016
United States
Tel: 1 212 381 3500

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 3rd Nov 2016: Melisa Goldie, chief marketing officer for the Calvin Klein brand has resigned to pursue other unnamed opportunities. In her current role she oversees all marketing for the CK brand, not just fashion but also Coty's licensed fragrance business. Calvin Klein parent company PVH said she won't be directly replaced, but her duties will instead be divided between her team, reporting to CEO Steve Shiffman and chief creative officer Raf Simmons. She told WWD, “I have two really cute kids and I have a brand new puppy. I want to take a long nap. I’m going to take a little time to rest and rejuvenate. I’m taking phone calls and open to opportunities, and I really want to be a part of another brand that I can rejuvenate and make relevant again for the future."

Adbrands Weekly Update 24th Aug 2016: Ads of the Week "Deep Euphoria". Star of the moment Margot Robbie makes her first appearance in an ad with this steamy campaign for Coty's Calvin Klein Deep Euphoria, from Laird & Partners. If Robbie really has dreams like this she seriously needs to take a pill or something to calm down. And let's hope the interviewer from that recent profile in Vanity Fair (you know, the "Australians are throwback people" feature) doesn't see this - he might literally explode.

Adbrands Weekly Update 24th Aug 2016: Frat boy behaviour doesn't look good on a 32-year-old. US swimmer Ryan Lochte is certainly sorry now for making up a story about being robbed at gunpoint in Rio de Janeiro. In an unusually robust response by sponsors for an athlete's bad behaviour, all four of his sponsors dropped the Olympic Gold medal-winner. The most damning verdict came from ten-year partner Speedo, owned by PVH. "While we have enjoyed a winning relationship with Ryan for over a decade and he has been an important member of the Speedo team, we cannot condone behaviour that is counter to the values this brand has long stood for," said the brand. "We appreciated his many achievements and hope he moves forward and learns from this experience." It will donate $50,000 of his fee to Save The Children's Brazilian subsidiary. Ralph Lauren had sponsored Lochte during the Games, and they issued a statement to say they would not be renewing his contract. Skincare manufacturer Gentle Hair Removal and mattress supplier Airweave also withdrew their support.

Adbrands Weekly Update 27th Mar 2014: Long-serving Calvin Klein CEO Tom Murry will retire in early 2015 after 17 years with the company, now a division of PVH. He has overseen the growth of the Calvin Klein brand from retail sales of around $2.8bn to over $8bn currently. Chief commercial officer Steven Shiffman becomes CEO in July, with Murry remaining as executive chairman until Jan 2015.

More from Adbrands Weekly Update

Brand Analysis

Rather like Ralph Lauren, the Calvin Klein brand has come to stand for elegant and understated American style, although Klein has a more sexually charged and urban edge. Calvin Klein first established the concept of casual leisurewear in the early 1980s, creating a vast downstream market. Calvin Klein jeans made the first real link between designer fashion and everyday clothing, and led to the huge growth of more stylish mass-market leisurewear ranges, epitomized nowadays by The Gap and others. Above all Calvin Klein created a particular language for fashion advertising. The marketing, most of it created or managed by in-house agency CRK Advertising, often courted controversy. In 1980, the debut ads for skin-tight Calvin Klein jeans featured 15 year-old Brooke Shields purring, "Do you know what comes between me and my Calvins? Nothing." This was mild compared to the ads for the underwear range, which featured a variety of male models including rap star (now actor) "Marky" Mark Wahlberg in dazzling white tight shorts which left little to the imagination. The undeniable homoeroticism of the ads caused a scandal at the time and has hugely influenced men's fashion advertising ever since. Other ads depicting children in underwear were withdrawn after complaints, while the supposed "heroin-chic" of some imagery for cK one and other fragrances also grabbed headlines.

Unlike designers such as Ralph Lauren and Giorgio Armani, who established a firm grip on all aspects of their products, Calvin Klein and his business partner Barry Schwartz decided at an early stage to relinquish responsibility for manufacturing and distribution, although they retained control of image and marketing. As a result, the most popular Calvin Klein lines were from the very beginning produced by other companies. Although Calvin Klein merchandise generated an estimated $3bn of worldwide retail sales in 2002, Klein's own company Calvin Klein Inc generated revenues of just $170m. Of that, less than $50m came from the two fashion collections then still being produced by the company, while the remaining $120m was contributed by royalties from the numerous outstanding licenses. (By contrast, Polo Ralph Lauren's revenues for the same year were more than 14 times higher at $2.4bn, while Tommy Hilfiger had sales of $1.8bn.).

Since early 2003, Calvin Klein himself has had even less to do with his name. Calvin Klein Inc, and the Calvin Klein and CK trademarks, were acquired that year by US clothing manufacturer Phillips-Van Heusen, best known at the time for dress shirts. In 2010, PVH signed off on another transformational deal to acquire another American classic design label, Tommy Hilfiger, for $3bn. Calvin Klein and Tommy Hilfiger are now separate standalone business units within what is now PVH. In the case of Calvin Klein in particular, PVH has worked hard since the acquisition to bring back under direct control the numerous licenses which the designer himself had contracted out in the 1990s.

Calvin Klein comprises several different labels. Sitting at the top of the apparel range is Calvin Klein 205 W39 NYC luxury men's and women's apparel - known until 2016 as Calvin Klein Collection. However sales of this line are very small, and its main purpose is to serve as a "halo" for more affordable lines. It is supported by a lower priced "bridge" range, CK Calvin Klein (previously Calvin Klein Platinum Label), sub-contracted to other manufacturers including GIII Apparel of the US. The third line, Calvin Klein, is described as career-inspired "better" sportswear. It too is sub-contracted to G-III, although design of all these lines is supervised inhouse by PVH.

These three general apparel and accessories labels are partnered by two significant lines historically produced under license by separate company Warnaco. It had held the license to design and market Calvin Klein Jeans until 2044 or beyond, while its license to produce Calvin Klein Underwear had no expiry date so effectively lasted forever. Warnaco also acquired rights to market a range of Calvin Klein swimwear worldwide, which launched in 2005 in Europe.

In the most significant development to-date in the evolution of the Calvin Klein brand, PVH agreed to acquire Warnaco in October 2012 for $3.13bn in cash and shares. That deal, which closed in Feb 2013, united ownership of all the Calvin Klein clothing lines under a single roof for the first time in their history (although some lines are still outsourced under license to G-III and others). It also makes the enlarged PVH the second largest manufacturer of branded apparel worldwide behind VF Corporation with revenues in excess of $8bn.

The Calvin Klein brand also lends itself to numerous accessory ranges. Calvin Klein eyewear was introduced in 1991 by Marchon. CK watches and jewellery are produced under worldwide license by Swatch, while footwear is produced by Jimlar. However the most widely known accessory line is the Calvin Klein fragrances portfolio, which has been manufactured and marketed since 2005 by Coty. The collection includes a wide variety of fragrances including Obsession, Eternity, cK one, cK Be, and Eternity Moment, as well as more recent launches Euphoria, Calvin Klein Man and CKIN2U. A colour cosmetics line was first introduced in 2000 but later discontinued as a result of disappointing sales. A new range was reintroduced by Coty in 2007. There are also a number of home furnishing products such as table lamps, linen, rugs and gifts produced by DesignWorks

Marketing and advertising for all Calvin Klein branded products is created by CRK Advertising, now a full subsidiary of PVH. Klein himself has retired from the business altogether, although he retained the title of consultant until 2006. Under the terms of the 2002 deal, PVH will pay him until 2017 an annual royalty equivalent to 1.15% of total worldwide net sales of products bearing his name.

In 2016, in its biggest sponsorship agreement to-date, Calvin Klein was confirmed as the lead sponsor for the North American and European of Justien Bieber's world tour. Bieber has appeared in the brand's advertising campaigns since 2014, and the Calvin Klein banner featured prominently during the shows.

PVH estimated retail sales of the Calvin Klein brand at $8.4bn in 2016, making it the third largest designer brand globally behind Ralph Lauren and Giorgio Armani. Around $4.7bn of that sum is generated in North America, and $1.6bn in Europe. Fragrances marketed by Coty are themselves worth around $1.4bn worldwide at retail. PVH's own revenues from the Calvin Klein brand totalled $3.14bn in fiscal 2016. Operating income was $334m.

The Calvin Klein brand is partnered within PVH by Tommy Hilfiger, which designs and markets a similar range of men's and women's sportswear, jeans and childrenswear. Retail sales were estimated by owner PVH at $6.6bn in 2016, making it the #4 designer brand behind Ralph Lauren, Giorgio Armani and stablemate Calvin Klein. The largest proportion of sales - 43% - comes from Europe, with 41% from North America, 10% from Asia Pacific and 6% from Latin America. The company describes its own approach as "updated classics with a twist" or "spirited All-American style". In other words, preppy clothing in the style of Ralph Lauren, but retooled with more of an urban edge.

During the 1990s these clothes struck a chord with two very different social groups in the US: urban rap and hip hop stars aspiring to more prestigious designer labels; but also upscale suburbanites looking for comfortable but more streetwise clothing. This lucky combination of market forces made Tommy Hilfiger one of the world's most fashionable labels by mid-decade. In the late 1990s, following a hugely successful endorsement from rap star Snoop Dogg, the company attempted to forge a relationship with the music industry, sponsoring a string of high profile US tours including the Rolling Stones, Britney Spears, Jewel and Lenny Kravitz. This approach was later abandoned and more recently the group has turned its attention to more upscale sports, supporting a number of skiing, sailing and golf events

Historically the group's biggest business has always been menswear, but sales of these lines have declined sharply since the 1990s, especially in the US. In the early 2000s, critics began to argue that the brand had failed to change with the times and was in danger of drifting further away from its audience. The group attempted to respond with H Hilfiger, a new range of dressier and more upscale tailored suits and accessories, launched in 2004 and promoted in its marketing by David Bowie and Iman. However it failed to catch on and was later discontinued. Since then the portfolio has been restructured further to offer just two main adult labels targeting both sexes. Flagship brand Tommy Hilfiger range offers a collection of casual sportswear for men and women, as well as what was previously a separately branded line of Hilfiger Sport athletics-inspired apparel. This are partnered by the Hilfiger Denim range, which includes the former Tommy Jeans line. The company's first childrenswear collection, Hilfiger Kids, was introduced in 1993, initially for boys, but subsequently expanded to both sexes, and is now available for all ages from new born to pre-teen. In the US, there are also lines of higher priced apparel under the Tommy Hilfiger Collection (womenswear) and Tommy Hilfiger Tailored (menswear) banners. Current brand ambassadors include tennis star Rafa Nadal for underwear and tailored menswear; actress Zooey Deschanel and models Gigi Hadid and Alexa Chung for womenswear. The group designs and distributes Hilfiger Collection and Hilfiger Denim itself. Tommy Hilfiger womenswear and some men's outerwear is produced and distributed under license in North America by G-III (also a major apparel licensee for PVH's Calvin Klein brand).

Responding to the sharp decline in sales from 2005 onwards through department stores, Hilfiger agreed in 2008 to an exclusive deal with Macy's. As a result, from Autumn 2008, wholesale supplies to other stores were suspended and Macy's is the only third party retail chain in the US to stock Hilfiger-branded men's and women's apparel. There is a similar relationship in Canada with HBC. The group also manages its own branded network of around 1,000 stores worldwide, of which it directly owns around half. The network of stores and wholesale partners stretches across around 90 countries worldwide.

The group oversees a sizeable portfolio of carefully chosen strategic licensing agreements, lending its name to a broad array of related apparel, accessories, footwear, fragrances and home furnishings. A key partnership is with Estee Lauder's Aramis division to produce the range of Tommy, Tommy Girl and new True Star fragrances and cosmetics. Other important license relationships include eyewear by Safilo and watches by Movado. The group has bought out several of its licensees in recent years including local footwear partner Hamm in Europe and its Japanese distributor. In 2016 it agreed to buy out its local joint venture partners in Hilfiger China, which operates more than 350 stores in that market.

PVH's revenues from the Tommy Hilfiger brand totalled $3.51bn in fiscal 2016, with operating income of $464m.

Other brands: PVH also controls a collection of so-called Heritage Brands, which houses the remaining Phillips Van Heusen clothing labels as well as several inherited as part of Warnaco. They include America's top-selling dress shirt label Van Heusen and sister brand Arrow; sports-inspired Izod casualwear; North American rights to renowned Speedo swimwear; and Warner's and Olga lingerie. GH Bass footwear and accessories were sold in Nov 2013. The group also produces shirts, ties and other apparel under license for a range of designers including Geoffrey Beene, Kenneth Cole, Michael Kors and Ralph Lauren's CHAPS. Heritage Brands generated combined retail sales of around $3.0bn, mostly in North America.

PVH's net revenues from Heritage Brands were $1.56bn in fiscal 2016, with operating income of $100m.

The group owns and operates around 1,600 of its own stores globally under the Calvin Klein, Tommy Hilfiger and Van Heusen brands as well as around 1,150 department store concessions.

Financials

For the year ending Feb 2014, including the first full-year contribution from Warnaco, PVH's combined revenues soared to $8.19bn (from $6.04bn in ye 2013). There was a modest increase in ye 2015 to $8.24bn. That figure included $392m of royalty and advertising income from Coty and other licensees. After plunging in ye 2014 as a result of one-off charges associated with the Warnaco deal, net income in ye 2015 almost quadrupled to $439m on revenues of $8.24bn.

There was another big lift in ye 2016, boosted by the absence of prior year adjustments relating to Warnaco. Net income almost tripled in the final quarter, lifting full year profits to $572m. However, revenues slipped back on currency fluctuations to $8.02bn; at constant rates they would have been up 4%. Tommy Hilfiger remains the biggest brand by attributable revenues within the group, as well as the most profitable. Approximately 60% of group revenues were generated in North America and 28% in Europe.

For the year to Jan 2017, revenues rebounded to $8.20bn. However, net income slipped back to $549m as a result of a higher tax charge. Pretax profit was up 4% to $674m. Just over half of revenues were generated in the US, and 29% in Europe.

Management

Emanuel Chirico is chairman & CEO of PVH Corp, with Mike Shaffer as EVP & chief operating & financial officer. Following the acquisition of Tommy Hilfiger, that company's CEO Fred Gehring became head of PVH's existing international operations and group vice chairman until his retirement in 2016. Ken Duane is CEO, heritage brands & wholesale with Michael Kelly as EVP, marketing. Other senior officers include David Sirkin (president, dress shirts), Geoffrey Barrett (president, national brand sportswear), Jim Gerson (president, Speedo), Leslie Hall (president, core intimates), Cheryl Abel-Hodges (president, underwear), Margaret Lachance (president, Van Heusen retail) and Molly Yearick (president, neckwear). Tiffin Jernstadt is SVP, global communications.

At Calvin Klein, long-serving president & CEO Tom Murry retired in early 2015. Steve Shiffman, previously president & chief commercial officer, took over as CEO in July 2014. Melisa Goldie was named as chief marketing officer in 2014, overseeing all brand communications including control of inhouse agency CRK. However, she announced her resignation in late 2016. Michelle Kessler-Sanders is president of the main Calvin Klein Collection brand, with Kevin Carrigan leading diffusion lines CK Calvin Klein, White Label and Jeans. Former Dior designer Raf Simons was appointed as chief creative officer for the entire Calvin Klein portfolio in 2016, with Pieter Mulier as creative director. His first collection was unveiled in 2017.

Other senior officers at Calvin Klein include Eugene Goselin (EVP, operations & CFO), Nick Strange (president, Americas), John van Glahn (president, global licensing) and Barrie Scardina (president, retail). Marketers include Michael DeLellis (EVP, integrated global marketing), Julie Warford (EVP, global marketing operations & strategic initiatives), Rebecca Traverzo (SVP, global media & consumer insights), Jill Krizelman (SVP, global marketing), Sydney Finkel (SVP, global strategy & operations) Katie Doran (VP, global marketing), Dan Kahn (VP, global licensing), Stacey Mayes (senior director, global media) and Shannon Duong (senior director, omni-channel & digital marketing). Marcella Wartenbergh is president, brand management, Europe.

Tommy Hilfiger is honorary chairman of Tommy Hilfiger Group, with Daniel Grieder as CEO. Other senior officers at Tommy Hilfiger include Gary Sheinbaum (CEO, Hilfiger North America), Jeannine d'Onofrio (EVP, production) and Sam Sperrazza (EVP, retail operations). Avery Baker is global chief brand officer. Peter Schlagboehmer is president, retail & licensing, North America. Marketers in New York include Abdel el Hamri (SVP, global marketing & communications), Liz Carey (VP, Americas marketing), Zach Eichman (VP, global communications), Eric Lichtmess (VP, advertising & integrated media, Americas) and Julia Lehman (marketing director). Based in Amsterdam are Luisa Wills (VP, global marketing operations), Wouter van der Pol (VP, global advertising & branding), Sanne Krom (VP, global digital marketing), Andrea Price (digital marketing director) and Carmen Seman (marketing communications director).

Background

After several years working in New York's fashion business, Calvin Klein set up his own business in 1968, aged 25, with $10,000 borrowed from old friend Barry Schwartz. The two became partners, with Klein producing the designs while Schwartz handled the business end. Initially the company made only coats, but it gradually moved into womenswear and sportswear to avoid becoming over-reliant on the winter season. During the early 1970s, the business really took off after a series of elegant collections. The fashion press raved about Klein, describing him as the "American Yves St Laurent" after the reigning king of French haute couture. However Calvin Klein designs were still priced well beyond the reach of most consumers. All that changed in 1980. Keen to reach a wider market, the designer broke with all traditions in the fashion industry, licensing a small denim manufacturer, Puritan Fashions, to mass-produce a line of designer jeans to his specification. These proved hugely successful, taking the industry almost entirely by surprise and spawning numerous imitators. In their first three months on-sale, the jeans reportedly sold more than 200,000 pairs every day, and by 1983, the company was selling more than $500m worth of designer jeans at retail a year.

The group also toyed with other lines including a small cosmetics range. Following the same model as the jeanswear, Calvin Klein Inc sold cosmetics rights to diversified soap and fragrance manufacturer Minnetonka Corporation in 1980. Initial sales of bath lotions and soaps were only modest, but the first Calvin Klein fragrance, Obsession, proved a huge success in 1985. It was quickly followed by Obsession for Men, Eternity and Calvin. By 1989, the Calvin Klein fragrances business had sales of $158m, and was by far Minnetonka's biggest business, generating 75% of sales. The company was acquired that year by global giant Unilever, then intent on developing its own prestige perfume business.

While the success of the jeans line quickly made Calvin Klein a household name, most of the financial benefits were being reaped by licensee Puritan Fashions. In 1983, Klein and Schwartz acquired the company for around $60m, but that move turned out to be a disaster. They had financed the deal with junk bonds, saddling them with substantial debts. Soon afterwards, the designer jeans phenomenon began to fade, pushing CKI into huge losses by the end of the decade. By 1992 Calvin Klein Inc was close to bankruptcy and was only saved through the generous financial assistance of music tycoon David Geffen, who loaned Klein and Schwartz the money to pay off their Puritan bonds. To generate additional funding, he encouraged the company to sell rights for a line of underwear to Warnaco, a company which also produced selected mass-market lines for Ralph Lauren Polo and other designers. In Warnaco's hands the underwear business rocketed from sales of around $50m to more than $300m. A year later CKI sold the jeans license to another company, Designer Holdings.

The huge success of Calvin Klein jeans encouraged the designer to widen his market. A series of other mass-market products followed including underwear, fragrances, home furnishings and more. In most cases, these were lines initiated by Calvin Klein Inc, who then sold on manufacturing and distribution rights to other companies. As a result, the Calvin Klein brand did much to create a worldwide market for more affordable designer clothing. One of the most important developments was CKI's capture in 1994 of Gabriella Forte, who had masterminded the global expansion of the Giorgio Armani brand over the previous 15 years. Forte quickly set about working the same magic on behalf of Calvin Klein, expanding the brand worldwide through a small collection of lavish upscale boutiques, as well as improved licensing arrangements.

However the relationship with Warnaco began to sour in the late 1990s, especially when the mass-marketer also acquired Designer Holdings and the Calvin Klein jeans license, against CKI's wishes. In 1999, Klein and Schwartz were reported to have put the business up for sale with a price tag of $1bn. However they were unable to find a buyer at that price, not least because potential buyers were frightened off by the worsening relationship with key licensee Warnaco. The following year, Klein took Warnaco to court, alleging that it had infringed trademarks by altering his designs, and also sold its merchandise to discount stores including JC Penney, substantially devaluing the brand. The suit was settled at the last minute out of court. There was further embarrassment a year later when, despite the success of its Calvin Klein lines, Warnaco filed for bankruptcy protection. (It emerged from Chapter 11 in 2003). Facing a downturn in designer spending in 2001, CKI cut back staffing and closed its last manufacturing operation in the US, making mid-price sportswear. In 2002, Klein and Schwartz, both then 60, agreed to sell the business for $550m in cash and stock to Phillips-Van Heusen.

The origins of Phillips-Van Heusen were laid down in Pennsylvania in 1881 by Moses Phillips who set up in business making men's shirts and selling them from a market stall. The business later relocated to New York, and in 1918, Moses' son Seymour went into partnership with John Van Heusen, a Dutch immigrant who had come to America to exploit his design for a self-folding shirt collar. (All shirts then had separate starched collars which needed to be attached with studs). In 1922 the company, renamed Phillips-Van Heusen, introduced the first ever men's shirt with an integrated attached collar, and the design was subsequently copied by all other manufacturers. Nevertheless, Phillips-Van Heusen retained his position as one of America's foremost manufacturers of dress shirts. Later it diversified, acquiring several other tailored brands including Izod and Bass shoes, and launched dress shirts under license for Geoffrey Beene, DKNY, Kenneth Cole and others. Van Heusen had established a separate business of his own in Britain, and this company was acquired by Phillips-Van Heusen of the US in 2000. Yet the group's most significant transaction by far was the acquisition in 2002 of the Calvin Klein brand name and business.

In 2006, Warnaco extended its hold on part of the Calvin Klein business by acquiring the companies which controlled branded jeanswear and bridge apparel, as well as retail outlets, in Europe and Asia. As part of that deal it also acquired Confezioni Moda International (CMI), the manufacturing company responsible for producing the top-end Calvin Klein Collection range. In 2007, in a move designed to establish a more amicable working relationship, Warnaco agreed a deal with PVH, swapping CMI for wider worldwide rights to the Calvin Klein Jeans range.

Last full revision 27th October 2017


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