Founder:: Calvin Klein
Headquarters:: New York City, United States
Parent:: Phillips-Van Heusen
Calvin Klein Inc. is a fashion house founded by American fashion designer Calvin Klein. The company is head quartered in Midtown Manhattan, New York City and currently owned by Phillips Van Heusen. Like other fashion brands, Calvin Klein established a monogram: the “cK” emblem.
In 1968, Klein founded Calvin Klein Limited, a coat shop in the York Hotel in New York City, with $10,000. The first Calvin Klein collection was a line of men’s and women’s coats featured at the New York City store, Bonwit Teller.
In 1969, Klein appeared on the cover of Vogue magazine. By 1971, sportswear, classic blazers and lingerie were added to his women’s collection.
In 1973, he received his first Coty American Fashion Critics’ Award for his 74 piece women’s wear collection.
By 1977, annual revenues had increased to $30 million, and Klein had licenses for scarves, shoes, belts, furs, sunglasses, and sheets. Klein and Schwartz were making $4 million each. After the company signed licenses for cosmetics, jeans, and men’s wear, Klein’s annual retail volume was estimated at $100 million.
In 1978, Klein claimed sales of 200,000 pairs of his famous jeans the first week they were on the market. By 1981, Fortune figured Klein’s annual income at $8.5 million a year. In the mid 1970s, he had created a designer jeans craze by putting his name on the back pocket.
In the late 1970s, the company also made attempts to set up it’s own fragrance and cosmetics business, but soon withdrew from the market with big financial losses. In the 1980s, as the designer jeans frenzy reached its all time high, Calvin Klein introduced a highly successful line of boxer shorts for women and a men’s underwear collection which would later gross $70 million in a single year. Calvin Klein’s underwear business, promoted later in the 1990s with giant billboards showing images of pop singer Mark “Marky Mark” Wahlberg, was so successful that his underpants became generally known as “Calvins”.
The stunning growth continued through the early eighties. The licensing program, which brought in $24,000 when it was initiated in 1974, had royalty income of $7.3 million ten years later. That year, worldwide retail sales were estimated at more than $600 million. Klein’s clothes were sold through 12,000 stores in the United States and were available in six other countries. His annual income passed $12 million.
Financial problems, increased pressure from all sides, disagreements with the licensee of the menswear line and its disappointing sales as well as an enormous employee turnover both within Calvin Klein and its licensing partners led to the first rumours that Calvin Klein Industries, as the company had been known by then, was up for sale. And indeed, in late 1987, it was said that the sale of the company to Triangle Industries, a container manufacturer, had only failed because of the crashing stock market.
Although the company almost faced bankruptcy in 1992, Calvin Klein managed to regain and increase the profitability of his empire throughout the later 90s, mainly through the success of its highly popular underwear and fragrance lines, as well as the CK sportswear line. Klein was named “America’s Best Designer” for his minimalist all American designs in 1993, and it came as a surprise in 1999 when it was announced that CKI was again up for sale. Planning to expand its business, the company had been approached by two luxury goods companies, LVMH and Pinault Printemps Redoute, to join Calvin Klein, but nothing resulted. Other potentials like Tommy Hilfiger Corp. and Italy’s Holding di Partecipazioni proved to be similar disappointments because of CKI’s steep price tag of supposedly $1 billion. After seven months and no potential buyer, Klein announced that his empire was not on the market any more. The company would never manage to go public, which had supposedly been Klein’s plan once. In June 2008, Calvin Klein started to sponsor America’s Next Top Male Model, allowing the winner to embark on a 100,000 dollar contract as well as a runway show, as a bonus, to launch their career.
Acquisition by Phillips Van Heusen
In mid December 2002, Calvin Klein Inc. (CKI) was finally sold to shirt maker Phillips Van Heusen Corp (PVH),whose then CEO Bruce Klatsky was the driving force behind the deal, for about $400 million in cash, $30 million in stock as well as licensing rights and royalties linked to revenues over the following 15 years that were estimated at $200 to $300 million. The sale also included an ongoing personal financial incentive for Klein based on future sales of the Calvin Klein brand.
PVH outbid VF Corp., the maker of Lee and Wrangler jeans, which had also been interested in the jeans, underwear and swimwear business of CK that had been controlled by Warnaco Group, maker of Speedo swimwear in the US, since 1997. The deal with PVH did not include these businesses, and they remained with Warnaco. Unable to pay debts from acquisitions and licensing agreements and due to bad publicity by a later dismissed lawsuit with Calvin Klein over selling license products to retailers other than agreed upon with Calvin Klein, Warnaco had filed for chapter 11 protection in mid 2001 but eventually emerged from bankruptcy in February 2003.
The transaction between Calvin Klein and PVH was financially supported by Apax Partners Inc., a New York private equity firm, which is said to have made a $250 million equity investment in PVH convertible preferred stock, as well as a $125 million, two year secured note, all in exchange for seats on the board of PVH.
CKI thus became a wholly owned subsidiary of PVH. In the beginning, Klein himself, who was included as a person in the 15years contract he had signed with PVH, remained creative head of the collections but then continued as an advisor (consulting creative director) to the new company from 2003 on and has since been more withdrawn from the business. Barry K. Schwartz was said to concentrate on his role as chairman of the New York Racing Association, a horse racing club. The current President and COO of the CKI division within PVH is Tom Murry, who had filled this position already before the acquisition.
With the fall 2006 Collection runway presentations in New York City, CKI inaugurated an 8,600 sq ft (800 m2) show room space that can seat up to 600 people on the ground floor of 205 West 39th Street, in Times Square South where Calvin Klein has been headquartered since 1978.
-Calvin Klein Collection (black label, top-end designer line)
-CK Calvin Klein (grey label, recently repositioned as bridge collection line; licensed to Warnaco Group, Inc.
-Calvin Klein (white label, better sportswear line)
-Calvin Klein Sport (sports version of the white label line for Macy’s)
-Calvin Klein Jeans (denimwear line; licensed to Warnaco Group
-Calvin Klein Home (high end bedding, towel, bath rug and accessory collections)
-The Khaki Collection (youthful medium to high end bedding, towel, bath rug and accessories) discontinued in 2008
-Calvin Klein Golf (launched in late 2007)
-Calvin Klein Underwear (underwear collections; licensed to Warnaco Group
-CK one Lifestyle brand (fragrance, underwear, jeans launched 2011)
-Calvin Klein Watches + Jewelry (watches launched in 1997, jewelry in 2004)