Calvin Klein
From Wikipedia, the free encyclopedia
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| Type | Subsidiary |
|---|---|
| Industry | Apparel, perfume |
| Founded | 1968 |
| Founders | Calvin Klein |
| Headquarters | New York City, United States |
| Parent | Phillips-Van Heusen |
| Website | CalvinKlein.com |
Contents
History
A Calvin Klein store
The early years
In 1968, Klein founded Calvin Klein Limited, a coat shop in the York Hotel in New York City, with $10,000.[5][6] The first Calvin Klein collection was a line of "youthful, understated coats and dresses" featured at the New York City store, Bonwit Teller.[5]In September 1969, Klein appeared on the cover of Vogue magazine.[7]
1970s
By 1971, Klein had added sportswear, classic blazers, and lingerie to his women's collection.In 1973, he received his first Coty American Fashion Critics' Award for his 74-piece womenswear collection - the youngest recipient at that time.[7] Klein won the award again in 1974 and 1975.[7] 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 menswear, Klein's annual retail volume was estimated[by whom?] 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. Klein's design assistant at the time, Jeffrey Banks, has claimed credit for the logo garments, stating that he had the logo from a press folder silkscreened onto the sleeve of a brown T-shirt as a present for Klein.[8] The gift was assumed by Schwartz to be part of the upcoming line, and similar logo shirts formed the uniform for the front-of-house staff at Klein's next catwalk show, leading to buyer demand.[8]
In the late 1970s, the company also made attempts to set up its own fragrance and cosmetics lines, 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, became so successful that his underpants became generally known as "Calvins".
1980s–1985: Underwear
In the early 1980s, Klein changed the American market of men's underwear—one where most men's underwear was white, purchased in packs of three by a "wife, mother or girlfriend when they needed to be" to one where "the American male to care about the brand of something few ever see".[9]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 rumors 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 1990s, mainly through the success of its highly popular underwear and fragrance lines, as well as the ck sportswear line. During his 1990-1995 stint as Calvin Klein's head of menswear design, John Varvatos pioneered a type of men's underwear called boxer briefs, a hybrid of boxer shorts and briefs.[10] Made famous by a series of 1992 print ads featuring Mark "Marky Mark" Wahlberg,[10][11] they have been called "one of the greatest apparel revolutions of the century."[10] 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 anymore. The company would never manage to go public, which had supposedly been Klein's plan once.
2002–present: Acquisition by Phillips van Heusen
In mid-December 2002, Calvin Klein Inc. (CKI) was sold to Phillips Van Heusen Corp (PVH),[12] 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.[13] 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.[14]
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.[15]
CKI thus became a wholly owned subsidiary of PVH. In the beginning, Klein himself, who was included as a person in the 15-year 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.
In a 2010 report, PVH, who manages the ready-to-wear activities, had estimated sales of €4.6 billion of Calvin Klein products.[3]
In Feb 2013 Warnaco Group was acquired by PVH which united Calvin Klein formal, underwear, jeans and sportswear lines.[16][17]
Products and marketing
Product & brand history
The most visible brand names in the Calvin Klein portfolio include:- Calvin Klein Collection (black label, upscale[3] top-end designer line)
- ck Calvin Klein (grey label, recently repositioned as bridge collection line; licensed to Warnaco Group, Inc. through at least 2044.[3][18] PVH acquired Warnaco Group in Feb 2013[16])
- Calvin Klein (white label, basic fashion[3] 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 through at least 2044.[18] PVH acquired Warnaco Group in Feb 2013[16])
- 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 through at least 2044.[18] PVH acquired Warnaco Group in Feb 2013[16])
- Calvin Klein Watches + Jewelry (watches launched in 1997, jewelry in 2004)
Fragrances
Calvin Klein has various lines of perfumes and colognes, including Obsession and Eternity. Until May 2005, their perfumes and the corresponding fragrance lines were maintained by Calvin Klein Cosmetics Company (CKCC), a Unilever company. Cosmetics giant Coty, Inc. of New York bought the fragrance licensing agreements from Unilever.Advertising
Calvin Klein models
They also play with emerging technologies. When advertising cKone perfume in 1999, they employed a very unusual and groundbreaking campaign that displayed e-mail addresses in print advertisements, targeted at teenagers. When these teens mailed these addresses, they would be placed on a mailing list that sent them mails with vague details about the models' lives, with fake details meant to make them more relatable. These mails came at unpredictable intervals, and were supposed to give readers the feeling that they had some connection with these characters. Though the mailing lists were discontinued in 2002, the campaign has inspired similar marketing tactics for movies and other retail products.
Branding
Like other fashion brands, Calvin Klein established a monogram: the "cK" emblem.[24]Licensees
As of 2012, the top three licensees were:- Warnco - 40% of license royalties, which is "around $100 million"[3]
- Coty - 12% of license royalties[3]
- G-iii Apparel Group - 14% of license royalties[3]
Internet
In 2004, the company bought the domain name CK.com. Calvin Klein is one of the few corporations worldwide to own a two letter domain name.[citation needed]Designers
The current creative director for Calvin Klein Collection for women is Brazilian-born Francisco Costa who had already worked with Klein directly before the founder's departure from the company. Costa had taken over the job in 2003.[25]Italo Zucchelli, a former Jil Sander and Romeo Gigli designer, had collaborated with Calvin Klein for six seasons before he became head designer of the Calvin Klein Collection menswear line in spring 2004.
Kevin Carrigan, an Englishman, is the creative director of the ck Calvin Klein and Calvin Klein (white label) brands and their related licensed products. Carrigan has been with Calvin Klein since 1998.
Corporate
Stores
- Calvin Klein Collection
- Calvin Klein (white label)
- Calvin Klein Jeans
- Calvin Klein Underwear
- Department Stores
- Europe and Asia
Controversies
The 1995 adverts promoting Calvin Klein jeans received criticism for being "kiddie porn".[26][27][28][29]In August 2012, Lululemon Athletica filed suit against Calvin Klein and supplier G-III Apparel Group for infringement of three Lululemon design patents for yoga pants.[30] The lawsuit was somewhat unusual as it involved a designer seeking to assert Intellectual Property protection in clothing through patent rights. On November 20, 2012, Lululemon filed a notice of voluntary dismissal in the Delaware courts based upon a private settlement agreement reached between the parties that would dismiss the suit.[31] According to a Lululemon press release, "Lululemon values its products and related IP rights and takes the necessary steps to protect its assets when we see attempts to mirror our products.”[32]
However, according to Chevalier's brand book Luxury Brand Management, Klein "is seldom involved in the design and the development of products bearing his name"[3] and "all activities are subcontracted to licensees."[3]
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