Calvin Klein (company)

This article is about the clothing company. For the fashion designer who founded the company, see Calvin Klein (fashion designer).

Calvin Klein Inc. is an American clothing company founded in 1968 by Calvin Klein.

History:

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In 1968, Klein and his childhood friend Barry K. Schwartz, who was to manage the business, then initially founded Calvin Klein Ltd., a coat shop in the York Hotel, in New York City with $10,000. Legend has it that a year later a buyer from Bonwit Teller got off the elevator on the wrong floor, and ended up placing a $50,000 order. It is more likely though, that Klein showed his work to Bonwit Teller staff, which led to the first Calvin Klein collection: a line of men’s and women’s coats featured at the New York City store.

In 1969, Mr. Klein, who was later described as “the supreme master of minimalism,” appeared on the cover of Vogue magazine. By 1971, sportswear, classic blazers as well as lingerie were added to his women’s collection portfolio.

In 1973, he was awarded the Coty Award for the first time, which he received for three consecutive years, for his 74-piece womenswear collection. By 1977, annual revenues had jumped to $30 million, and he 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 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 magazine 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. The jeans were famously advertised with a commercial featuring a 15-year-old Brooke Shields cooing in 1979/80 that “nothing comes between me and my Calvins” and “I’ve got seven Calvins in my closet, and if they could talk, I’d be ruined.” Controversial advertising, including a series of ads featuring adolescents in sexually evocative poses, has been a recurring theme for the company. Shields advertised for Klein underwear in 1984 as well.

In the late 1970’s, the company also made attempts to set up its 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 “Marky Mark” Mark Wahlberg, was so successful that his underpants became generally known as “Calvins.”[1]

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 90s, mainly through the success of its highly popular underwear and fragrance lines, as well as the ck sportswear line. Mr. 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, Mr. Klein announced that his empire was not on the market anymore. The company would never manage to go public, which had supposedly been Mr. Klein’s plan once.

Acquisition by Phillips-Van Heusen

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In mid-December 2002, Calvin Klein Inc. (CKI) was finally sold to shirt maker Phillips Van Heusen Corp.[2], 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 Mr. Klein based on future sales of the Calvin Klein brand.

PVH outcompeted 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, 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 of 2003. Mr. Klein himself had considered Linda Wachner, then CEO of Warnaco Group, a personal enemy.

In reaction to the announcement of the deal, Phillips-Van Heusen shares closed down 14 cents at $12.54 on the New York Stock Exchange on December 17, 2002. The industry feared that PVH had taken on too much with the acquisition. It is said that talks between Calvin Klein and PVH had begun as early as 2000.

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, Mr. 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. Mr. Klein has appeared in the news from time to time since then when his name was associated with drug abuse, withdrawal treatments and public nuisance. Barry 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.

Current licenses

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In early 2003, it was announced that Vestimenta SpA of Italy would be entrusted with the manufacture and distribution of Calvin Klein Collection for men and women – the label’s high-end designer line which these days is shown on runways during the fashion weeks in New York and Milan – while design, marketing, advertising and public relations as well as control over the distribution of the line remained with CKI.

In June 2003, CKI announced that Kellwood Corp. of Chesterfield, Missouri had been selected as a strategic licensing partner to produce, source and distribute a Calvin Klein women’s better sportswear line to launch in North, Central and South America in late 2004. Under the terms of the arrangement, Kellwood collaborated with Andrew Grossman and Alexander Vreeland, two seasoned Giorgio Armani executives, who had formed a new business venture named GAV with Jay Schottenstein, chairman and CEO of Schottenstein Stores Corp., to help develop and launch the line in terms of marketing, design and advertising. GAV, a Manhattan based company, already then designed and manufactured for ck Calvin Klein and Emanuel Ungaro. The cooperation between Kellwood and GAV was ended on friendly terms in September 2005 with Kellwood being left solely responsible for the women’s sportswear line while the other parties could focus on their ck Calvin Klein bridge business. A better sportswear line for men has been designed and developed in-house at CKI and PVH since spring 2004.

As of December 2005, the Warnaco Group announced that in 2006 they would acquire 100% of the shares of the companies that operate the licenses and related wholesale and retail businesses of Calvin Klein Jeans and accessories in Europe and Asia as well as the ck Calvin Klein bridge line of sportswear and accessories in Europe from Fingen SpA, a Florentine holding company, and Euro Cormar SpA for €240 million. Fingen, a company controlled by the Italian Fratini family, had held a 90% share in the European Calvin Klein business – which was managed by Fabio Fusco – since 1995 with CKI owning the remaining 10%. Additionally, beginning in 2008 and continuing through December 2013, Warnaco will assume the license for Calvin Klein Collection men’s and women’s apparel and accessories worldwide from Fingen, with Mr. Fusco remaining in charge after the completion of the deal. The deal will have no impact on the existing US licenses with Kellwood Corp. for the Calvin Klein women’s better sportswear line and with GAV for the ck Calvin Klein bridge sportswear business.

In 1997, Calvin Klein International and Swatch Group signed a license agreement. Since this date, the company Calvin Klein Watches & Jewelry has been creating and marketing watches, and more recently jewelry, for Calvin Klein International.

Designers

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The current creative director for Calvin Klein Collection for women is Belgian born Raf Simons who previously worked for Dior next to his own brand.

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.

Stores

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In the late 1990s the company opened elegant Calvin Klein Collection stores in Paris, Seoul, and Taipei and ultra-fancy ck Calvin Klein stores in Hong Kong, Milan and Kuwait City. As of today, there is only one Calvin Klein Collection store operated by CKI. It is located in New York City. The Calvin Klein stores
Out of the two Calvin Klein Collection stores that existed in the US, the Dallas location in Highland Park Village which had been open for 20 years was closed in mid-2005. The only international location, in Paris, was closed by PVH in March 2006. The New York store, which serves as the company’s flagship store at 654 Madison Ave., remains open still today. Recently, however, the company has opened Calvin Klein Collection stores in Milan, Beijing and Dubai, according to it’s website. White Label Calvin Klein stores have also been opened at Lenox Square in Atlanta, Beverly Center in Los Angeles, Cherry Creek Mall in Denver, Natick Collection in Natick, MA and The Mall at Partridge Creek in Michigan. The sportswear and ck lines are mainly sold through North American department stores and in Europe through some high-end retail stores. In Europe, Calvin Klein is predominantly known for his underwear, and perhaps the Collection business, rather than for the medium-priced sportswear lines. In Asia, there are also signature ck stores that only carry the ck sportswear line. The Warnaco Group, in addition, maintains Calvin Klein Jeans and corresponding outlet stores. Apart from signature Calvin Klein Underwear boutiques, there are also several Calvin Klein Outlet stores, mostly located within factory outlet malls in the US, that sell the sportswear and ck lines at reduced prices but do not carry the Collection lines.

With the fall 2006 Collection runway presentations in New York City, CKI inaugurated an 8,600 sq ft 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. Their current office space in the building is about 143,000 sq ft with lease costs probably figuring at around $30 per sq in that area.

In 2006 two Calvin Klein Jeans boutiques opened in Cairo and Alexandria Egypt, selling only Calvin Klein Jeans.
Also in 2006, Calvin Klein opened three boutiques (including a store selling only underwear) in Istanbul/Turkey.

Besides the aforementioned specialised/dedicated Calvin Klein stores, the brand is widely available across globe. Notable retailers in the UK offering Calvin Klein include stores such as John Lewis Partnership, Debenhams and KJ Beckett. Likewise in the US, collections are available in department stores including Bergdorf Goodman, Lord & Taylor, Saks Fifth Avenue, and Neiman Marcus as well as many small independent stores. Calvin Klein collections are also found online with particular internet focus on selling Calvin Klein underwear and fragrance.

Brands

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The most visible brand names in the Calvin Klein portfolio include:

• Calvin Klein Collection

  (black label, top-end designer line)

• ck Calvin Klein

  (grey label, recently repositioned as bridge collection line)

• Calvin Klein (white label, better sportswear line)

• Calvin Klein Jeans

  (denimwear line)

• Calvin Klein Home

  (high end bedding, towel, bath rug and accessory collections)

• Calvin Klein Golf

  (golf apparel line)

Licenses are in effect for the most of the above mentioned brands’ jeans, kids clothing, underwear, swimwear, sleepwear, hosiery and socks, watches, fragrance, eyewear and home lines/collections.

Fragrances

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Calvin Klein is famous for the label’s various lines of perfumes and colognes. Their perfumes and the corresponding fragrance lines used to be maintained by Calvin Klein Cosmetics Company (CKCC), a Unilever company, until recently when in May 2005 cosmetics giant Coty, Inc. of New York bought up the fragrance licensing agreements from Unilever.
[year of launch]

• Calvin (men) [1981]
• Calvin Klein Man [2007]
• ck be (unisex) [1996]
• ck IN2U (men and women) [2007]
• ck one (unisex) [1994, ‘Red Hot’ limited edition 2000, ‘Graffiti’ art limited edition 2003]
• ck one Electric (unisex) [2006] LIMITED EDITION
• ck one Scene (unisex) [2006] LIMITED EDITION
• ck one Summer [2004 yellow and green] [2005 yellow and orange] [2006 blue and green] [2007 red and green] [2008 clear blue] LIMITED EDITIONS
• Contradiction (men and women) [men 1998, women 1997]
• Crave (men) [2003]
• Eternity (men and women) [1989]
• Eternity Moment (women) [2004]
• Eternity Purple Orchid (women) [2003] LIMITED EDITION
• Eternity Rose blush (women) 2002 LIMITED EDITION
• Eternity Summer (men and women)[2006] LIMITED EDITION

• Escape

  (men and women) [men 1993, women 1991]

• Euphoria

  (women) [2005] (men) [2006]

• Euphoria Blossom (women)[2007]
• Obsession (men and women) [men 1985, women 1986]
• Obsession Night (men and women) [2005]
• Truth (men and women) [men 2002, women 2000]
• Obsessed (men and women) [2017]

Advertising

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The early ads in the 1980’s were shot by Bruce Weber. Calvin Klein’s advertising campaigns are frequently controversial, but prove this can be very successful – to the point of making a blitz career. One of his male underwear models, Mark Wahlberg, went on to fame as hip hop star ‘Marky Mark’, launching himself into the Hollywood scene to become a current “A-list” actor. Another Hollywood star owing his respectable career to the Calvin Klein advertisements is Antonio Sabato Jr.. In the early ’90s, Calvin Klein was also responsible for launching the international career of supermodel Kate Moss and offering her another opportunity to revive her career in 2002 after cocaine allegations[3].

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 (such as [email protected] or [email protected]). 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.

Internet

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In 2004 the company managed to buy the premium Domain Name CK.com.

Trivia

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• In Back to the Future, Marty McFly goes by the name Calvin Klein after he is called that by his fifties mother because he is wearing CK underwear.

• On Family Guy, Klein is seen asking to use Stewie in one of his ads. When Peter feels unsure, Brian states “Peter, this is heterosexual fashion designer Calvin Klein,” referencing the homosexual stereotype of male fashion designers.

References

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1. ↑

   Prud’homme, A.. “What’s It All About, Calvin?.” Time. Sept. 1991: 44. Middle Search Plus. 13 Feb. 2008 < http://search.ebscohost.com/login.aspx?direct=true&db=mih&AN=9109232626&site=src-live >.

2. ↑

   Tracie Rozhon, Calvin Klein Selling His Company To Biggest Shirtmaker in the U.S., New York Times, 18 December 2002

3. ↑

   Moss to star in new Calvin Klein ad, USA Today, 10 April 2006

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