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fashion-features

Calvin’s Swan Song

Calvin Klein told several friends that Friday’s fall collection would be his final one — at least in his position as chief designer.

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When the deal to sell the company to PVH was finally reached in December, Klatsky made it clear it was not only a designer brand he had acquired, but also creative control, in return for a lucrative payout to Klein, which in addition to the total $430 million that was paid to both partners, includes ongoing financial incentives tied to future sales of the Calvin Klein brands that could potentially drive the purchase price to as much as $700 million over the next 15 years.

PVH intends to build the Calvin Klein name in many under-developed apparel categories and is negotiating with several of the biggest women’s companies to develop a new main floor sportswear concept, which Klatsky believes is a $1 billion opportunity. The company, which specializes in men’s apparel, will also build a similar men’s brand in-house. Klein personally endorsed this plan, saying at the time that he always wanted to develop such a big-volume business.

“I have a long-term emotional, as well as financial, interest in the success of this business,” Klein said in December. “This has been my life. It’s a company not just about me, but also a lot of incredibly wonderful people. I care about this and I have a financial interest in seeing it do well.”

Klein and Schwartz also received incentives to do the deal with PVH with shares in the company representing a 4.4 percent stake. The competition to acquire Calvin Klein was intense and several deals nearly reached fruition late last year before falling apart at the last moment, but the bidding was not nearly as steep as it was a few years ago when the partners put the company on the block with an asking price of $1 billion that drew interest from all the luxury conglomerates like Gucci Group and LVMH Moët Hennessy Louis Vuitton, as well as Lawrence Stroll and Silas Chou, who bought an 85 percent stake in Michael Kors last month.

PVH faced a more serious bidder last year when VF Corp. made a run at both Calvin Klein and its big money jeans and underwear businesses through Warnaco, but the fact that it was now mass-oriented companies looking at a designer business, instead of a luxury group, left many to consider what the consequences would be for Klein. He said at the time, “Quite frankly, I wanted and believed we needed a company with the resources to take our brands to the next place.”
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