Women’s Wear Daily
04.16.2014
fashion-features
fashion-features

Calvin to Regain Collection Control

Calvin Klein Inc. is bringing its much-traveled Collection business back in-house and, to help cover the costs, CKI owner Phillips-Van Heusen Corp. is...

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Italo Zucchelli and Tom Murry

Italo Zucchelli and Tom Murry

Photo By WWD Staff

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NEW YORK — Calvin Klein Inc. is bringing its much-traveled Collection business back in-house and, to help cover the costs, CKI owner Phillips-Van Heusen Corp. is getting $38.5 million from Warnaco Group Inc. for several new licenses.

In the multifaceted deal, expected to close in mid-January, CKI will take over Warnaco's shares of Calvin Klein Collection licensee Confezioni Moda Italia Srl, or CMI. Warnaco was due to begin producing Collection in 2008, which would have marked the first time it made designer-level ready-to-wear.

Now Warnaco will instead acquire the rights to operate Calvin Klein Jeans accessories stores in Europe, Asia and Latin America; ck Calvin Klein accessories boutiques in Europe and Latin America; Calvin Klein Jeans e-commerce for the Americas, Europe and Asia, and Calvin Klein Jeans accessories e-commerce for Europe, Asia and Latin America through 2044. It will also enter a sublicense and distribution agreement for Calvin Klein Golf through Windsong Golf LLC for Asia.

In return, Warnaco will pay $38.5 million to PVH "to offset projected losses for the Calvin Klein Collection business," according to a PVH statement. "The Collection business would be expected to have no material financial impact on PVH. The company would acquire CMI free of all debt and would pay Warnaco an amount based on the net working capital of CMI."

"[The deals] went hand in hand," said Joe Gromek, Warnaco's president and chief executive officer.

The news confirms a report CKI was taking Collection in-house in WWD Monday.

"It's something we have been discussing for the past six months with Warnaco," said Tom Murry, president and chief operating officer of Calvin Klein Inc. "Everyone understands that it's really best for a Collection business to be operated in-house. Most of our businesses fit the licensing model very well, and Collection is the most difficult to license for several reasons." Those challenges include the in-house presence of creative directors Francisco Costa and Italo Zucchelli, head of women's and men's, respectively, versus external operations, as well as the pressures of maximizing profitability in a licensing arrangement.

"With most Collection businesses, profitability is not necessarily the number-one objective," Murry said. "Everyone obviously wants to make a profit or lose as little as possible, but the main reason for a Collection business is to drive the image and create the halo for the brand."
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