Calvin Klein Exits Collection Business, Leaving ‘Halo’ Effect Behind
Calvin Klein is bidding the Collection business goodbye.
After deciding in January to shutter its 205W39NYC business, the renamed high-end designer collection in which parent PVH Corp. had invested close to $70 million, Klein has opted to get out of the collection business altogether. In January, Klein said it planned to relaunch the 205W39NYC collection business following chief creative officer Raf Simons’ departure under a new name, design approach and creative direction, but changed its mind after a thorough review of the entire business.
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As a result, 50 employees in the New York office and 50 employees in the Milan office were let go, and the company plans to shut down the Milan office. In addition, Michelle Kessler-Sanders, president of Calvin Klein 205W39NYC and Calvin Klein by Appointment, will be leaving the company, but will stay on through June to help close down the business. She may continue to work in an advisory capacity beyond that.
The brand plans to shutter its Calvin Klein by Appointment business unit as well, but to continue to dress talent and celebrities, said a source close to the company.
Steve Shiffman, who remains chief executive officer of Calvin Klein Inc., was unavailable for comment Wednesday.
Klein bypassed a fashion show in February and shipped its final 205W39NYC collection under Simons’ direction for spring 2019.
Prior to Simons’ tenure as chief creative officer in August 2016, the Collection had represented a modern, minimalist and clean aesthetic and while not a big volume generator, set the tone and created a “halo” effect for Klein’s entire business.
While Simons brought a lot of buzz to the house and won several prestigious CFDA Awards for the Collection, he took the brand in a totally different design direction, which some considered too high-concept and didn’t relate to the DNA of the brand. Emanuel Chirico, chairman and ceo of PVH Corp., parent company of Klein, said over the last three years, the group has invested between $60 million and $70 million in 205W39NYC — and it hasn’t seen a return on the investment.
As reported, Klein and Simons amicably parted ways in late December after Klein decided on a brand direction that differed from Simons’ creative vision. Simons’ three-year contract was set to expire in August.
In January, Klein also said it planned to close its New York flagship at 654 Madison Avenue. The flagship, opened in 1995, was reimagined under Simons with a floor-to-ceiling installation by artist Sterling Ruby to showcase the Belgian designer’s 205W39NYC collection. Ruby had transformed the boutique in June 2017 from its minimal design by John Pawson to an otherworldly installation consisting of bright yellow walls, industrial scaffolding and soft, tie-dye fabric sculptures.
PVH said in January that the Calvin Klein restructuring, primarily consisting of severance, inventory markdowns and allowances, and the store closure were expected to result in about $120 million in restructuring costs over 12 months. About 100 employees were let ago across the entire business, including the flagship, in January.
A source close to the situation said the company still has an active search under way for a fashion director, who would oversee design for the entire business. That person will work closely with the design and merchandising teams of all product categories, that include jeans and underwear.
Morris Goldfarb, chairman and ceo of G-III Apparel Corp., which does the bulk of Calvin Klein’s apparel business, said, “I never met Raf and he had no impact on our business. Needless to say, I don’t need a replacement.” The fact that Klein is not going forward with a Collection “has nothing to do with G-III,” he said.
He said if Klein hires a fashion director to oversee Calvin Klein’s products, that person will interact with G-III. “They have historically had interaction with us. They view the product and it’s an open-door policy. They have the right to approve everything we produce. We understand the brand quite well. We helped create the women’s side of the business. They have the right to direct what we go out with. It’s their brand,” said Goldfarb. G-III has the Calvin Klein license for ready-to-wear, accessories, outerwear, swimwear and dresses in North America.
Susan Sokol, cofounder and ceo of High Alchemy, and a former president of Calvin Klein Collection from 1983 to 1994, said Wednesday that she believes that these days, the Calvin Klein business can flourish without the “halo” aspect of a designer collection.
“I do believe it can because I think the brand Calvin Klein became a true mass brand once PVH bought it. And I don’t mean this in a negative way. I think PVH has done an admirable job of leveraging the Calvin Klein name and dream through its marketing efforts. The customer that is buying Calvin Klein dresses, sportswear, denim, perfume, underwear, eyewear, etc., is not the designer customer and has not been for many years. Through these last two decades the business has clearly flourished under PVH’s leadership. The women’s collection was only a tiny morsel of the total picture. So now, after all this time, I think we have been looking at a different business model for Calvin Klein that is clearly working with very solid licensing partners, smart top management and a business that will continue to flourish with or without a designer umbrella collection business.”
Robert Burke, founder and ceo of Robert Burke Associates, an industry consultancy, said, “It’s sad to hear because when one thinks of the Calvin Klein business and the Collection business and what it represented to American fashion and to the world, it’s sad to see it go away. It speaks to how delicate the fashion business is today.”
“And they certainly had the resources and the manpower to execute, but unfortunately it didn’t work. Sometimes it’s not just about the manpower and the financial strength. It’s really about product and talent,” added Burke.
“I think that fashion is aspirational and it has to have that element. I’m sure it gives pause for many of the big groups to question the importance of Collection,” he said. “Call me a romantic. I still think you need it. It has to make people dream and aspire to something. It’s really the launching point for everything,” he said.
Asked whether a Collection is necessary for a designer business to flourish today, Ron Frasch, operating partner at Castanea Partners, who has his own consulting business, said, “I think it’s different for every brand. For Calvin Klein, I think it would have been important had they retained the right designer and the right staffing commitment. They brought in quality executives under Shiffman, and I thought those were very good moves, but it sounds like it just didn’t work out. Unless they were willing to make that commitment again, I don’t think it’s necessary. I think it’s very sad. This is a treasured American brand with a great history about American sportswear. But that commitment, and that’s a very expensive commitment, I’m sure they had hoped for much better returns on it. I don’t think that anyone will miss it unfortunately.”
He said he didn’t feel it would impact what G-III is doing. “It would have had a positive impact had it been executed as they had hoped, but it’s also a very expensive commitment to make,” said Frasch. “They lost a lot of money with it, they lost money prior to that. Unless they were willing to make that commitment again, it’s not worthwhile. I’m sorry for Michelle and all the staff.”
Discussing whether the brand can succeed without a designer collection, Kim Vernon, president and ceo of Vernon Company, a consulting firm, said, “I see it as a huge challenge that would require experienced and knowledgeable talent and management in order to rethink how to hold onto the core values of the brand, which have been sidelined, while developing exciting product and selling formats that are relevant today. Tommy [Hilfiger] and his team have done a great job at maintaining relevance in a very true-to-brand way. What that looks like for Calvin Klein, without a Collection, will probably be an evolution, not a revolution. My fingers are crossed.”
After years of establishing a minimalist and modern design aesthetic for Calvin Klein under its namesake designer and Francisco Costa, the company underwent a complete transformation under Simons. At the time, Simons was given the kind of complete control that had not been seen since the days when Calvin Klein himself, and his partner, Barry Schwartz, were running the business. Simons immediately set out to rethink the collections, change the teams, change the ad campaigns and basically reinvent the Klein business, which was generating some $8 billion in sales but had lost its momentum in some respects.
Over the last two years, Simons explored the dark side of the American pop landscape, the immigrant “outsider” experience, cowboy culture, the high school years, horror movies and the actual apocalypse with models walking the runway in hazmat suits, firefighter coats and Mylar accessories. His tenure had several bright spots, when one considers all the buzz the initial partnership brought to the house. Calvin Klein’s fashion shows were packed with A-list celebrities such as Gwyneth Paltrow, Brooke Shields, Julianne Moore, Sarah Jessica Parker, Millie Bobby Brown, Sofia Coppola, Nicole Kidman, Margot Robbie, Michael B. Jordan, Lupita Nyong’o, Rachel Brosnahan and Cindy Crawford. Simons also dressed Saoirse Ronan, who was nominated for best actress, at last year’s Academy Awards.
Going forward, the game plan for Calvin Klein’s advertising is also changing, as reported.
Simons’ ads for Calvin Klein, which were heavily print-oriented, had futuristic and artistic overtones and featured androgynous, otherworldly looking models, a shift from the highly sexualized and controversial campaigns for which the brand was known. As reported, the company has adopted a new “consumer marketing organization” and a digital-first approach, bypassing print magazines. The concept is to accommodate the rapidly changing demands of today’s consumers with highly specialized teams focused on areas including consumer engagement and the shopper experience.
The company intends to change its investments to its core business areas, whereas previously too much was allocated to 205W39NYC collection and its advertising.
In January, the company also said it planned to streamline its North America division to become a more effective organization, including consolidating operations for the men’s Calvin Klein Sportswear and Calvin Klein Jeans business. The Calvin Klein retail and e-commerce teams will be integrated to create an omnichannel approach, intended to mirror how consumers browse, shop and purchase today.
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