Calvin Klein’s new owners are taking a business approach that mimics the brand’s jeans–a simple structure, and a very tight fit.
PVH Corp, which acquired Calvin Klein Jeans as part of their $2.9 billion purchase of Warnaco Corp in February, laid out plans to revive the brand in a conference call last week. Emanuel Chirico, PVH’s chairman and CEO, said that discounts will be steeper, unprofitable stores will be closed, and between 900 and 1,000 employees will be let go.
In North America, 2012 sales of CK jeans and underwear were over $500 million, but Chirico said that jeans are “underperforming” and “overly dependent on the off-price and [warehouse] club channel.” In Europe, on the other hand, operating margins are in dangerously low territory–below 4% in 2012. Growth in Asia has been in the double-digits–the brand did a $530 million business last year–but Chirico noted that further investment is needed in Asia.
“This is a major, complicated acquisition,” he said. “It’s over $2 billion in sales in four geographic regions. I’m not going to be Pollyanna about this – this is more complicated than other acquisitions we’ve done, and it’s required us to really dig in.”
Shares in PVH fell $5.98, or 5.3% after Thursday’s announcement, closing at $106.81.