“Our ultimate goal is to create the largest, most profitable branded apparel company in the world,” said Emanuel Chirico, PVH’s chairman and chief executive officer, at the company’s annual meeting Thursday at the Proshansky Auditorium of The Graduate Center at City University New York.
Without the Tommy Hilfiger business, the $3 billion acquisition of which closed in May, PVH would be a $2.5 billion apparel firm. Adding in the $2.3 billion Tommy operation, PVH becomes a $4.8 billion behemoth and surpasses other giants such as Hanesbrands Inc. ($3.89 billion in 2009 sales), Jones Apparel Group Inc. ($3.33 billion) and Liz Claiborne Inc. ($3.01 billion).
While PVH hasn’t yet vaulted over Polo Ralph Lauren Corp. at $4.98 billion or VF Corp. at $7.22 billion in annual volume, that is clearly Chirico’s long-term goal.
“The acquisition [of Tommy Hilfiger] puts us in a position of a much better balance,” he added.
Chirico set no time frame for the goal and made no reference to the possibility of future acquisitions in his remarks, but did describe the 2003 purchase of Calvin Klein Inc. as “a transformational transaction.”
“Revenues in the business are over $300 million, our operating margins are in excess of 55 percent,” the ceo said, noting the firm has “significant dress shirt and men’s sportswear businesses at wholesale and a very significant and profitable retail channel, with about 150 stores in the U.S.,” in addition to numerous licensees from which it derives royalties.
“Calvin Klein is composed of over 30 domestic and international licensees,” he said. “The business worldwide does over $5.8 billion in global retail sales. This year, we will cross $6 billion.”
Chirico pointed out that the firm spends $275 million marketing and promoting the Calvin Klein brand around the world.
Warnaco Group Inc. is the largest licensee with the $1 billion Calvin Klein Underwear and $1.6 billion Calvin Klein Jeans divisions. It plans to double those businesses globally over a five-year span. Warnaco will shortly launch the Calvin Klein X Jean and the Envy line of lace bras and panties, with Envy to feature a celebrity spokeswoman whose identity will be revealed in early July.
Envy, Chirico said, “will continue to bring energy not only to the underwear business but the entire Calvin Klein positioning on the floor.”
Diane Kruger will be the spokeswoman when Calvin Klein Beauty launches in the fall. Coty’s Calvin Klein business generates revenues of about $1.2 billion.
“As we look at the business here, and as we look at our licensee partners’ business plans and new product launch plans over the next three to five years, we believe we can continue to grow this business an additional $2 billion to $3 billion,” Chirico said of Calvin Klein. “There is a significant amount of momentum in this business.”
Moving to Hilfiger, Chirico said the acquisition “provides us with a continuation of the strong metrics we have in our business…from operating margins to return on investment and cash flow. It has excellent growth prospects, particularly internationally,” Chirico told attendees.
Like the Calvin Klein purchase, he noted, Hilfiger should also provide a solid platform for international growth for PVH.
Providing shareholders with an overview of the Hilfiger business and detail on its history, Fred Gehring, ceo of Hilfiger and PVH International, pointed out, “Fifty-eight percent of the business is done outside of North America. Also, the majority of profitability comes from the international business.”
According to Gehring, 80 percent of Hilfiger’s fiscal 2010 revenues will be from the European wholesale business, with Germany and Spain representing 40 percent of the total business at 25 percent and 15 percent, respectively.
Shares of PVH Thursday fell $1.49, or 2.9 percent, to $49.71 as retail shares fell 2.7 percent to a four-month low and weighed on the broader market.
Elsewhere on Wall Street, the S&P Retail Index lost 11.36 points to close at 405.38 — territory not seen since mid-February. Among the fashion firms shedding market value were Macy’s Inc., down 6.2 percent to $18.85; AnnTaylor Stores Corp., 5.6 percent to $17.36; American Eagle Outfitters Inc., 4.6 percent to $12.13; Nike Inc., 4 percent to $69.63; Nordstrom Inc., 4 percent to $35.38, and Target Corp., 3.7 percent to $50.73.
The Dow Jones Industrial Average fell 1.4 percent, or 145.64 points, to 10,152.80 as banking stocks slipped and investors looked to Washington to gauge the impact of pending financial reform.
• Burkle’s American Apparel Stake: Financier Ronald Burkle of The Yucaipa Cos. LLC filed papers with the Securities and Exchange Commission saying that he holds slightly more the 4.3 million shares of American Apparel Inc., giving him a 6 percent stake in the firm. The filing said he’d bought the stock in “open market transactions since June 10, 2010, because, in his opinion, such shares were undervalued by the market at the time they were acquired.” While he indicated the purchases were for investment purposes, the filing said he “may modify his plans in the future” based on the performance of the firm and its equities. On Thursday, the firm’s shares fared better than most, slipping just 0.6 percent to $1.77 after it amended its credit agreement with Lion Capital (Americas) Inc. The amendment replaces the total debt to consolidated EBITDA covenant with a minimum consolidated EBITDA covenant. It also boosts the interest rate on the credit agreement to 17 percent from 15 percent.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye