PVH Corp. and Gazal Corp. Ltd., based in Sydney Australia, have forged a joint venture, PVH Brands Australia Pty. Ltd. The venture will license from Calvin Klein Inc., a wholly owned subsidiary of PVH, the rights to operate, manage and distribute Calvin Klein brand products in Australia, New Zealand and other island nations in the South Pacific. The license is for a 20-year term.
At present, the main distribution in the region consists of a wholesale and retail Calvin Klein Underwear distribution business operated by Gazal, with product supplied through a wholly owned subsidiary of PVH, and a wholesale and retail Calvin Klein Jeans business operated by two other PVH subsidiaries. The joint venture will combine these businesses and establish a unified approach to distribution of the Calvin Klein brand in the region.
As part of the agreement, Gazal will sell to the joint venture its subsidiary currently operating its Calvin Klein Underwear distribution business in Australia and New Zealand. PVH will sell to the joint venture its subsidiaries currently operating the Calvin Klein Jeans businesses in Australia and New Zealand. The venture is expected to begin its wholesale and retail operations on Feb. 3. It will begin with jeans and underwear and will eventually extend into other product categories.
“This strategic move allows us to directly support the development and expansion of our Calvin Klein brand in Australia and New Zealand,” said Tom Murry, chief executive officer of Calvin Klein. “With the tremendous expertise of Gazal, which has successfully managed our underwear business for many years, this partnership should ensure the long-term potential of the brand in the region.”
Gazal will oversee the day-to-day operations of the joint venture.
Gazal markets and manages national and international apparel brands in Australia and New Zealand, including Van Heusen, which it has operated for over 30 years under a license from PVH.
Gazal will realize a one-time profit of $6.1 million on the sale of its Calvin Klein Underwear distribution business to the joint venture. Gazal anticipates the joint venture to be earnings neutral in its current 2014 fiscal year, with the expectation of a positive earnings contribution in its 2015 fiscal year.
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