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NEW YORK — Calvin Klein Inc., a division of PVH Corp., is about to usher in a new era.
This story first appeared in the March 25, 2014 issue of WWD. Subscribe Today.
Steve Shiffman, currently president and chief commercial officer of CKI, will become chief executive officer on July 1, succeeding Tom Murry, who has been at the fashion firm for 17 years. Murry will become executive chairman, serving in an advisory role until he retires on Jan. 31.
Murry, 63, originally planned to change his role at CKI in mid-2016, but decided to accelerate the process by two years. He said he felt like the company would be in capable hands with Shiffman, with whom he has worked closely for the past seven years.
“The past 17 years of Calvin Klein have been an incredible experience for me, having shepherded the company through multiple transformations over the last decade. I felt this is the right time to accelerate our transition plans and made my decision knowing that Calvin Klein is in an excellent position and that we have the right team in place to build on our success around the world,” said Murry. He added that selecting Shiffman as his successor “provides for a smooth, seamless transition.”
Starting in July, Murry will serve as an adviser to Shiffman. “I’ll provide Steve with whatever guidance he wishes. He takes over the reins,” said Murry who, as executive chairman, will have his hours, salary and bonus opportunities cut in half. Murry’s base salary is currently $1 million per year.
Murry said he decided on the move after having hip replacement surgery Jan. 8. He couldn’t play golf and he was recuperating with his wife at their Florida home. “I had time to reflect on our lives and what we wanted to do with the rest of our lives,” said Murry. He said Shiffman, in his role as president and chief commercial officer, “had really risen to the occasion and really got his arms around the job.”
Murry asked for PVH chairman and ceo Emanuel Chirico’s permission to accelerate his retirement, and Chirico agreed.
“Tom’s accomplishments at the company have been nothing short of amazing,” said Chirico. “Under his leadership, Calvin Klein has grown from $2.8 billion in global retail sales to close to $8 billion in 2013, having evolved from a licensed-only model to a more directly operated business.” Chirico said Murry was instrumental in helping PVH acquire CKI in 2002 “and was a great partner working through the Warnaco acquisition and integration to date.”
Shiffman, 56, joined PVH in 1992, and is a member of the PVH corporate operating committee. He has overseen the global commercial operations of the CKI business, reporting to and working closely with Murry, with direct oversight of North American retail and e-commerce businesses, Asia-Pacific and Latin American operations, as well as global licensing and creative services. Earlier, Shiffman served as group president and chief operating officer of PVH Retail, where he oversaw the company’s retail divisions. Before that, he was president and chief operating officer of Calvin Klein Retail, where he headed all aspects of retail apparel and the accessories business, including design, sourcing, merchandising, planning, distribution and visual marketing.
Chirico said Shiffman brings a familiarity with the brand and a deep retail knowledge to the business. With the acquisition of The Warnaco Group Inc., he said about 55 percent of PVH’s business is direct to consumer, either e-commerce or in their own retail stores. “That’s Steve’s area of expertise,” said Chirico. The business units, both internationally and domestically, have been reporting to Shiffman, “and it was a natural progression for us as we went forward,” he said.
Shiffman’s successor hasn’t been named yet.
Chirico said he’s not looking for big changes at CKI, since it’s performing so well. He looks to continue the momentum and integration of the Warnaco business into PVH. “We still have some system conversions and integrations going on, which ultimately is his responsibility,” said Chirico. “With the Warnaco acquisition, we’re making significant acquisitions in people, product, design, marketing and presentation of our product globally.”
Chirico said Murry’s skill sets are more on the marketing and creative side, whereas Shiffman’s skill sets skew more toward the operational side of the business. Murry will probably spend some time in his advisory role looking to create a complementary management team going forward, he said.
Shiffman sees expanding the international footprint as a top priority in his new role.
“When you look at the globe, there are huge opportunities in Asia, and many parts of India and Australia, South America in particular, and obviously in Europe. We’re looking to layer on and leverage our jeans and underwear platform. We’re looking to convert many parts of the world from a classifications business of jeans and underwear into a lifestyle business and offer sportswear and other categories,” he said. The overseas business is a combination of wholesale and retail business. “In combination there are significant opportunities,” said Shiffman, who has spent a lot of time in the last year and a half traveling in Asia, South America and Europe.
Shiffman called the Asian business very good, with the strongest market being China. “We have a very formidable business in China, Korea, Hong Kong, Singapore, in particular,” said Shiffman. The company just signed a joint venture in Australia. On Monday, PVH Corp. signed an agreement with Arvind Brands and Retail Ltd. as its joint venture partner for its Calvin Klein businesses in India.
Shiffman has been overseeing the e-commerce business at CKI the last seven years, which he sees as another big growth opportunity. Asked whether CKI is as developed in e-commerce as its competitors, he replied, “I think we have a ways to go. I think we’ve done a good job, but there’s definitely room for improvement.” All of Klein’s products in North America are represented on the Web site, except for Collection. “But we do have plans to add it in the future,” said Shiffman.
Speaking of Collection, Murry said they intend to open another Collection store “on a very high-profile luxury street” in the U.S., but he declined to divulge details. Right now there’s only one freestanding Collection store, on Madison Avenue in Manhattan.
“As you know we licensed the [Collection] business and almost destroyed it. We only got it back in spring 2009, which seems like a long time ago, but it isn’t. Not when you have to rebuild a whole company. Now we’re executing well, shipping a quality product on time, opening new accounts every season. We’re very proud of the product out there. You have to look at this business as a very long-term business,” said Murry. He said that the company gets a tremendous amount of publicity from the Collection business, generating $400 million a year in advertising cost equivalent “which is very valuable. The coverage of our runway shows is amazing. It’s a very worthwhile business. We’re very focused now on creating a bigger commercial success but it’s going to take time,” said Murry.
Fifty percent of CKI’s business continues to be generated in North America, 30 percent in Europe and the Middle East, and 20 percent in Asia, said Murry. “The percent to total has remained relatively constant all of these years, which really speaks to the geographic diversification of the company,” said Murry. In the U.S., Calvin Klein merchandise is distributed in 2,000 department stores.
In discussing how Calvin Klein Jeans was performing these days following PVH’s $2.9 billion acquisition of Warnaco last year, Murry called it a turnaround situation. “We’re in the midst of that, and the integration has gone very well. It’s a turnaround and it will take some time.” The first season under CKI is spring 2014. “We’ll get it turned around. Manny [Chirico] has said on record, the investment in those businesses are more than we anticipated…we’re on schedule and we’re on track and that’s why I felt comfortable accelerating my timetable,” said Murry.
“Our jeans and underwear business was overpenetrated in Spain and Italy, which has put additional pressure on us. [Sister company] Tommy Hilfiger is very strong in Northern Europe, so CKI is putting their business on Hilfiger’s platform,” he said. Murry said that while the European economy is still struggling, and its Calvin Klein jeans aren’t through the pipeline yet, what they’ve been doing is improving the stores and in-store presentations and building new showrooms in multiple cities.
Murry described the other CKI businesses in Europe as either “good or very good.”
“Our watch business is very strong and our fragrance business is very large and stable. Footwear is OK,” said Murry. “I don’t think you’ll talk to too many brands right now who have really good businesses in Europe. You see what’s going on over there. We keep hearing about improvement in the economic environment, but I haven’t seen much evidence of it yet.”
As for Murry’s contribution to CKI, Chirico said the brand successfully transitioned from being a private company under founders Calvin Klein and Barry Schwartz (who left after selling the business in 2003). “Tom has led our efforts to transition that to a public company environment. You can never replace a Calvin Klein but he’s been able to build a professional organization that’s been able to continue that legacy going forward. We’ve never missed a beat at all,” said Chirico.
Murry joined CKI in 1996 as president of the global bridge business. Two years later, he assumed responsibility for the Calvin Klein Collection for women, including apparel and accessories. In 1999, he was promoted to president and chief operating officer of CKI, succeeding Gabriella Forte, who left the company. In 2008, Murry was named president and ceo. Prior to joining CKI, Murry spent six years as corporate president of Tahari Ltd.
Asked what were his biggest accomplishments at CKI, Murry replied: “I think I have made a number of contributions. I better have after 17 years. I think if I had to pick something and rank it I would say team building and creating and maintaining a team culture. If you don’t have that, it doesn’t matter how much talent you have, you can not accomplish your objectives.”