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NEW YORK — If it appeared that Calvin Klein lingered on the runway for a moment or two longer than usual when he took his post-show bow on Friday evening, there was a good reason: It was his last show in total control of the designs bearing his name.
The designer, one of the driving forces of American fashion for the past three and a half decades, told several close friends backstage that Friday’s fall collection would be his final one, at least in his position as the chief designer, although it remains to be seen whether Klein becomes the Michael Jordan of fashion — bowing out for now but returning to the runway eventually because he misses the excitement.
This story first appeared in the February 18, 2003 issue of WWD. Subscribe Today.
Klein has always vowed he would never retire because he loved what he did too much.
He had been expected to reduce his role at the company following its sale to Phillips-Van Heusen Corp. for an initial $430 million in cash, which was completed last week, but the designer surprised many of his employees by the much sharper degree to which he evidently plans to do so. Klein’s decision was even more surprising since PVH, for its part, remains firmly committed to doing runway shows for the designer’s women’s and men’s brands.
In a lengthy internal memo that was personally addressed to several vice presidents on Friday, Klein basically formalized his ongoing role in the company as that of a “consulting creative director.” But the language of that letter left many people to draw the conclusion that the 60-year-old Klein might well be scaling back his role in the company he founded in 1968 with his life-long friend Barry Schwartz, who did formally retire from the company last week.
The mood backstage and at a dinner after the show that night was occasionally somber and filled with confusion over just what Klein meant when he told several associates that would be his last show — and just how serious he was. Several people were crying backstage and Klein’s daughter, Marci, had tears in her eyes as the models took their final exit.
According to insiders, the terms of the deal reached by Schwartz and Klein to sell the company to PVH basically leaves the decision to participate in future Calvin Klein collections up to the designer, who is of course bound by a non-compete clause, the duration of which was not indicated in PVH’s filings to the Securities and Exchange Commission. He could conceivably continue to design or oversee the collections, or at the least make an appearance at future runway shows — but the likelihood of that happening was thrown into doubt by his demeanor on Friday. The designer could not be reached over the holiday weekend.
Responding to inquiries from WWD, Tom Murry, president and chief executive officer of Calvin Klein, said in a statement that “Calvin will continue to play an important role in the design process.
“Calvin has always recruited top talent for each design studio and given them the freedom to create within his aesthetic,” Murry said. “We are very committed to the collection business and will continue to hold runway shows of the size and scope as in the past. Calvin will continue to be the design inspiration for the company. Not only is he contractually incented but he also very much wants to be. While Friday was the last show developed with Calvin as the owner, we are looking forward to Calvin’s involvement, and he and I are looking forward to seeing everyone at our next show.”
In his memo, Klein outlined several operational changes that will take place as a result of the transition from a privately held company — the only such American megabrand — to its ownership by the publicly traded PVH.
Most significantly, Klein said that the final word on all creative and product decisions will no longer be his, but will now go to Bruce Klatsky, chairman and chief executive officer of PVH; Mark Weber, its president and chief operating officer, and to Murry. Insiders said Klein will “come in when he is asked to come in,” but he will be turning over most of the design responsibilities to his staff, with Francisco Costa, design director of the women’s collection, obviously taking a pivotal role. Costa joined the company a year ago after working for Tom Ford at Gucci.
Word of the memo quickly got around to the Calvin Klein staff, which has been nervously anticipating the transition to PVH’s ownership and its plans to rapidly develop new mass-oriented collections, leading to at least two interpretations of what was happening.
Some employees felt the memo was meant to serve simply as a formal policy that would stop a long-standing practice at the house where employees would often look to Klein to override a senior executive’s veto of their idea for a design, marketing or advertising decision. The idea of the memo was to that it’s now Klatsky, Weber and Murry who call the shots. But others read into Klein’s writing that he was reflecting upon a final personal chapter of his career, because his fall collection was the last designed as an owner with the last word on hem length, color and print. They also noted that Klein’s career-long rival, Ralph Lauren, celebrated his 35th anniversary with an enormous amount of fanfare last year and that Klein preferred to play down his own 35th, which is this year.
When the deal to sell the company to PVH was finally reached in December, Klatsky made it clear it was not only a designer brand he had acquired, but also creative control, in return for a lucrative payout to Klein, which in addition to the total $430 million that was paid to both partners, includes ongoing financial incentives tied to future sales of the Calvin Klein brands that could potentially drive the purchase price to as much as $700 million over the next 15 years.
PVH intends to build the Calvin Klein name in many under-developed apparel categories and is negotiating with several of the biggest women’s companies to develop a new main floor sportswear concept, which Klatsky believes is a $1 billion opportunity. The company, which specializes in men’s apparel, will also build a similar men’s brand in-house. Klein personally endorsed this plan, saying at the time that he always wanted to develop such a big-volume business.
“I have a long-term emotional, as well as financial, interest in the success of this business,” Klein said in December. “This has been my life. It’s a company not just about me, but also a lot of incredibly wonderful people. I care about this and I have a financial interest in seeing it do well.”
Klein and Schwartz also received incentives to do the deal with PVH with shares in the company representing a 4.4 percent stake. The competition to acquire Calvin Klein was intense and several deals nearly reached fruition late last year before falling apart at the last moment, but the bidding was not nearly as steep as it was a few years ago when the partners put the company on the block with an asking price of $1 billion that drew interest from all the luxury conglomerates like Gucci Group and LVMH Moët Hennessy Louis Vuitton, as well as Lawrence Stroll and Silas Chou, who bought an 85 percent stake in Michael Kors last month.
PVH faced a more serious bidder last year when VF Corp. made a run at both Calvin Klein and its big money jeans and underwear businesses through Warnaco, but the fact that it was now mass-oriented companies looking at a designer business, instead of a luxury group, left many to consider what the consequences would be for Klein. He said at the time, “Quite frankly, I wanted and believed we needed a company with the resources to take our brands to the next place.”
As for his own involvement in the company, Klein said he would remain as involved in design, marketing advertising and brand positioning as he had been, “but I am really going to focus on how to grow the brand, as opposed to being just involved in the day-to-day stuff.”