NEW YORK — The interest in Calvin Klein’s fashion empire has turned into a horse race, and market sources put VF Corp. ahead by a nose Tuesday, while Phillips-Van Heusen, despite its interest, appears to have stumbled off the track.Rumors about the possible sale of Calvin Klein Inc. have heated up this week, and the biggest surprise yet could come from VF by the end of the month — what several people familiar with the negotiations said could be a bid for both Calvin Klein Inc. and an offer for all of the bankrupt Warnaco Group, which owns the Calvin Klein underwear business and is the licensee for the designer’s denim.Designer Calvin Klein and his business partner, Barry Schwartz, are reportedly anxious for the negotiations to quickly reach the finish line, but there are also still a lot of dark horses in the race, including Lawrence Stroll and Silas Chou, partners in the London-based luxury firm A&G Group, and, despite questions about financing, some claim French tycoon François Pinault is still a contender. There also remains a fair possibility that separate deals could be reached for CKI and the Warnaco-produced Calvin Klein brands.VF Corp. is said to be well-capitalized to make such an acquisition, but should the Calvin Klein brands be thrown into an auction, Stroll and Chou, are likely candidates to make an offer, one source said. The overriding factor that has pushed VF into the apparent lead is its sheer size, capitalization and its ability to write a check without having to line up complicated financial backing to complete a deal, which could slow other parties down. While PVH executives are said to maintain an interest in CKI, one source said that an offer believed to be in the range of $700 million for Warnaco alone was turned aside, possibly for being too low and over issues of financing. A VF bid for CKI is expected to range between $650 million and $800 million, while it could not immediately be learned what the company might pay for Warnaco. That still represents a lower offer than what Klein and Schwartz were looking for three years ago, when they circulated a book on CKI with an asking price of $1 billion.Still, neither Klein nor Schwartz were talking on Tuesday, and PVH vice chairman Ken Duane answered a question about the company’s reported offer with a brief response: "I wouldn’t know anything about that."A Warnaco Group spokesman declined to comment as well.Meanwhile, there are some indications that a deal with VF Corp. is so close that it could happen within a week. A VF Corp. spokeswoman declined to confirm or deny the possibility of the deal."We would never be able to comment on any market speculation or rumors," she said, but acknowledged that VF remains interested in acquisitions and would consider buying a major lifestyle brand if the right deal came along.VF chairman, president and chief executive Mackey McDonald was said to be tied up in a regularly scheduled board meeting on Tuesday and was unavailable for comment. But during the past year, VF officials haven’t done much to hide their interest in the Calvin Klein brand and Warnaco’s operations.Last year, the Greensboro, N.C.-based company said it was broadening its acquisition strategy, and was interested in two kinds of brands — small operations with revenues of less than $100 million that could be integrated into its existing divisions and big-name lifestyle brands in the $500 million range. At the time, McDonald told WWD he was interested in Warnaco’s Calvin Klein lines.While Calvin Klein’s designer women’s and men’s businesses have estimated sales of $30 million to $50 million, the jeans and underwear lines had combined sales of $539 million last year, and Calvin Klein Cosmetics, a beauty license held by the Anglo-Dutch Unilever, has estimated sales of $600 million to $700 million."Those are good, solid brand names," McDonald said last fall. "We have interest in a lot of the brands that are out there. Some of the Warnaco brands, if they become available, are of interest to us."Recently, McDonald has said, "The ideal acquisition for us would be a lifestyle brand that would cover multiple product categories."After a binge of buying in 2000 — during that year, VF snapped up The North Face, Jantzen and the Chic jeans label — VF’s shopping spree has appeared to be on hold. Last year, company officials said they were taking the time to fully integrate the new buys into the company. But the November 2001 revelation that the company was interested in making bigger buys, which came on the day the company announced it was closing factories and cutting about 13,000 jobs, seemed to indicate VF was back in a buying mood.VF last year reported net income of $137.8 million on sales of $5.52 billion. Through the first nine months of this year, sales slipped 5.4 percent, while restructuring charges pulled the company into the red.During the past year, VF has paid down its debt levels and boosted its cash position, which would help it in making a major acquisition.As of Sept. 28, VF’s long-term debt stood at $602.6 million, down from $904.2 million a year earlier, according to a filing with the Securities and Exchange Commission. Its short-term borrowings stood at $56.8 million, down from $113.9 million.Its on-hand cash and equivalents stood at $255 million, up from $133.1 million — but down from $332 million at the close of its last fiscal year.The Calvin Klein deal would add punch at the top of VF’s offerings, particularly on the jeans side. The company’s denim lineup includes Wrangler, Chic, Brittania and Gitano at the mass market and the Lee and Riders labels at national chains and department stores. The Calvin Klein brand would give the company a stronger presence in high-end department stores.While VF is known for its solid execution and sound management, the company hasn’t had a stellar track record with designer names. Through the Nineties, it licensed the Marithé and François Girbaud jeans line in the U.S. While the line grew rapidly to a peak of $250 million in 1992, it quickly petered out.The line was relaunched by I.C. Isaacs & Co. in 1999, and that company built its sales back up to the $53.5 million level for the first nine months of this year. Girbaud still speaks bitterly of the VF experience, contending that the company over-distributed the brand.But the Calvin Klein business is already widely distributed and well-known in the U.S., which makes it a very different animal from the French designer’s line.Other sources said if VF were only to acquire the Warnaco brands, and not CKI, it has expressed an interest to put the Calvin Klein jeanswear business in its Lee group. According to Warnaco’s latest monthly results, filed Monday with the SEC, the company posted a $15.8 million loss for the four weeks ended Nov. 2. Included in the period were $9.5 million in reorganization costs and $1.5 million in interest expense. Total revenues for the month were $91.7 million.For the 10 months ended Nov. 2, the loss was $921.2 million on revenues of $1.04 billion. Reorganization costs so far have reached $85.6 million.Warnaco filed its amended plan of reorganization last month. As reported, unsecured creditors are expected to receive 7.2 cents on the dollar for their claims on a pro rata share. The firm said in its SEC filing it expects to file for an extension of its exclusive period to obtain acceptances of the plan through and including Jan. 6, 2003. A confirmation hearing is still set for Jan. 16 before the Manhattan bankruptcy court.Meanwhile, given Schwartz’s non-fashion interests as chairman and chief executive officer of the New York Racing Association, most Calvin Klein watchers continued to follow developments there as if it was, indeed, a horse race, one insider offered a mixed metaphor."It’s definitely been a roller coaster," he said.

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