NEW YORK — As part of a grand strategy to turn most of Calvin Klein Inc. into a lucrative licensing business, the company is reportedly close to signing a deal for CK women’s and men’s jeans.
Klein Inc. is talking with Arnold Simon, president and founder of Rio Sportswear, about licensing CK jeans, sources said.
Rio Sportswear currently manufactures and markets girls’ and junior jeans under the Rio brand, and jeans under license from Bill Blass and L.A. Gear.
In a pending sale that could affect how a Rio/Klein deal is structured, Oshkosh B’Gosh, one of the largest children’s wear manufacturers in the U.S., said last September it was planning to acquire Rio. Once the deal is consummated, Rio would become a wholly owned subsidiary of Oshkosh B’Gosh, and Simon is expected to continue as president and ceo of Rio.
Neither Simon nor his partner Steven Wong could be reached for comment. A Calvin Klein official said she had “no comment.”
Douglas Hyde, president and ceo of Oshkosh, based in Oshkosh, Wis., said he was leaving to go to Los Angeles today to complete the Rio-Oshkosh deal. “We’re still proceeding to close the deal.” He said he expects it will be done in three to five weeks.
Asked whether Simon is planning to license the CK line, Hyde said, “There is some truth to that rumor. We’re trying to close one deal before we think about another one.”
Hyde said that Simon would definitely be running Rio and “whether Rio gets involved with Calvin Klein” would be a decision made down the road.
Rio has significant overseas sourcing in the Far East and Central and South America.
According to sources, Calvin Klein’s casual women’s and men’s business lost about $7.7 million in both 1992 and 1991, and sales held steady at $150 million. The jeans business accounts for a significant part of that.
Klein officials told WWD two weeks ago that the company has devised a strategy that will turn the firm into a complete licensing operation — with the exception of the Collection business — over the next few years, patterned after the designer’s highly profitable fragrance license with Unilever.
As part of this strategy, Klein recently sold his men’s underwear business to the Warnaco Group and disclosed plans to license his women’s innerwear, once the current license expires this year. In the same deal, Klein sold the trademark rights to his men’s accessories business. The deal, worth $64 million plus ongoing fees, gives Calvin Klein Inc. the capacity to be debt-free immediately, in addition to a steady stream of royalties.
In 1992, Oshkosh did $364.2 million in sales.