PVH Corp. and Gazal Corp. Ltd. have significantly expanded their year-old 50-50 venture in Australia and Oceania, with PVH’s Tommy Hilfiger and Van Heusen businesses being added to the initiative.
This story first appeared in the December 22, 2014 issue of WWD. Subscribe Today.
The venture, PVH Brands Australia Pty. Ltd., began operations in February as the licensee for PVH’s Calvin Klein Jeans and Calvin Klein Underwear businesses in Australia, New Zealand and the rest of Oceania.
It has been licensed by PVH’s Tommy Hilfiger Europe BV subsidiary to manage the Hilfiger business in Australia and New Zealand for a 12-year term. It also will acquire certain assets of the existing Hilfiger business in Australia, including 12 standalone stores.
“This arrangement enables us to more directly support the development and expansion of the Tommy Hilfiger retail and wholesale businesses as we continue to establish Tommy Hilfiger as a premium lifestyle brand in the region,” said Daniel Grieder, chief executive officer of Tommy Hilfiger.
The venture will acquire Gazal’s shirting, tailored and men’s accessories businesses, which consist of PVH’s Calvin Klein and Van Heusen brands, and Gazal’s owned and licensed Bracks, Pierre Cardin and Paramount brands, with the current license for the PVH brands transferred to the JV and extended through 2033.
Additionally, Gazal’s shapewear business, consisting of the Australian and New Zealand rights to the Nancy Ganz brand, will be moved to the JV, along with the license for the Spanx brand in Australia and New Zealand and Gazal’s HoldmeTight brand. The JV also will enter into a perpetual license for rights to the Nancy Ganz brand for all territories outside of Australia and New Zealand.
The Hilfiger business in Australia previously had been assigned to another licensee, Tommy Hilfiger Australia Pty. Ltd. PVH acquired the Nancy Ganz brand as part of its 2013 purchase of The Warnaco Group for approximately $2.9 billion.
Manny Chirico, chairman and ceo of PVH, said the moves will allow PVH “to consolidate all our branded businesses in the Australasian market with one strong local partner.”
PVH and Gazal expect to conclude the agreement in early February.
Each company will make an additional equity investment of 45.5 million Australian dollars, or $42.4 million at current exchange, in the venture, with Gazal’s portion consisting of 11.9 million Australian dollars, or $11.1 million, in cash and the remaining 33.6 million Australian dollars, or $31.3 million, coming from the value of its shirting, tailored and shapewear businesses. Those businesses generated net income of 3.6 million Australian dollars, or $3.4 million, on revenues of 46.9 million Australian dollars, or $43.7 million, during the fiscal year ended June 30.
PVH invested $10 million to fund the venture upon its inception.
In the nine months ended Nov. 2, PVH’s net income more than doubled, to $387.5 million, as revenues grew 0.6 percent to $6.13 billion.