PVH Corp. and Grupo Axo said Thursday they have entered an agreement to form a joint venture that will license from wholly owned subsidiaries of PVH the rights to operate and manage the distribution of Calvin Klein, Tommy Hilfiger, Warner’s, Olga and Speed brand products in Mexico.
The joint venture will be established by merging PVH México, S.A. de C.V., a wholly owned subsidiary of PVH and the operator of its Calvin Klein and Heritage Brands businesses in Mexico, with Baseco, S.A. de C.V., a wholly owned subsidiary of Axo and a distributor in Mexico of PVH’s Tommy Hilfiger brand products.
The closing, which is subject to customary closing conditions including regulatory approval, is expected to take place early in the third quarter of 2016. Terms of the joint venture weren’t disclosed. PVH said it expects this transaction to be neutral to PVH’s 2016 earnings on a non-GAAP basis.
“This strategic move allows us to maintain a direct ownership interest in our Calvin Klein and Heritage Brands businesses in Mexico, while gaining more control over our Tommy Hilfiger business in the region,” said Emanuel Chirico, chairman and chief executive officer of PVH.
“Grupo Axo, which will oversee the joint venture’s day-to-day operations, is an experienced multichannel distributor, including successfully managing our Tommy Hilfiger business in Mexico for the last 22 years. We believe that leveraging Grupo Axo’s in-region expertise across our brand portfolio should ensure the long-term potential in Mexico and our brands.”
A leading multibrand company based in Mexico City for apparel, accessories and home brands, Grupo Axo will oversee the joint venture’s operations, which will include wholesale, retail and back-office.
Andres Gomez, co-ceo of Grupo Axo, added, “We have a long and successful relationship with Tommy Hilfiger and PVH. We are excited about the opportunity to expand our relationship to include the global megabrand Calvin Klein, as well as the Warner’s, Olga and Speedo heritage brands. We believe all these brands have huge potential for growth in Mexico and we look forward to partnering with PVH to make that potential a reality.”
Upon closing the transaction, Marcella Wartenbergh will become ceo of the joint venture’s operations and will report to Grupo Axo. She was previously country manager for PVH Mexico.
In addition to Hilfiger, Grupo Axo’s portfolio of brands includes Abercrombie & Fitch, Bath & Body Works, Brooks Brothers, Brunello Cucinelli, Coach, Emporio Armani, Guess, Kate Spade, Theory, Thomas Pink and Victoria’s Secret.