The much ballyhooed Calvin Klein-Raf Simons marriage has ended in divorce — and now observers wonder what’s next for the iconic American fashion brand, and whether it can flourish without the “halo” of a designer collection.
As reported, the tie-up between Klein and Simons came to an abrupt — but not unexpected — end Friday night when Calvin Klein Inc. sent out a terse press release at 6:17 p.m., right before the Christmas holiday weekend, stating the company and Simons, who was chief creative officer, had “amicably decided to part ways.” The statement said that Klein has decided on a new brand direction which differs from Simons’ creative vision — but provided no details on what that new direction is.
Calvin Klein will not be having a fashion show during New York Fashion Week in February (it had been scheduled for Feb. 12 at 8 p.m.), and the company will now have to figure out how to move forward after the pricey, multimillion dollar experiment with Simons went bust after a mere 28 months, and eight months before the end of a three-year deal with the Belgian designer.
PVH Corp., parent company of Calvin Klein, invested between $60 million and $70 million in Calvin Klein 205W39NYC (the name given to the high-end designer collection by Simons) over the past three years. While wholesale distribution of the designer collection expanded from about 20 to 25 doors under former Calvin Klein women’s creative director Francisco Costa to about 40 doors under Simons, the line struggled at retail, PVH’s chairman and chief executive officer Emanuel Chirico admitted in a conference call with Wall Street last month.
At its peak in the mid-Nineties, Calvin Klein Collection was generating around $60 million in wholesale volume, and has never seen those numbers since, said sources. Global retail sales for all Calvin Klein brand products exceed $8 billion.
The failure of the Simons experiment accentuates that Calvin Klein is a largely wholesale-driven company, while directly controlled retail is the dominant business model for the most successful designer labels and luxury goods companies.
Observers question since Simons isn’t a household name, whether having “that halo effect” really does anything for the bulk of the Calvin Klein business, which is driven by better-price sportswear, jeans, underwear and fragrance, rather than designer apparel.
”Today, if you took a poll on the Calvin Klein customer, who’s Macy’s and Dillard’s, and ask them who Raf Simons is, I think you get a zero. I think you probably get less than 10 percent of the fashion population that knows who he is,” Morris Goldfarb, ceo of G-III Apparel Group, which has the Calvin Klein license for ready-to-wear, accessories, outerwear, swimwear and dresses in North America, told WWD on Saturday.
Market sources believe the Klein-Simons match-up seemed a little naïve from the start and the company made too big a deal about it when Simons joined in August 2016, after having been artistic director of Christian Dior, responsible for women’s haute couture, ready-to-wear and accessory collections, and before that creative director at Jil Sander.
At Calvin Klein, Simons was basically handed the keys to the kingdom, with as much responsibility as founder Calvin Klein himself had when he was at the company. Klein himself was unavailable for comment over the weekend. Observers believe Simons was given too much responsibility, made changes too quickly, eliminated key positions, brought in longtime associates whom he had worked with both on his own men’s wear line and at Dior and didn’t connect with his fellow employees. The liaison appeared troubled from the start, and went off the rails fairly early on.
For his part, Simons was said to be frustrated by what he saw as a lack of infrastructure and know-how to support the collection business. His supporters alleged to WWD last month that PVH had breached its contract with Simons in several ways.
Steve Shiffman, ceo of Calvin Klein Inc., whom Chirico has said was the impetus behind the hiring of Simons and a big supporter, sent out an e-mail, obtained by WWD, to his associates at 8:30 p.m. Friday night explaining what had occurred.
“As we look at the next stage of Calvin Klein’s evolution, we are exploring various operational and organizational structures for our halo collection business and our overall business. Because our new direction differs from the vision of our chief creative officer, Raf Simons, we have mutually and amicably decided to part ways. In light of these changes, Calvin Klein will not show during New York Fashion Week in February 2019. I want to thank Raf for his contributions; Calvin Klein is a more creative company today as a result of his vision. We wish Raf the very best with his namesake brand and all of his future endeavors. I look forward to communicating our go-forward plan in January.”
Calvin Klein officials had no further comment over the weekend, and Simons couldn’t be reached.
But as the company looks to the future, myriad questions are swirling throughout the industry:
—Can Calvin Klein flourish without the halo effect of a designer collection — and, having experimented with Simons, does PVH even want to try again?
—If so, who might be on the short list to succeed Simons?
—Will there be any collection for fall?
—Will Calvin Klein ship its 205W39NYC collection for spring?
—What’s next for Simons, beyond his eponymous men’s wear line?
—Finally, what impact will Simons’ exit have on Shiffman and Michelle Kessler Sanders, president of Calvin Klein, who was another big proponent of hiring the designer?
As one observer put it, “It’s a black eye for all of them.”
The two-year liaison had several bright spots, when one considers all the buzz the initial partnership brought to the house. Calvin Klein’s fashion shows were packed with A-list celebrities such as Gwyneth Paltrow, Brooke Shields, Julianne Moore, Sarah Jessica Parker, Millie Bobby Brown, Sofia Coppola, Nicole Kidman, Margot Robbie, Michael B. Jordan, Lupita Nyong’o, Rachel Brosnahan and Cindy Crawford. Simons also dressed Saoirse Ronan, who was nominated for best actress, at this year’s Academy Awards.
The American fashion community also seemed to swoon over Simons’ arrival at one of its best-known brands. Simons won a slew of awards for his work at Calvin. For the second year running, he won the CFDA Award for Womenswear Designer of the Year, and the year before, he scooped up both the women’s and men’s prizes — a feat that had never been done before.
Still, now that PVH has to plot out a new strategy for the brand, G-III’s Goldfarb said that he believes the Calvin Klein business can flourish without the designer collection.
“Yes, I certainly do. There’s no doubt that they’ll continue to spend aggressively on the marketing side of their business. They always have. That’s been for me more the driver than Raf Simons,” he said.
Market sources estimate that G-III’s Calvin Klein business, which has healthy distribution in major department stores, is reportedly on track to generate about $1.2 billion in wholesale volume by yearend.
As for whether Goldfarb believes Chirico gave Simons enough time, or if he feels it was wiser for PVH to cut its losses, the G-III ceo said, “You and I don’t know what goes on behind the scenes. Creative people aren’t always easy to manage. They have their own point of view. They don’t share very well, and in all candor, I have no clue what experience they both had, whether Raf just couldn’t take it, or the business side of Calvin Klein, who has a business to run, and yes, halo is important and image is important, but at the end of the day, this is about earnings.”
Goldfarb pointed out a key element to the dissolution. “Sometimes creative people don’t get the concept of earnings quite as well as the business side of a company does. Manny [Chirico] comes out of public accounting. He didn’t grow up in a fashion world. He grew up in the finance world. He was able to read a financial statement better than most, and he was able to structure a company better than most, but I wouldn’t tell you he could identify fashion better than most. That’s not his skill set. Maybe the two didn’t marry well.
“I don’t think it’s as big of deal that the world is making it,” he added. “Dior survived and he [Raf] was much more a key element to Dior than he was to Calvin Klein. He was everyday Dior. He was absolutely it. I think that everything that came out of Dior was touched by him. You can’t say that with Calvin. He didn’t touch all the product.
“I’ve never met him [Raf]. He’s never said pink, and not orange. I’ve seen him at all the fashion shows,” said Goldfarb. “I have the greatest respect for what he tried to create. I do think it was a good idea to hire him. I don’t think it was money that was wasted. It raised the profile. It brought the company back to light in the designer area. The store on Madison Avenue has never made money. It is image, it’s Madison Avenue, it’s designer. He, in a sense, was an extension of Madison Avenue.”
Susan Sokol, cofounder and ceo of High Alchemy, and a former president of Calvin Klein Collection, believes that the collection business has changed, and it may not be necessary to have that halo aspect for it.
“Clearly Raf brought a much-needed renewed energy, gravitas and excitement to the sleepy halo business now branded Calvin Klein 205W39NYC as well as to NYFW in general. And for sure this part will be missed. Will the business do well if this part goes away? When I left as president in the mid-Nineties of that business, the Calvin Klein Collection, I would have said a resounding no!” said Sokol.
“But things were very different then. The collection truly was the umbrella business and set the tone and spirit for all the other products. It was positioned as a designer women’s business, prices were much different and there were many more retailers to sell, fewer competing designers and no Internet. For the last two decades all or the majority of Calvin Klein is about mass marketing and classification businesses that drive the revenue — jeans, underwear, perfume, sunglasses, all the moderate businesses under the G-III licenses, etc.,” said Sokol.
“In retrospect, Calvin himself was a genius when it came to marketing and he surrounded himself with some of our industry‘s best talent — Madonna Badger, Sam Shahid, Fabien Baron, all the while truly believing in and supporting the women’s collection business as the top of the pyramid. And in those days, it was a respectable size and made money for the company,” she added.
She said things are so much harder today. “And yes, I think Raf, as talented as he is, was a disconnect for the Calvin Klein business today, 25 years later. There was too much on his plate and quite frankly he did not have the experience and perhaps skill set to oversee all creative for such a well-oiled machine. Too massive a ship to steer. So at the end of the day, PVH learned a tough lesson and now needs to course correct and get the ship back into smoother waters. I have no doubt they will.”
Asked about a possible successor to Simons, Sokol said she believes PVH is thinking about creative innovation for Calvin Klein “but not at such a high risk or price.”
“I can’t imagine they will bring in another big name,” she said. “They made a huge investment in Raf and I doubt they will make the same mistake.” Sokol said they could hire someone up and coming like Puig did with Wes Gordon at Carolina Herrera, or there may be someone within they could promote. Sokol said they will most likely remove “chief” from the title and divide and conquer the role leaving marketing, digital and retail creative control to a different team.
Discussing whether Calvin Klein can flourish without the halo of a designer collection, Kim Vernon, president of Vernon Company, who was a former chief marketing officer of Calvin Klein Inc., sees the importance of Collection. “This is a huge concern. There is and always has been a significant design gap in the Collection and the Calvin Klein products in wider distribution. (Unlike Tommy Hilfiger, which is an elevated American sportswear brand that has maintained appeal globally through collaborations and exciting presentations and deliveries, and which PVH also owns). The Collection gives credibility to the house, to the brand, and has never existed without it. I see this as a huge challenge currently and to close the Collection would require a significant rethinking of the brand,” said Vernon.
In her opinion, the collaboration faced multiple challenges. “The idea of hiring Raf to lead design and creative was very exciting at the time. We all talked about how important and pivotal this could be after some years of splintered design. Raf was given too much control by leadership to remake a brand that has a huge history and identity. He went too far into his personal design concepts (intellectual and often morose) and left the core brand ethos behind.”
She feels the ad campaigns proved to be another misfire. “The brand moved to unrecognizable and the campaigns were often not appealing, compelling, aspirational. The Collections and very imaginative, directional runway shows while lauded by the editorial community, did not translate into enough great wearable clothes and failed in stores. He didn’t treat the other products with the seriousness of the Collection and missed on those, too. Nothing in fragrance, jeans or underwear, the stalwart moneymakers for the company, was a huge success in the past two years. The one flagship for the brand was re-envisioned and unshoppable. A lot of money was invested in 205W39NYC without the necessary returns. Art without commerce doesn’t work at a public company,” said Vernon.
Ken Downing, senior vice president, fashion director of Neiman Marcus said, “It’s very sad and unfortunate. Raf Simons is a great designer, Calvin Klein is a great American brand; that began as a brilliant fashion moment with great promise. It’s unfortunate the vision for the revitalization of Calvin Klein under Raf’s design direction didn’t see it to fruition. Raf Simons at Calvin Klein brought great excitement to the New York fashion scene and New York Fashion Week. But ultimately, like in any relationship, if it’s not working, it’s best that both parties determine that earlier than later.”
Robert Burke, ceo of Robert Burke Associates, believes that Simons was given too much responsibility from the get-go.
“I think for a company the size of Calvin to give over complete creative control is a huge leap of faith, especially without guardrails. There was also so much anticipation and the expectation level was so high. When we look at certain brands that have had a major turnaround such as Gucci, it kind of happened organically. This was a major manufactured turnaround or change. People were raving the first season, but it quickly started to lose its shine and seemed to be kind of troubled from the very beginning,” he said.
“This was not a right match on either side. Maybe they happened to recognize it early, or didn’t feel it was going anywhere. To me, it was probably way more advanced than the Calvin brand could handle at one time. Its message and its audience, and the creative was extremely advanced, given the customer base. It was under the microscope from the very beginning.”
Asked if he thinks the Klein business can flourish without the halo effect of a designer collection, Burke believes the brand needs a designer collection.
“I think brands need direction and they need a strong point of view,” he said. “And it’s a fashion brand at the end of the day, and it has to stay relevant. And it needs someone guiding it from a fashion standpoint.” He said it’s a predominantly licensed business. “Otherwise, every license takes it in the direction they want.”
While many pointed at Simons for the reason for the breakdown in the relationship with PVH, other sources said his growing disenchantment seemed to stem from changes that were made last fall in his responsibilities and reporting structures.
According to sources, the company decided in September to reduce some of Simons’ duties and wanted him to agree to a new contract with fewer responsibilities. Sources said Klein officials wanted certain areas of the business such as store design, visual merchandising, e-commerce, public relations and communications, and corporate social responsibility to report to Marie Gulin-Merle, chief marketing officer, (who came from L’Oréal), rather than Simons, who had been given total responsibility for all creative areas when he joined in August 2016.
Last month, Chirico was outspoken in his disappointment in the Calvin Klein Collection and Jeans business. He said in rather blunt terms on the company’s earnings call that the reimagined Calvin Klein — under Simons’ direction — was not working. He said the collection, 205W39NYC, needed to become more commercial and that investments in the collection and advertising would be shifted elsewhere.
Calvin Klein’s earnings before interest and taxes for the quarter decreased to $121 million, from $142 million a year earlier,“ primarily attributable to an approximately $10 million increase in creative and marketing expenditures compared to the prior-year period.” The company also cited gross margin pressure, principally due to more promotional selling in the Calvin Klein Jeans business, particularly in North America.
“While many of the product categories performed well, we are disappointed by the lack of return on our investments in our Calvin Klein 205W39NYC halo business and believe that some of Calvin Klein Jeans’ relaunched product was too elevated and did not sell through as well as we planned,” Chirico said on the earnings call.
Further, Chirico said that the redesigned Calvin Klein Jeans was a “fashion miss,” telling investors: “From a product perspective, we went too far, too fast on both fashion and price. We are working on fixing this fashion miss, and we believe that our CK Jeans offering will be much more commercial and fashion-right beginning in 2019, especially for the fall 2019 season.”
The Calvin Klein Jeans line, reworked for fall 2018 in upgraded fabrics, featured bold pop-inflected irreverence, oversize logos, trucker jackets, Western shirts, cowboy boots, colorblocking, patchwork denim, an Andy Warhol segment, and a theme Simons made his own at Calvin: Americana.
Soon after the earnings call, Klein sent out a communication saying that starting in February, it would stop doing print advertising and would shift those dollars to digital media.
Sources indicated that Simons caused a lot of havoc in the company and overspent on everything (including a pricey office). Insiders said they were relieved that Simons was leaving because he created “a culture of fear” and bullying. One observer went so far as to say that Simons, who surrounded himself with his own friends, didn’t want any people in the elevator when he went up to the offices. Simons had apparently been spending a lot of time away from the office.
But Simons’ team did have strong supporters. His inner circle that he brought with him to Calvin Klein included Pieter Mulier, his longtime number two who became creative director of Calvin Klein, and Mulier’s boyfriend, Matthieu Blazy, the design director of women’s ready-to-wear. Followers posted on Mulier’s Instagram account over the weekend that they were sorry to see Mulier go, that he’ll find something in Europe, that he was “too cool for America,” and that Chirico was too impatient and “was ridiculously short-sighted.”
“You elevated Calvin Klein and made it relevant, they’ll go downhill again,” said one post.
It is understood a renewal offer came to Simons in recent weeks, even though his current pact didn’t expire until August 2019. Sources indicated that Simons decided not to accept the renewal due to restrictions on Collection spending and a reduction in the full creative control that he previously had.
Upon joining the company, Simons immediately set out to rethink the collections, change the teams, change the ad campaigns and basically reinvent the business, which had lost its momentum in some respects. Chirico has repeatedly said he believes Calvin Klein will become a $10 billion business.
Some sources indicated to WWD that CKI should have established ground rules before giving Simons so much responsibility to completely change the company’s well-established aesthetics and advertising.
Despite Chirico’s disappointment in 205W39NYC, Simons’ directional, often disquieting fashion shows brought the company a lot of buzz, taking the brand in a different direction from the clean, modern, minimalist roots planted by its renowned founder and strengthened by Simons’ predecessors as women’s creative director, Francisco Costa, and men’s creative director, Italo Zucchelli.
Over the last two years, Simons has explored the dark side of the American pop landscape, the immigrant “outsider” experience, cowboy culture, the high school years, horror movies and the actual apocalypse with models walking the runway in hazmat suits, firefighter coats and Mylar accessories.
While Simons helped popularize cowboy-style boots, he didn’t produce any hit bags or broad fashion trends during his tenure. However, he did touch on several aspects of American culture with his Andy Warhol collaboration and the use of Eighties “Jaws” movie graphics. He was obsessed with cheerleaders, pom poms and prairie dresses and also used blue collar utility uniform references, elevating the everyday New York construction worker.
Throughout his career, Simons has collaborated closely with artists. One of Simons’ first campaigns featured underwear-clad models standing in front of Sterling Ruby’s oversize tapestry. Ruby also redesigned Klein’s flagship on Madison Avenue, a bright yellow space filled with scaffolding, a 180-degree turn from the former John Pawson design with its sandstone floors and white walls and columns.
The brand’s ad campaigns, shot by Willy Vanderperre, had futuristic and artistic overtones and have featured androgynous and otherworldly looking models, as well as the Kardashian-Jenner clan. The ads were a major shift from the highly sexualized and controversial campaigns for which the brand has been known.
“There’s no sex in anything that he’s doing. It’s all neutral, or neuter,” said one observer.