In 1995, the company was a mere arriviste in Europe. Today, it’s a giant.
On his return from “discovering” the Americas, Italian explorer Christopher Columbus said that, by prevailing over all obstacles and distractions, one might unfailingly arrive at one’s chosen goal or destination.
He would know, as the man who opened the New World to the Old. So would Calvin Klein, whose journey the other way into the European market in the mid-Nineties, while not without its own missteps, likewise blazed a trail.
From 1981 until 1995, the business on the Continent was handled through distributors for jeans and fragrances and through CKI’s New York office for ck and Collection. Recognizing that becoming an international force in fashion required well-orchestrated distribution outside the U.S., Calvin Klein Inc. itself entered Europe 13 years ago, launching a stand-alone division with headquarters in Milan.
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The aim was to control distribution in licensed products, following the success of jeans and underwear, and to develop a sales strategy for the bridge line ck Calvin Klein and the signature Calvin Klein Collection, as well as expanding the brand’s wholesale and retail network.
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With few maps to follow — only a handful of American men’s brands had penetrated Europe with a retail and wholesale approach — CKI’s European odyssey was inevitably peripatetic.
CKI chopped and changed license partners for making and distributing its portfolio in the region, eventually taking Collection in-house for the second time at the start of this year, and signing long-term licenses for European jeans and accessories and the ck bridge line and accessories businesses to Warnaco Group Inc. in 2006.
Former licensees for Collection apparel and accessories include Selene SpA, a part of Italy’s Mariella Burani Fashion Group, which produced the company’s women’s wear from 1999 to 2001; GFT Net, a subsidiary of Italian conglomerate Holding di Partecipazioni Industriali, which made Calvin Klein men’s wear from 1991 to 2002; Vestimenta SpA (2003 to 2005), and Florence-based Fingen SpA (2006 to 2008). CKI manufactured the luxury line in-house via third-party contractors in the periods when the Collection was unlicensed.
Warnaco, which owns the Speedo and Chaps brands, held the rights to Calvin Klein underwear, swimwear and jeans from the mid-Nineties. (It was also due to begin producing Collection this year, prior to CKI’s decision to retake control.)
CKI also experimented with retail formats in Europe, opening and closing a 6,000-square-foot Collection store (1997 to 2000), and later, a similarly sized company-owned Calvin Klein flagship (2002 to 2006) on Avenue Montaigne in Paris. It developed a network of Calvin Klein- and ck-branded franchise units across Europe to grow distribution beyond department stores. “We got a bit of a false start in Europe because of a licensee issue with [the ck Calvin Klein] bridge [line],” CKI president and chief operating officer Tom Murry admitted.
CKI shuttered ck in 2001 in Europe, as well as in the U.S. and the Middle East, terminating its agreement with Italian clothing firm Stefanel SpA, which had produced ck for Europe and the Middle East — at a loss — under a licensed joint venture starting in 1996.
Three years later, CKI launched the bridge line, merging the business into its then jeanswear licensee Fingen, under the ck Calvin Klein Jeans umbrella for distribution in Europe and Asia.
The tinkering paid off. In 2007, European sales accounted for around 34 percent of CKI’s overall turnover, compared with 4 percent prior to 1995. The results far exceeded expectations for Calvin Klein Europe, the original long-term goal of which was to constitute 10 to 15 percent of CKI’s total volume.
The upward trend is set to continue. European and Middle Eastern combined retail sales are projected to hit $2.2 billion by 2010, compared with $1.7 billion last year.
“The fact that [Europe] is keeping pace with Asia shows how much our European market is growing,” Murry said. “Europe is still very important.
“On different volume levels, all of the business is good,” Murry said. “Jeans, underwear and fragrance are still the biggest categories by volume, but watches and eyewear are also doing very well. The ck bridge line is doing well, growing with [Warnaco].”
CKI’s designs have struck a chord with Italian, Spanish, British and French shoppers in particular. “That’s been consistent,” Murry said. “We expect the biggest growth from [these countries]…and the biggest percent change in growth will probably come from Russia.” To wit, CKI intends to increase its Russian store count to 55 in 2010, up from 38 in 2007. In Europe and the Middle East overall, its store count is slated to hit 260 in 2010 — covering all formats, although predominantly Calvin Klein jeans, underwear and ck — up from 150 last year.