Raf Simons Starts at Calvin Klein, Marking Strategic Shift

NEW YORK, United States — It's official. Raf Simons has been named the new chief creative officer of Calvin Klein, formalising the Belgian designer's next move after three years as women's creative director of Christian Dior Couture.

The arrival of Simons at the helm of the iconic American brand comes soon after the news that Dior has hired Valentino co-creative director Maria Grazia Chiuri to design its women's collections, replacing Simons, who resigned in October 2015 from the LVMH-controlled French luxury house.

Simons' non-compete agreement is thought to have expired at the end of July, which explains why his appointment at the PVH Corp.-owned Calvin Klein, though widely anticipated in industry circles, was never confirmed by the company until today. The company took to social media — including Instagram, Twitter and Facebook — to communicate the news.

“The arrival of Raf Simons as chief creative officer signifies a momentous new chapter for Calvin Klein,” said Steve Shiffman, CEO of Calvin Klein, Inc. “Not since Mr. Klein himself was at the company has it been led by one creative visionary, and I am confident that this decision will drive the Calvin Klein brand and have a significant impact on its future. Raf’s exceptional contributions have shaped and modernised fashion as we see it today and, under his direction, Calvin Klein will further solidify its position as a leading global lifestyle brand.”

Calvin Klein has also appointed Pieter Mulier, Simons' longstanding right hand man, to the position of creative director, reporting directly to the designer. "Mulier will be responsible for executing Simons' creative and design vision for all men's and women's apparel and accessories lines within the Calvin Klein brand," the company said in a statement.

In April 2016, it was announced that Calvin Klein Collection designers Francisco Costa (women's) and Italo Zucchelli (men's) would exit the company, paving the way for a new global creative strategy, unifying all Calvin Klein brands under one creative vision.

Simons will indeed lead the creative direction for the company's entire stable of brands, including ck Calvin Klein, Calvin Klein Jeans and Calvin Klein, as well as the men’s and women’s ready-to-wear collections. Under this new arrangement, the designer will have complete creative control over everything from brand imagery — including underwear and fragrance campaigns — to diffusion lines and home goods, something he is said to have coveted at Christian Dior, where men’s fashion, store concepts and beauty were overseen by other designers.

At the same time, Simons has been a vocal critic of the current fashion system and the pressure it puts on designers throughout the creative process. It's unknown how Simons will approach a new creative directorship at another major conglomerate. "Technically speaking, it works. Does it work for me emotionally? No, because I'm not the kind of person who likes to do things so fast," he told Cathy Horyn in a 2015 interview for System magazine. "I think if I had more time, I would reject more things, and bring other ideas or concepts in. But that's also not necessarily better. Sometimes you can work things to death when you take too much time."

The appointment appears to mark a distinct shift in the Calvin Klein playbook. Ready-to-wear contributes less than $10 million a year to the company's $2.9 billion in annual revenue and has long been seen as a mere marketing platform for the wider brand.

"It's not a business that contributes to the bottom line and it probably never will be," Tom Murry, former president and chief executive of Calvin Klein, told BoF in 2011. "For us, it's a marketing expense." Currently, PVH operates just one Calvin Klein Collection retail store on Madison Avenue in New York City.

By giving creative control of the company to Simons, Shiffman and Calvin Klein Collection president Michelle Kessler-Sanders seem to be signaling renewed interest in designer fashion. The move also underscores the opportunity in high-end accessories, a major revenue driver for luxury brands like Dior and a category in which Calvin Klein has not yet made a name for itself.

It also gives Simons — one of the great talents of his generation — his largest commercial platform to date. While his minimalist leanings and a deep connection to youth culture both clearly align with the Calvin Klein brand, the wide reach of the business will certainly require Simons to think more broadly than before. Simons is known as a first-mover whose ideas are often appropriated and repackaged for larger audiences. But questions remain as to whether he is ready to communicate with the masses himself.

"Fashion became pop. I can’t make up my mind if that’s a good or a bad thing,” he told Horyn in 2015. “The only thing I know is that it used to be elitist. And I don’t know if one should be ashamed or not to admit that maybe it was nicer when it was more elitist, not for everybody. Now high fashion is for everybody."

Calvin Klein has been largely reliant on its licensing and wholesale business since the 1980s, shilling everything from women's dresses to bedding. But its retail partners, such as Macy's, are struggling to attract customers as the rise of e-commerce, direct retail and other market shifts continue to reshape the way people shop. By buying Warnaco Group for $2.9 billion in 2012, PVH made the first step in consolidating the Calvin Klein brand, taking direct global control of both the jeans and underwear businesses, licenses for which were previously held by the group. While there is only one Calvin Klein Collection store, PVH operates approximately 1,450 retail stores under the Calvin Klein, Tommy Hilfiger and Van Heusen trademarks, and 1,100 company-operated department store concessions (or shop-in-shops) under the Calvin Klein and Tommy Hilfiger trademarks.

In 2015, Calvin Klein's reported revenue was $2.9 billion, up 2.2 percent from 2014 on a GAAP (generally accepted accounting principles) basis. A significant part of that comes from royalties attached to its fragrance license, which has been held by Coty since 2005 when the beauty manufacturer bought Unilever's global fragrance business for $800 million. Coty also owns the Calvin Klein colour makeup license, which it acquired in 2010 from Markwins International, although a 2012 launch of a "CK One Color" makeup line seems to have been put on hold.

If Calvin Klein is indeed going to put more emphasis on Collection — and pay Simons a reported salary of $18 million a year — the question becomes how this diverse array of businesses, with their different models, can operate in harmony under one creative umbrella. In an era of intense competition, some companies are taking another approach, streamlining their portfolios to focus on what they do best. LVMH, for instance, just sold its Donna Karan International business, in part, because DKNY's diffusion model was a poor fit with the group's expertise. Notably, it is G-III — the publicly traded company that acquired Donna Karan from LVMH for $650 million — that owns the license for the Calvin Klein women's apparel, dresses, outerwear, performance and cold weather businesses, lower-priced lines sold primarily at department stores. (In February PVH and G-III brokered a similar deal for the Tommy Hilfiger brand.)

In another twist, Mr. Calvin Klein, the brand's founder, has been particularly vocal in the past few months, poking holes in the business model that made him a multi-millionaire. "The really smart retailers — Europeans like Zara, Asians like Uniqlo — they're not using the word luxury," he recently said. "But I can tell you, I know denim really well, and the same denim that Uniqlo uses is $1,000 in a designer store on 57th Street."

Klein sold his namesake company in 2003 to PVH, then known as Phillips-Van Heusen, for $400 million in cash, as well as $30 million in stock and up to $300 million in royalties "linked to revenues over the next 15 years," according to a 2002 report by The New York Times. Klein and his business partner, Barry Schwartz, retired upon the acquisition, although Costa and Zucchelli were their hires. Simons' modern-minimalist approach appears well-suited to the world Klein first envisioned in 1968, when he introduced his first range of smart outerwear. But Simons will also be the first designer to manage the brand without a direct link to its founder.

Of course, just how far PVH — not particularly well-versed in the ways of high fashion, compared to European conglomerates like LVMH and Kering — will go to transform the Calvin Klein business under new creative leadership remains to be seen. "As Calvin Klein looks to grow the brand to $10 billion in global retail sales, this new leadership is intended to further strengthen the brand’s premium positioning worldwide and pave the way for future long-term global growth," the company said in a statement.

But one thing's for sure: Simons' runway debut — for the Fall 2017 season — will no doubt be the most anticipated show of New York Fashion Week next February.

Related Articles:

Costa and Zucchelli Out at Calvin Klein, Raf Simons to Take Reins?
The Curious Case of Raf Simons at Calvin Klein
Tom Murry Breaks Down Calvin Klein's Business Model