Calvin Klein Jeans: expansion into Europe in 2015

By

Olivier Guyot

Published
Apr 1, 2015

The management of PVH Corp isn't hiding anything: it is indeed expecting a complicated 2015 financial year due to the development in currency exchange rates. The group is expecting an approximately 3% increase in its revenue. However, according to its calculations, after passing through customs, its consolidated income in dollars should show a 4% decrease compared to 2014. 

Before exchanges, its progress could reach 5%. And its executives are notably placing new hopes in Calvin Klein Jeans.

"In the jeans area, new product has been delivered and we are seeing a good reaction from consumers, particularly where we have installed new jeans shops," explained Manny Chirico, the group's CEO, during a recent discussion with financial analysts. "In North American we have installed 225 shops in 2014, 150 men’s shops and 75 women’s shops. In the newly installed shops we’ve experienced a 40% retail sales increase over the prior year."

To back up his enthusiasm, the executive specifies that in 2014, the average growth in its stores was 15% and that this trend has been confirmed for the first quarter of 2015. The group seems to be ready to push this vision of Calvin Klein Jeans and has announced 150 shop installations in North America in 2015.

"I think in North American the real focus for the next twelve months will be improving the profitability as we really focus on selling full priced merchandise, which heretofore had been a challenge, particularly over the last three of four years," Manny Chirico also specified.

"You will also be seeing in North America a much more elevated presentation at retail with our key accounts Macy's, Lord & Taylor, Dillard’s...We should be seeing higher averaging at retails going out the door."

And this repositioning should also bear its fruit beyond the group's domestic market. "In Europe we are in early stages of a turnaround in the jeans business. We have sold over 60 new jeans shops throughout Europe. We have significantly improved the quality level of our jeans line with better fabrics, trims and packaging. We are effectively out of all off-price retailers in Europe beginning in the first quarter of 2015."

The executive explains that even though the group closed stores that were under-performing, it also started the reconstruction of its network with the opening of 11 stores in the second half of 2014. He also adds that, in the first quarter of 2015, the London, Rome, Venice and Milan stores are being reviewed with the new concept and should open in the second quarter.

The PVH Group's CEO has a clear ambition: to improve the profitability of Calvin Klein Jeans. "Every other Calvin Klein business that we run in Europe and in North America are running at double digit operating margins for us. So we clearly believe that we have the opportunity there to bring those margins over the next four to five years to approach 10%."