Calvin Klein Inc.

FOU NDED: 1968

OVERVIEW
As the fashion industry has progressed, it has grown
and transformed into an icon. One of the most influen­ Contact Information:
tial designers in that movement is Calvin Klein. His de­ HEADQUARTERS: 205 W. 39th St., 5th Fl.
signs and ideas brought fashion into a new realm that New York, N Y 10018
took on its own personality. With products ranging from PHONE: (212)719-2600
clothing to bed linens to perfume, people around the FAX: (212)730-4818
world are familiar with Calvin Klein, and his name has
become synonymous with couture fashion. Calvin
Klein’s products are high quality and have price tags that
reflect it. His products are displayed and sold in top notch
department stores such as Dayton Hudson’s and Saks
Fifth Avenue, as well as in the 30 Calvin Klein retail
stores operating worldwide.

COMPANY FINANCES
Calvin Klein’s approximately 400 in-store shops
earned $5.1 billion in revenue during 1997, approximately
28 percent of which was earned in Europe. The company
expects revenues to increase 15 percent during 1998.
Calvin Klein hoped to add between 650 and 700 new
shops in department stores during 1998 in order to better
compete with rivals DKNY Jeans and Tommy Hilfiger.

HISTORY
Calvin Klein started his self-titled company in 1968
with company Chairman Barry Schwartz. He began de­
signing coats and later ventured into sportswear. Intro-

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 C a l v i n Kl e i n Inc
duced in 1980, Calvin Klein jeans helped lead the com­
pany to success during the designer blue jeans craze. His
unique designs were appealing to the population at large
and brought in a substantial profit. It was during the early
1980s that the company made the decision to adopt a
form of advertising that would really grab the attention
of consumers. Klein hired Richard Avedon to head up
the campaign, and it was he who filmed the famous tele­
vision ads featuring Brooke Shields. Klein continued to
utilize provocative advertising since it generated a
tremendous amount of revenue. During the late 1980s,
the company released several ads for its Obsession per­
fume as well as for Calvin Klein’s underwear line. The
ads were pretentious and erotic but were always dis­
cussed among consumers and store buyers. Klein usually
disregarded attacks by those who disagreed with the ads
because it was these displays that turned Calvin Klein
into a household name.
The ads brought in profits for Calvin Klein and also
helped accelerate the careers of several actors and mod­
els, including musician Marky Mark and model Kate
Moss. Even with the popularity of the ads and products,
Calvin Klein experienced a loss at the expense of lower-
priced retailers such as The Gap. In order to ease some
of the financial strain, record producer David Geffen pur­
chased $60 million of the company’s junk bond debt in
1992. In 1993, Calvin Klein was the subject of a biog­
raphy that portrayed him as a drug addict during the Stu­
dio 54 designer jeans years. This book, titled Obsession,
was disputed by many within the company but published
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nevertheless. The controversy surrounding Calvin Klein
ads did not cease. In August 1995 the company decided
to withdraw ads shot by Steven Meisel; these television
and print ads were seen as possible child pornography.
This was looked into extensively, but no formal charges
were pressed against Calvin Klein or the company, and
the company continued its provocative advertising.
STRATEGY
Advertising used by the company was influential in
circulating its products. Ads usually showed scantily clad
men and women wearing only certain pieces of Calvin
Klein clothing. Whether it was underwear or a simple
pair of blue jeans, the billboards and magazine ads were
eye catching. The most famous clothing ad was one of
the company’s first—a television ad featuring actress
Brooke Shields uttering the statement, “You know what
comes between me and my Calvins? Nothing.” Ads like
these helped increase sales worldwide. The company
continued to enjoy much success and continued to re­
lease new products for the public to devour.
During the late 1990s, Calvin Klein was planning to
build up its brand’s “tops” business, adding fleece tops,
woven shirts, T-shirts, and active wear in a wider range
of colors than was offered in previous years. It also added
more styles to its jean line, including “skateboard” and
“carpenter” styles, dark denim, and stretch denim. New
C o m p a n y P r o f i l e s for S t u d e n t s

products and new shops would be launched with exten­
sive advertising campaigns focused on depicting healthy
adults in active, outdoor lifestyles.
Another strategy used by Calvin Klein to extend its
product reach was the licensing of the Calvin Klein name
to foreign companies. One such example was its agree­
ment to license its home furnishings line to Crown Crafts,
Inc. Another example was Calvin Klein’s latest deal to
extend its menswear partnership with GFT, SpA. The two
companies signed a long-term international licensing
agreement covering Europe, the Middle East, and the
Asia/Pacific region (excluding Japan). The two compa­
nies have worked together since the early 1990s build­
ing a highly successful men’s line in the United States
with hopes of extending it to other major regions of the
world. The product line is planned for launch in Europe
in the spring of 1999, supported by advertising and pub­
lic relations campaigns. A complete lifestyle collection
is to be designed and sold under the Calvin Klein label;
distribution will be limited to high-end specialty retail­
ers, department stores, and Calvin Klein Collection
stores.
INFLUENCES
Much opinion concerning Calvin Klein, as an indi­
vidual and about his advertising strategies, was negative.
Critics saw Klein as a fiendish drug addict with little self­
control, and controversy surrounding his advertisements
was intense. In the beginning, there was some argument
regarding the sexual undertones in the ads, and the prob­
lems grew. In 1996, Calvin Klein Industries produced a
series of television commercials showing a series of
baby-faced models wearing very little clothing, usually
just a tee shirt and a pair of Calvin Klein blue jeans. Mod­
els were then questioned by a person the viewer never
saw but sounded as though he was a mature, older man.
According to writer Carolyn Christenson, Calvin Klein
exploited the sexuality of the younger generation in or­
der to sell his products. Christenson felt that Klein was
completely aware of the controversy that would surround
his ads but went ahead with them anyway. In the mid-
1990s the company continued to draw criticism for us­
ing models that looked anorexic, underaged, and
drugged. New advertising in 1998 focused on a more
wholesome lifestyle and included healthier looking mod­
els in outdoor settings.
Calvin Klein was also impacted significantly by
counterfeiting in the fragrance industry. The company,
along with the Colombian government, participated in an
ongoing investigation into the problem. More than 6,000
counterfeit units of CK One, Escape, Eternity, and Ob­
session were found in an April 1998 seizure alone. The
problem was also uncovered in September of 1997 in
Panama, where another seizure took place. Counterfeit
containers were made so that those purchasing the bot­
C o m p a n y P r o f i l e s for S t u d e n t s
Ca l v i n Kl e i n Inc.
FAST FACTS:
About Calvin Klein Inc.
Ownership: Calvin Klein Inc. is a privately owned
company.
Officers: Barry K. Schwartz, Chmn. & CEO; Calvin
Klein, VChmn., 50; Gabriella Forte, Pres. & COO;
Lawrence C. DeParis, Sr. VP, Finance & CFO
Employees: 900
Chief Competitors: Calvin Klein is one of the most rec­
ognized designers and marketers of apparel and fra­
grances. Primary competitors include: Donna Karan;
The Gap; Gucci; Guess?; J. Crew; Jordache Enter­
prises; Liz Claiborne; Nautica; Nike; Levi Strauss
Associates; OshKosh B’Gosh; Oxford Industries;
Polo/Ralph Lauren; and Tommy Hilfiger.
tles believed they were buying authentic Calvin Klein
products. According to Jennifer Owens’ article in
Women’s Wear Daily, Calvin Klein was one of the fra­
grance industry’s leaders in attacking the counterfeiting
problem.
CURRENT TRENDS
Calvin Klein adopted a strategy in the late 1990s
that made its clothing and fragrances as recognizable in
Europe as they were in the United States. Moving toward
this goal, in mid-1998 the company announced a sum­
mer 1999 menswear collection. The collection included
a new couture line for the European market that was pro­
duced and distributed by GFT, SpA, an Italian manufac­
turer that has produced the company’s black-on-black la­
bel in the United States since 1992. It would be the first
time a top-of-the-line Calvin Klein line was made widely
available to the European market—until the agreement
with GFT, the Calvin Klein men’s couture collection was
only available in a Calvin Klein store in Paris. The new
line was scheduled to be in stores in the spring of 1999
for distribution to upmarket retailers through GFT show­
rooms in Milan, Madrid, Paris, Dusseldorf, and London.
A roll-out across the Middle East and Asia was planned
sometime after the line’s initial release in Europe.
Calvin Klein not only introduced several new cloth­
ing lines, cosmetics, perfumes, and eyewear but also de-