CALVIN KLEIN is a global lifestyle brand built on iconic essentials and powered by bold, progressive ideals. The brand portfolio includes CK CALVIN KLEIN, CALVIN KLEIN, CALVIN KLEIN JEANS, CALVIN KLEIN UNDERWEAR and CALVIN KLEIN PERFORMANCE. Global retail sales of CALVIN KLEIN products were approximately $9.8 billion in 2018. CALVIN KLEIN products are distributed globally through our wholesale partners (in stores and online), through pure play digital commerce retailers, on our calvinklein.com digital commerce sites (which cover over 35 countries, including the U.S., most of Europe, Brazil and most of the Asia Pacific region) and through over 4,000 CALVIN KLEIN retail locations (including company-operated, franchisee, concession and distributor stores).
We believe in offering our products in the distribution channels that are most compelling and convenient for our consumers. Accordingly, we have been focused across all of the regions where we operate on increasing the penetration of our products sold online, particularly with our wholesale partners. We have elevated our overall digital and marketing experience by implementing an “always on” approach. This includes more collaborations with brand ambassadors and key influencers, and offering fresh social media content, capsule collections and new brand activations, particularly at a local level.
Additionally, we have taken steps to elevate the overall consumer experience through the creation of our Consumer Marketing Organization in 2018. This internal team reimagines our marketing function by bringing together all facets of the consumer marketing experience – from consumer engagement to our digital offerings, consumer data insights and the overall shopping experience. We believe that this enhanced marketing approach will better meet our consumers’ needs, as we adapt to their rapidly changing demands.
Our Calvin Klein business consists of two reportable segments: Calvin Klein North America and Calvin Klein International.
Calvin Klein North America
Calvin Klein North America accounted for 48% of Calvin Klein's revenue in 2018. This includes revenue generated from the wholesale channel (in stores and online), our own retail stores, calvinklein.com (U.S. and Canada) and licensing agreements (including our joint venture in Mexico).
Product categories that are distributed in North America include men's sportswear (casual apparel), jeanswear, dress furnishings, underwear, outerwear, fragrance, accessories, footwear and performance apparel; women’s sportswear (casual apparel), jeanswear, dresses, intimates, suits, outerwear, fragrance, accessories, handbags, footwear and performance apparel; and soft and hard homegoods. We believe that the largest growth opportunities in North America exist in performance apparel, women’s intimates, men’s sportswear (casual apparel), women’s jeans (under our licensee, G-III) and accessories.
Products are sold by us and our licensing partners through wholesale customers (in stores and online), our own retail stores, which are primarily located in premium outlet centers, and through calvinklein.com.
Calvin Klein International
Our international operations accounted for 52% of our 2018 Calvin Klein revenue (including revenue generated in Europe, most of Asia, Australia, New Zealand and Latin America). Internationally, our products are sold through the wholesale channel (in stores and online); our own retail locations (including concessions); licensee stores, and on calvinklein.com. Product assortments that are distributed internationally primarily include men's and women's jeanswear, underwear and accessories, and we are growing our sportswear (casual apparel) and performance apparel businesses. Overall, the largest category expansion opportunities for CALVIN KLEIN products internationally are men’s and women’s jeanswear, sportswear (casual apparel), accessories and performance apparel.
Calvin Klein's Asia Pacific operations accounted for 20% of Calvin Klein's revenue in 2018. Our regional headquarters is located in Hong Kong and we have commercial teams based in Shanghai, Seoul and Tokyo and satellite offices in Taiwan and Singapore, to support our business in major markets such as China, South Korea, Japan, Southeast Asia, Australia and New Zealand. We also maintain a 50% interest in a joint venture in India.
In the Asia Pacific region, we sell CALVIN KLEIN jeanswear, underwear, performance apparel, accessories and, in Australia and India only, sportswear (casual apparel). We believe that the largest growth opportunities in the region are to expand men’s and women’s jeanswear, sportswear (casual apparel, which is run by our licensee, Club 21), accessories and performance apparel.
Our retail portfolio includes approximately 470 company-operated retail stores and approximately 370 concessions. Additionally, we operate a wholesale business, through which we primarily sell our products to distributors and franchisees (currently approximately 1,840 doors), and in certain markets, including Australia, Japan and South Korea, we have a significant department store presence. We also sell to third party travel retailers. Digital commerce is a key focus area, with our products sold on Tmall, jd.com, zalora.com and several other accounts, as well as calvinklein.com, which we operate in China, Hong Kong, Macau, Japan, Malaysia, Singapore, Taiwan, South Korea, Australia and New Zealand.
Calvin Klein's European business accounted for 30% of Calvin Klein's revenue in 2018. In these countries, the largest categories are jeanswear, underwear and accessories. We also sell a limited selection of men's and women’s sportswear (casual apparel), performance apparel and kids apparel. Our store base includes approximately 210 retail stores (full price and outlet locations), approximately 750 concessions and approximately 190 franchisee stores. We also operate calvinklein.com sites across most of Europe.Our Calvin Klein Europe business has experienced significant growth over the last several years and we continue to believe that Europe represents the brand’s largest regional opportunity in the near-term. We believe that the largest growth opportunities in Europe are to develop the men’s sportswear (casual apparel) business, which is in early stages of growth, expand women’s sportswear (casual apparel) and performancewear (both categories launched in Fall 2018), and grow accessories, jeanswear and kids.
Calvin Klein's Latin America business, which consists primarily of our directly controlled operations in Brazil, accounted for 2% of Calvin Klein's revenue in 2018. We primarily distribute CALVIN KLEIN products through the wholesale channel (in stores and online), approximately 100 retail stores (including franchisee stores) and on calvinklein.com. Products sold include CALVIN KLEIN jeanswear, sportswear (casual apparel), accessories, underwear and related products. We see a notable opportunity to expand CALVIN KLEIN underwear, sportswear (casual apparel) and performance apparel in the region. Additionally, we have been expanding distribution throughout South America through a third-party licensee.
Calvin Klein has approximately 50 licensing and similar arrangements worldwide with third parties and our joint ventures in India and Mexico for use of the CALVIN KLEIN brands for a broad array of product categories.
Licensing continues to be a significant component of Calvin Klein's business, as 53% of global retail sales under the brand in 2018 were generated from licensed businesses. Licensing revenue is included in the region in which the products are sold to consumers. Calvin Klein's two largest licensees in terms of 2018 global retail sales were:
|NORTH AMERICA (1)||TOTAL STORES:||~185|
|EUROPE (2)||TOTAL STORES:||~1,130|
|LATIN AMERICA (3)||TOTAL STORES:||~100|
|ASIA PACIFIC (4)||TOTAL STORES:||~2,700|
TOMMY HILFIGER is one of the world’s leading designer lifestyle brands and is internationally recognized for celebrating the essence of classic American cool style with a preppy twist. Tommy Hilfiger offers a wide range of high-quality apparel, accessories and lifestyle products to a diverse consumer following. We design, market and distribute the HILFIGER COLLECTION, TOMMY HILFIGER TAILORED, TOMMY HILFIGER, TOMMY JEANS and TOMMY SPORT brands, and license these brands for an assortment of premium lifestyle products as well as in various countries and regions. Global retail sales under the brands were approximately $8.5 billion in 2018. TOMMY HILFIGER products are available globally through our wholesale partners (in stores and online), through pure play digital commerce retailers, on our tommy.com sites (which cover over 30 countries, including the U.S., most of Europe, most of the Asia Pacific region, Brazil, Chile and Mexico) and through approximately 1,800 TOMMY HILFIGER retail locations (including company-operated, licensee, franchisee, concession and distributor stores). They are also distributed in North America, Europe, the Asia Pacific region and Latin America through licensees.
Our strategy is to offer our products in the distribution channels that are most compelling and convenient for our consumers. Accordingly we have been focused across all of the regions where we operate on increasing the penetration of our products sold online, particularly through our wholesale partners. We have allocated incremental resources and added new talent to help us grow our digital business, enhance our data capabilities and improve the online experience related to our merchandising and product offerings. In conjunction with these efforts, we have elevated our overall digital and marketing experience by implementing an “always on” approach. This includes more collaborations with brand ambassadors and key opinion leaders, offering fresh social media content, capsule collections and new brand activations, particularly at a local level.
Our Tommy Hilfiger business consists of two reportable segments: Tommy Hilfiger North America and Tommy Hilfiger International.
Tommy Hilfiger North America
Tommy Hilfiger North America accounted for 38% of Tommy Hilfiger's revenue in 2018. This includes revenues generated from the wholesale channel (in stores and online), our own retail stores, tommy.com (U.S. and Canada) and licensing agreements (including our joint venture in Mexico).
Retail accounted for 73% of Tommy Hilfiger's North American sales(1) in 2018. This consists principally of sales generated from approximately 245 stores in the U.S. and Canada. Our store base primarily consists of company-operated stores, which are located in premium outlet centers and carry specially designed merchandise at a lower price point than our other stores. Additionally, we generate sales on we generate sales on tommy.com.
Our wholesale business represented 27% of Tommy Hilfiger North America's sales(1) in 2018. We sell our products in stores and online at Macy's and Hudson's Bay, and in Spring 2019, we began to broader our distribution and reach a wider audience by selling into wholesale accounts including Belk, Bloomingdale's, Dillard’s and Nordstrom. We believe that there is a more significant opportunity to grow the brand’s wholesale presence in 2020 and beyond. We also sell TOMMY HILFIGER products to select specialty apparel retailers (in stores and online) and through pure play accounts to cater to more youth-minded consumers.
G-III is our licensee for TOMMY HILFIGER women’s sportswear (casual apparel) in the U.S. and Canada, as well as women’s performance apparel, swimwear, denim, suit separates and dresses (all of which is sold through a variety of wholesale accounts).
We view Tommy Hilfiger’s wholesale presence as an important component of its North American distribution strategy. We are continually expanding the brand's presence in top doors, seeking to maximize sales of key items and upgrade the in-store experience by creating clear and impactful store presentations. Additionally, we license certain product categories, including eyewear, watches, dresses, fragrance and home furnishings, which are also sold at various retailers.
Tommy Hilfiger International
Tommy Hilfiger International accounted for 62% of the business's revenue in 2018. Products are sold by us through the wholesale and retail channels in Europe, most of Asia, Australia and New Zealand and by distributors, licensees and franchisees in Europe, Latin America and the Asia Pacific region, including through joint ventures in India and Brazil. We also operate tommy.com in most of Europe, most of Asia, Brazil, Chile and Mexico. While category expansion opportunities vary by region, the overall largest opportunities internationally are in women’s apparel, as well as categories that further develop the lifestyle offering, such as denim, underwear, performance apparel, men’s tailored apparel and accessories.
Tommy Hilfiger has well-established operations in Europe that accounted for 52% of Tommy Hilfiger's revenue in 2018. The largest markets in Europe are Germany, France and the U.K.
TOMMY HILFIGER products sold in Europe primarily through the wholesale channel, which represents 62% of European sales(1) – with customers ranging from large department stores to small independent stores. There are also over 675 retail stores (of which approximately 45% are company-operated, while the remainder are franchisee and distributor-operated stores) and approximately 260 concession locations. Our company-operated store base in Europe consists largely of full price stores, which are complemented by outlet locations. Tommy Hilfiger's digital commerce operations are well-developed in Europe and the tommy.com sites that we operate in Europe are our largest and most profitable. Looking ahead, we continue to see opportunities for growth in Europe, as we gain market share from competitors and expand various underpenetrated product categories, such as women’s apparel, performance apparel,accessories, underwear and men’s tailored apparel.
Tommy Hilfiger's Asia Pacific operations accounted for approximately 10% of its revenue in 2018. Tommy Hilfiger’s operations in Asia Pacific include its businesses in Japan, China, Central and South East Asia, Australia and New Zealand, which are owned; the business in India, which is operated through a joint venture; the business in Korea, which is licensed to a third party; and the businesses in Indonesia, Vietnam and the Phillipines, which are operated through a distributor.
Tommy Hilfiger primarily sells its products through the retail channel, which includes concessions, shop-in-shops, retail stores (both full price and outlet), franchisees and licensee stores. Digital commerce is a key focus area, with our products sold on Tmall, jd.com, zalora.com and several other accounts, as well as tommy.com, which we operate in China, Hong Kong, Macau, Japan, South Korea, Australia and New Zealand.
In general, our largest category offering across the Asia Pacific region is men’s sportswear (casual apparel), and we believe that the most significant growth opportunities are to expand women’s apparel, as well as men’s and women’s denim, accessories, underwear and performance apparel, and kids.
By region, China is the largest long-term regional expansion opportunity, as we leverage our well-established infrastructure in Asia, the regional expertise of management, and strong brand momentum in the region. In addition to category expansion, we believe that we can drive growth through additional retail store openings and, over time, taking direct control of the brand in additional cities where it is currently operated by distributors and franchisees. Our Japan business has been performing well, as our efforts to turn it around have seen great progress. Lastly, we also recently acquired the retail business that was licensed to a third party for Hong Kong, Macau, Taiwan, Singapore and Malaysia. We believe that there are significant opportunities to expand our business in this region as we grow our lifestyle category offerings, open additional retail locations, enhance store productivity, grow our digital businesses and invest in marketing.
Revenue in Latin America is primarily generated in Panama, which is licensed to a third party, and Brazil, where we have a joint venture with a local partner. The retail base in Brazil includes approximately 225 full-price and outlet stores, primarily operated by franchisees. We plan to expand the brand’s presence in the region over the next several years, assuming economic growth, particularly in Brazil, as TOMMY HILFIGER exhibits strong brand health with consumers.
|NORTH AMERICA (1)||TOTAL STORES:||~245|
|EUROPE (2)||TOTAL STORES:||~930|
|LATIN AMERICA (3)||TOTAL STORES:||~225|
|ASIA PACIFIC (4)||TOTAL STORES:||~705|
With revenue of approximately $1.6 billion in 2018, our Heritage Brands business designs, sources and markets a varied selection of prominent brand label dress shirts, neckwear, sportswear (casual apparel), swim products, intimate apparel, underwear and related apparel and accessories, and licenses certain of our brands for an assortment of products. The Heritage Brands business also offers private label dress furnishings programs, particularly in neckwear. We distribute our Heritage Brands products at wholesale, primarily in the U.S., Canada, Australia and New Zealand (in stores and online), through company-operated stores, principally located in outlet centers throughout the U.S. and Canada, and through our directly operated digital commerce sites SpeedoUSA.com, IZOD.com, VanHeusen.com, styleBureau.com and TrueandCo.com.
Our Heritage Brands business is comprised of several category offerings, which are detailed below. Overall, nearly 85% of Heritage Brands’ sales(1) were generated from the wholesale channel and close to 15% of its sales(1) were generated from the retail channel in 2018.
Our Dress Furnishings business principally consists of the design and marketing of men's dress shirts and neckwear that is primarily distributed through department, chain and specialty stores, warehouse clubs, mass market, off-price and independent retailers (in stores and online), as well as through pure play digital commerce retailers and on IZOD.com, VanHeusen.com and styleBureau.com. We market both dress shirts and neckwear under brands including Van Heusen, IZOD, ARROW, Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, Unlisted, a Kenneth Cole Production, MICHAEL Michael Kors, Michael Kors Collection and DKNY. We also market dress shirts under the Chaps brand, among others. We offer private label dress shirt and neckwear programs to retailers, primarily national department stores and mass market retailers. We believe our product offerings collectively represent a sizeable portion of the domestic dress furnishings market. Recently, we have been focused on adding innovation and performance features to our products, including stretch fabrics, temperature-activated cooling technology and wrinkle-resistant styles.
Our Heritage Brands Sportswear business includes the design and marketing of men's sport shirts, sweaters, bottoms and outerwear, principally under the IZOD, Van Heusen and ARROW brands. IZOD and Van Heusen were the first and second best selling national brand men’s woven sport shirts, respectively, in United States department and chain stores in 2018.
Our products are primarily distributed through department, chain and specialty stores, warehouse clubs, mass market, off-price and independent retailers (in stores and online), as well as through IZOD.com, VanHeusen.com and pure play digital commerce retailers. As a complement to our wholesale business, we operate approximately 160 stores, which are primarily located in outlet centers in the U.S. and Canada. All of our stores offer a broad selection of Van Heusen men’s and women’s apparel, along with various of our dress shirt and neckwear offerings, and IZOD and Warner’s products.
We design and market certain men's, women's and children's swimwear, pool and deck footwear and swim-related products and accessories, such as swim goggles, learn-to-swim aids, water-based fitness products and training accessories under the Speedo trademark. The Speedo brand is exclusively licensed to us for North America and the Caribbean in perpetuity from Speedo International Limited. We primarily distribute Speedo products through mass market retailers, sporting goods stores, team dealers, swim clubs, off-price retailers and digital commerce websites, including our SpeedoUSA.com website and websites operated by pure play digital commerce retailers.
Our Heritage Brands business underwear and core intimates offerings include intimate apparel, shapewear and loungewear under the Warner's and Olga brands, as well as intimate apparel under the True&Co. brand. We believe in leveraging core competencies and best practices within the underwear and intimates categories from across the PVH organization to enhance our products and assortments. This includes leveraging our Calvin Klein Underwear business's strong expertise in product, packaging and marketing, capitalizing on Warner's reputation in bras and leveraging True&Co.’s platform to increase innovation, test product with data driven-decisions and enhance speed across our intimate apparel business. Warner’s and Olga products are primarily distributed through department stores, chain stores and mass market retailers (in stores and online) and pure play digital commerce retailers, in addition to some company-operated outlet stores. True&Co. is primarily distributed through our TrueandCo.com digital commerce website, although it is expanding into select wholesale accounts, including Nordstrom and Target (under the True Everybody label).