(Reuters) – Apparel maker PVH Corp said on Thursday it would exit its high-end collection of Calvin Klein apparel and shut the label’s flagship store on New York’s Madison Avenue, as the fashion line failed to strike a chord with customers.
Logo of Calvin Klein watches is seen at the Baselworld watch and jewellery fair in Basel, Switzerland, March 26, 2018. REUTERS/Arnd Wiegmann
The company also said it was in talks with its North America apparel partner G-III Apparel Group LTD to license out the brand’s women’s jeans unit.
G-III also operates Tommy Hilfiger women’s business, which helped boost PVH’s strong financial results in the fourth quarter, lifting its shares nearly 18 percent in morning trading.
“We believe this was the right decision for the long-term health of the brand (Calvin Klein) as the existing high-end business was not resonating with our core consumer,” Chief Executive Officer Emanuel Chirico said on a post earnings call.
Fashion missteps at high-end Calvin Klein’s 205W39NYC line of clothing have hit sales in recent quarters as customers baulked at the high prices of the ready-to-wear luxury clothing label that offered oversized sweaters, tie-dyed and silk dresses.
The New York-based company said the decision to exit the label and license out its women’s jeans unit would lower its fiscal 2019 revenue by $100 million.
However, the restructuring of Calvin Klein and the lack of a need for big promotions in its jeans business were likely to improve profit margins in the second half of 2019, the company said.
PRESSURE IN CHINA
Chirico said the trade tensions has impacted the company’s retail business in China and the United States.
“Business is softer than we saw the first half of 2018… We’re looking for that trend to continue throughout the first half of 2019,” Chirico said referring to China.
Still, PVH forecast full-year adjusted profit between $10.30 and $10.40 per share, the midpoint of which was above analysts’ expectation of $10.31.
Reporting by Aishwarya Venugopal and Uday Sampath Kumar in Bengaluru; Editing by Arun Koyyur