PVH Corp. and G-III Apparel Group might be corporate fashion’s perfect frenemies.
First, they had a nearly 20-year licensing relationship, forged by G-III chief executive officer Morris Goldfarb and former PVH chief Manny Chirico. G-III used its Seventh Avenue savvy to build up PVH’s Calvin Klein and then Tommy Hilfiger brands at U.S. department stores.
Both sides made plenty of money.
Then came a changing of the guard at PVH with Stefan Larsson stepping in as CEO. He broke up with G-III in 2022 as part of a broader plan to take more complete control of the brands and reposition them.
It was a blow that effectively snatched away 50.7 percent of G-III’s sales. But it was also drawn out as the licenses — covering men’s and women’s outerwear, luggage, women’s apparel, dresses, suits and swimwear — don’t all expire until 2027.
Like a couple that split, but still live together, they’ve been civil, not warm as they head in their own directions.
Now G-III and PVH are increasingly meeting in the market as competitors.
The shift is still relatively small. The businesses with G-III accounted for about 33 percent of PVH’s global licensing revenues in 2021 and will still be 20 percent of expected licensing revenues for 2025.
As the companies separate, they are building up their respective businesses.
G-III is pushing ahead with the other brands it owns, like Karl Lagerfeld, and new licenses, like Converse and Champion and has admirably set itself up for the next turn of the wheel.
The company relaunched Donna Karan to help plug the void, while PVH reintroduced its own version of Calvin Klein sportswear in 150-plus Macy’s doors.
There was a lot of tut-tutting from some corners as G-III used to sell the brand in 450 Macy’s doors — but then again, even Macy’s doesn’t want to be in 450 of its doors and is whittling the chain down to its best locations.
PVH is also working on something bigger.
The rollout of new Calvin Klein sportswear collided with some difficulties in PVH’s efforts to set up a global product kitchen for the brand. But Larsson has stressed that when the pieces of his strategic plan come together, they work beautifully.
Last week, he pointed to Calvin Klein’s new Icon Cotton Stretch underwear franchise, which saw a 25 percent boost in revenues as product innovation, marketing and the go-to market strategy all lined up.
“When we lean in to where we have the iconic strength and the love from the consumer and add newness strategically in product, we combine it with cut-through marketing campaigns and strengthen the marketplace execution and bring that impact into both wholesale partners and stores, then we really win,” Larsson told WWD. “It’s a multiyear journey. You see it season by season.”
Along the way, Larsson has switched up the company’s executive leadership — most recently installing a new head at Calvin Klein — cut costs and jettisoned noncore businesses.
Analysts have been believers in the plan, but are getting itchy for PVH to show more results.
“Time is ticking on the turnaround catalyst,” said John Kernan, an analyst at TD Securities, in a note to clients last week.
Likewise, while G-III has survived its existential moment and found its footing after PVH withdrew, it still has to demonstrate to investors that it can make its businesses work.
Interestingly, since the day G-III and PVH started to part ways in November 2022, shares of both companies are down about 2 percent (while the S&P 500 marched steadily higher with a 48 percent gain).
Despite the breakup, they are both coming from the same place and heading in the same direction. PVH’s Larsson wanted to bring back closer control of his brands to position for methodical, repeatable break away performance.
G-III’s Goldfarb has also been leaning into owned brands, liking the control and security it gives him, while also holding onto the licensing part of the business.
Larsson is betting on a new approach for PVH, Goldfarb is doubling down on what has worked for G-III in the past.
Goldfarb, who’s been a CEO in fashion for more than 50 years, is picking up all the help he can get along the way, while taking some mild digs at all comers.
“The Tommy and Calvin brands are good brands, but there’s something to be said for the value of the people operating the brands,” Goldfarb told WWD recently. “I’ve seen an amazing amount of brands that have faded away. The Liz Claibornes of the world, the Jones New Yorks of the world. As new management comes in and takes an approach of cleaning house of the amazing talent that they employed — the legacy talent and the legacy culture that was inherited, they don’t see very much value in it. I have always respected the values of the brands that really ruled in the sector in my career.
“As Liz Claiborne disbanded…I took the best of their talent, hired them, learned from them, and placed them globally to add value to our company. I found them to be absolutely amazing,” he said. “Same thing with some of the PVH talent.”
The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000. It appears periodically.
