With global retail sales of approximately $9.1 billion in 2017, CALVIN KLEIN is one of the best known designer names in the world, exemplifying bold, progressive ideals and a seductive, often minimalist, aesthetic. CALVIN KLEIN 205 W39 NYC acts as a halo and offers inspiration to the other CALVIN KLEIN brands, which include CALVIN KLEIN JEANS EST. 1978, CK CALVIN KLEIN (our contemporary line), CALVIN KLEIN (better sportswear), CALVIN KLEIN UNDERWEAR, CALVIN KLEIN JEANS and CALVIN KLEIN PERFORMANCE. CALVIN KLEIN products are distributed globally through our wholesale partners, through over 3,700 CALVIN KLEIN stores (including company-operated, licensee, franchisee, concession and distributor stores), and through calvinklein.com digital commerce sites, which cover over 35 countries, including the U.S., all of Europe, Brazil and most of Asia.
We believe in offering our products in the distribution channels that are most compelling and convenient for our consumers. Accordingly, across all of the regions where we operate, we have been focused on increasing the penetration of our products sold online, particularly on the wholesale side. Additionally, we have allocated incremental resources and added new talent to help us grow our digital business and improve the online experience related to our merchandising and product offerings.
Our Calvin Klein business consists of two reportable segments: Calvin Klein North America and Calvin Klein International.
Calvin Klein North America
Our North American operations, which include revenues generated in the U.S. and Canada, accounted for nearly 50% of our Calvin Klein revenues in 2017. Product categories that are distributed in North America include men's sportswear and dress furnishings, men's and women's jeanswear, underwear, outerwear, fragrance, accessories, footwear and performance apparel, women's sportswear, dresses, intimates, suits and handbags and items for the home. We believe that the largest growth opportunities in North America exist in men’s jeanswear, accessories and women’s apparel.
Products are sold by us and our licensing partners (including our joint venture in Mexico), through wholesale customers (in stores and online), through our own network of retail stores, which are primarily located in premium outlet centers, and on calvinklein.com.
Calvin Klein International
Our international operations accounted for 51% of our 2017 Calvin Klein revenues (including revenues generated in the Asia Pacific region, Europe and Latin America). Internationally, our products are sold through the wholesale channel (in stores and online); our own network of 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 focused on rolling out and growing our casualwear and performance apparel businesses. While exact expansion opportunities vary by region, the largest overall opportunity for CALVIN KLEIN internationally is to expand the men’s and women’s apparel businesses.
Calvin Klein's Asia Pacific operations accounted for 20% of Calvin Klein's revenues in 2017. 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 and Southeast Asia. We also own interests in joint ventures in India and Oceania (which encompasses Australia, New Zealand and other island nations in the South Pacific).
In the Asia Pacific region, we sell CALVIN KLEIN jeanswear, underwear, performance apparel, accessories and CALVIN KLEIN apparel (Australia and India only) primarily through the retail channel, which includes concessions, shop-in-shops, retail stores (both full price and outlet) and travel retail locations, which are located in major international airports. We believe that the largest growth opportunity in the Asia Pacific region is to expand men’s and women’s apparel and performancewear and that there is also significant room for expansion of underwear, jeanswear and accessories.
Our retail portfolio includes approximately 420 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 1,490 doors), and in certain markets, including Japan and South Korea, we have a significant department store presence. 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 and South Korea.
Calvin Klein's European business accounted for 28% of Calvin Klein's revenues in 2017. In these countries, we sell CALVIN KLEIN jeanswear, underwear and accessories, and a limited selection of men's CK CALVIN KLEIN apparel. Our store base includes approximately 200 retail stores (full price and outlet locations), approximately 730 concessions and approximately 150 franchisee stores. We also operate calvinklein.com across Europe, which ships to nearly 30 countries.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 apparel business, which is in early stages of growth, and introduce women’s apparel in Fall 2018. Additionally, there is significant room to expand jeanswear and accessories and launch performancewear in Fall 2018.
Calvin Klein's Latin America business, which consists primarily of our directly controlled operations in Brazil, accounted for 3% of Calvin Klein's revenues in 2017. We primarily distribute CALVIN KLEIN products through the wholesale channel (in stores and online), a limited number of retail stores and on calvinklein.com. Products sold include CALVIN KLEIN jeanswear, sportswear, accessories, underwear and related products. We see a notable opportunity to expand CALVIN KLEIN apparel and accessories distribution in the region. Additionally, we have been expanding distribution throughout South America through a third-party licensee.
Calvin Klein has approximately 55 licensing and similar arrangements (including arrangements with our joint ventures in Australia, India and Mexico) worldwide with third parties for use of the CALVIN KLEIN brands for a broad array of products.
Licensing continues to be a significant component of Calvin Klein's business, as 54% of the brand's global retail sales in 2017 were generated from licensed businesses. Licensing revenues are included in the region in which the products are sold to consumers. Calvin Klein's two largest third-party licensees in terms of 2017 global retail sales were:
|NORTH AMERICA (1)||TOTAL STORES:||~190|
|EUROPE (2)||TOTAL STORES:||~1,090|
|LATIN AMERICA (3)||TOTAL STORES:||~100|
|ASIA PACIFIC (4)||TOTAL STORES:||~2,380|
With global retail sales of approximately $7.4 billion in 2017, 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 and TOMMY JEANS brands, and license these brands for an assortment of premium lifestyle products as well as in various countries and regions. TOMMY HILFIGER products are available through our wholesale partners (in stores and online), through pure play digital commerce retailers, on our tommy.com digital commerce sites (which cover approximately 35 countries, including the U.S., all of Europe, China, Japan, Brazil, Chile and Mexico), and through our retail locations in North America, Europe, Japan and China; they are also distributed in North America, Europe, the Asia Pacific region and Latin America through licensees (including joint ventures), franchisees and distributors.
Our strategy is to offer our products in the distribution channels that are most compelling and convenient for our consumers. Accordingly, across all of the regions where we operate, we have been focused on increasing the penetration of our products sold online, particularly through our wholesale partners. Additionally, we have allocated incremental resources and added new talent to help us grow our digital business and improve the online and offline experiences related to our merchandising and product offerings.
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 41% of Tommy Hilfiger's revenues in 2017. This includes revenues generated from the wholesale channel (in stores and online), our own retail stores, our directly operated website, tommy.com and licensing agreements (including our joint venture in Mexico).
Retail accounts for 74% of Tommy Hilfiger's North American sales(1). This consists principally of sales generated from approximately 240 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, as well as several full-price flagship and anchor stores. Additionally, we generate sales on tommy.com.
Our wholesale business represents 26% of Tommy Hilfiger North America's sales(1). Macy's is the exclusive department store retailer for TOMMY HILFIGER men's and women's sportswear in the U.S. and, in Canada, Hudson's Bay is the principal department store retailer. Both of these customers sell our goods in their stores and on their digital commerce websites. We sell other TOMMY HILFIGER products to select specialty apparel and pure play accounts to cater to a broader audience, particularly more youth-minded consumers.
G-III is our licensee for TOMMY HILFIGER women’s sportswear in the U.S. (where it is sold exclusively through Macy'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, including Macy’s).
We view Macy's and Hudson's Bay as key partners in further shaping our North American sportswear strategy for TOMMY HILFIGER, and we are continually expanding the brand's presence in top doors at both department stores, 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 Macy's and Hudson's Bay, as well as through other retailers.
Tommy Hilfiger International
Tommy Hilfiger International accounted for 59% of the business's revenues in 2017. Products are sold by us through the wholesale and retail channels in Europe, Japan and China and by distributors, licensees and franchisees in Europe, Latin America and the Asia Pacific region, including through joint ventures in India, Brazil, Australia and New Zealand. We also operate tommy.com in Europe, China, Japan, Brazil, Chile and Mexico. The largest category expansion opportunities overall for TOMMY HILFIGER internationally are in women’s apparel, as well as categories that further develop the lifestyle offering, such as jeans, tailored apparel, underwear, performancewear and accessories.
Tommy Hilfiger has well-established operations in Europe that accounted for 50% of Tommy Hilfiger's revenues in 2017. 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 61% of European sales(1) – with customers ranging from large department stores to small independent stores. There are also over 650 retail stores (of which approximately 45% are company-operated, while the remainder are franchisee and distributor-operated stores) and approximately 240 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, as the tommy.com website that we operate in Europe is our largest and most profitable, ships to nearly 30 countries. 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 and accessories, men’s tailored apparel and underwear.
Tommy Hilfiger’s operations in Asia Pacific include its Japan and China businesses, which are owned; the businesses in India, Australia and New Zealand, which are operated through joint ventures; and the business across Southeast Asia, which is licensed to a third party. The Asia Pacific businesses operated through the joint ventures and third party licensee generated retail sales of approximately $410 million in 2017.
In Japan, we operate approximately 140 stores. This business saw significant improvement and growth in 2017 and we believe that it can continue to experience further growth.
China is the largest regional expansion opportunity for Tommy Hilfiger, as we leverage our well-established infrastructure in Asia, the regional expertise of management, and strong brand momentum across our Tommy Hilfiger and Calvin Klein businesses in the region. In particular, we see a significant opportunity to grow the categories outside of casual men’s apparel, including men’s tailored apparel, underwear, accessories and women’s apparel. We also 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.
Revenues in Latin America are primarily generated in Panama, which is licensed to a third party, and Brazil, where we have a joint venture with a local partner that was established in 2013. Tommy Hilfiger's retail base in Brazil includes approximately 220 full-price and outlet stores. 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:||~240|
|EUROPE (2)||TOTAL STORES:||~900|
|LATIN AMERICA (3)||TOTAL STORES:||~220|
|ASIA PACIFIC (4)||TOTAL STORES:||~620|
With 2017 revenues of approximately $1.6 billion, our Heritage Brands business designs, sources and markets a varied selection of prominent brand label dress shirts, neckwear, sportswear, swim products, intimate apparel, underwear and related apparel and accessories, and licenses our Van Heusen, IZOD, ARROW, Speedo and Warner's brands for an assortment of products. The Heritage Brands business also includes private label dress furnishings programs, particularly neckwear programs. We distribute our Heritage Brands products at wholesale in the U.S. and Canada (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.
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 and mass market and off-price retailers (in stores and online), as well as 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, ARROW, IZOD, Eagle, Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, 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 and temperature-activated cooling technology.
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. Our products are primarily distributed through department, chain and specialty stores, warehouse clubs and mass market and off-price 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. A majority of our stores offer a broad selection of Van Heusen men’s and women’s apparel, along with a limited multi-brand selection of our dress shirt and neckwear offerings, and IZOD Golf, Warner’s and, to a lesser extent, Speedo brand products. Approximately half of these stores operate under the Van Heusen name, with the remaining stores featuring multiple brand names on the store signage.
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, catalog retailers and digital commerce websites, including our directly operated digital commerce website SpeedoUSA.com 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, data driven-decisions and speed across our intimate apparel business. Warner’s and Olga products are primarily distributed through department and chain stores, warehouse clubs and mass market retailers (in stores and online), as well as pure play digital commerce retailers. True&Co. is primarily distributed through our TrueandCo.com digital commerce website.