After chief creative officer Raf Simons' nightmare-before-Christmas, effective-immediately departure last December shocked the fashion world, Calvin Klein, Inc. announced today that it will be shuttering its runway business altogether. Last month, the billion-dollar fashion and lifestyle company reported it was closing its higher-end, Simons-born 205W39NYC line. The company will also let go of some 100 employees — 50 in New York and 50 in Milan.
Reports of waining 205 sales surfaced last year, when Calvin Klein parent company PVH's chief executive Emanuel Chirico plainly expressed his chagrin after its earnings were made public. "We’ve been disappointed that our investments in the 205 collection business have not delivered the results we expected," Chirico said. "We will cut back on a number of these planned investments in the 205 collection business, and as we move forward, we will be taking a more… commercial approach to this important business." He went on to call the relaunched denim business a "fashion miss".
Though revenue was up ahead of Simons' arrival in 2016, more than 7% from the year before, it seems the brand's ready-to-wear business has always bled money. In 2018, PVH announced its pre-taxes and interest earnings fell to $121 million USD, from $142 million USD a year earlier, mostly due to increases in creative and marketing expenditures (ahem, Simons' vision). Total revenue rose to $2.52 billion USD, but did not meet analysts' estimate of $2.53 billion USD.
In the wake of the announcement of Simons' departure, the company revealed it had plans to relaunch the runway collection under a new name (and possibly a new creative director). But, just one month later, in January, Calvin Klein confirmed to WWD the rumours of several department-wide layoffs in its Milan office. "We can confirm that there is a collective dismissal procedure in place for some departments of the Calvin Klein Milan office," a spokesperson said. "The company is working to try to minimize the social impact of this procedure. We know it is a difficult time, but we trust in the cooperation of all of those involved to find appropriate solutions for the impacted associates." The company now has plans to close the Milan office entirely, WWD reports.
But the closures don't stop there. In January, the company also revealed its plans to close the doors on its flagship at 654 Madison Avenue, as well. The moves were expected to result in upwards of $120 million USD of restructuring costs. Additionally, Michelle Kessler-Sanders, president of Calvin Klein 205W39NYC, is set to exit the company, but will stay on through June. Steve Shiffman, chief executive officer of Calvin Klein, Inc., will remain in his position.