What Comes Between Costa and His Calvins? (NYT)

[DosViolines]

source: nytimes.com

First part (of two)

February 26, 2006
What Comes Between Costa and His Calvins?

Don Ashby
Francisco Costa's designs for Calvin Klein, above from left (in groups of five spring 2005, fall 2005 and spring 2006.

By CATHY HORYN
Thirty-eight years ago, Barry K. Schwartz, a grocer's son from the Bronx who had acquired a serviceable education hanging around pool halls and racetracks, gave his boyhood friend Calvin Klein $10,000 to start a coat business. Since then, hundreds of designers, when faced with the terrible odds of going solo in the fashion business, have said to themselves, "What I need is a Barry Schwartz." A Schwartz at your back was proof against shutdown, a guarantee of unending loyalty. Three years ago, Klein and Schwartz sold Calvin Klein Inc. to Phillips-Van Heusen in a deal worth about $730 million. Klein has kept a hand in the company's advertising. He also travels a lot; Brazil is apparently a favorite destination. Schwartz, a gambler at bottom, devotes himself to his horse-racing operations, a sideline developed in the first gold-rush days of designer denim and underwear. Horses bred on his 741-acre farm in Westchester County run at the country's top tracks, and Schwartz stepped down as the chairman of the New York Racing Association at the end of 2004. Although Wall Street was skeptical that Phillips-Van Heusen could manage a designer label — it was better known for brands like Izod and Bass — Calvin Klein has apparently thrived under PVH. Its runway collections, by Klein's chosen successor, Francisco Costa, have received some of the best reviews in the company's history, and PVH's stock price has risen from $11.50 in January 2003 to nearly $37 as of mid-January.

Jean-Baptiste Mondino


Costa, 41, had been at Calvin Klein for only about a year when the company was sold, and he says that until recently he gave little thought to why Klein had picked him. Costa was industrious — as a teenager in Brazil, where his mother owned a children's-wear factory, he put on fashion shows for charities — and having honed his design skills in the 90's at Gucci and Oscar de la Renta, he assumed that the company wanted him to freshen up Klein's minimalist aesthetic. Costa immediately took charge, drawing inspiration from sources like Bauhaus, the formality of riding clothes and the sulfuric colors at Yellowstone, which in September 2004 led to a series of swirling jersey dresses. He was adept at cutting jersey, and though a decision to change Klein's fit alienated longtime customers, the new clothes were lighter and more feminine.

Jean-Baptiste Mondino

Costa was at a disadvantage, however. In early 2003, PVH closed the sample-making rooms at Calvin Klein's West 39th Street headquarters, let most of the staff go and transferred those operations to a garment maker in Italy called Vestimenta. PVH considered this a more cost-effective way to run the collection business: let the manufacturer bear the expense of prototypes. Costa, now left with fewer workers, didn't have time to dwell on the logic of the decision. "After the sale, I did the cruise collection with one assistant," he told me recently. "We just immediately went on — not even thinking about it. I wasn't thinking at all what it meant to do Calvin Klein, probably the biggest name in America and the second-biggest in the world. I was kind of blind, and maybe to my advantage."


Yet in the past year Costa has witnessed enough displays of corporate indifference at Calvin Klein to make him wonder, he says, whether the company really cares about being in the designer business. He's had to go out and hire tailors in the garment district to get samples made on time. On one occasion, when Vestimenta failed to deliver samples in either the correct size or correct fabrics, Costa and his staff in New York remade the entire collection in three days just before the show. Almost as surprising for a top-level designer, he has no one around him to do merchandising or product placement. "Zero," he said. And all this has made him question whether the shows, the glowing reviews, were real or phantom.


When he talks about the situation at Calvin Klein, Costa, a compact man with warm brown eyes and a diffident manner, generally sounds baffled rather than aggrieved. But over lunch one day, he said, "What I'm going to tell you will sound really mean, but I have the feeling that Calvin didn't really care" who took over. He paused, as if reconsidering, and then shrugged. "Maybe I was just being skeptical. I did feel he endorsed me."


Costa's boss, Tom Murry, the president of Calvin Klein, admits there were problems with Vestimenta, which collapsed in the summer, but denies that he has been unsupportive. "We approved anything that he needed," Murry said. Nevertheless, the problems have had a snowballing effect. Because of late deliveries and poor sales, Neiman Marcus and Bergdorf Goodman have closed or downsized their Calvin Klein spaces. And though the collection represents a fraction of Calvin Klein's total volume of $1.9 billion, sales have fallen from a peak of about $55 million during the Schwartz-Klein years to less than $20 million, according to company sources. Recently, Costa absorbed a particularly severe blow when the company's press office told him that it could not meet some 250 magazine requests to photograph his widely praised spring line. Promotion was always the company's great strength, but because it had agreed to make only one set of samples, there weren't enough to send out. "I looked at all these pages of shoots we had missed, and I was so sick," Costa said. (Murry says that two sets of samples will now be produced.)


All along, Costa discussed what was happening at Calvin Klein with his partner of 15 years, a burly horse trainer named John DeStefano. "Francisco's favorite line is, 'They just don't get it,"' DeStefano told me. DeStefano, of course, saw Schwartz at racing meets (they also own horses together), and DeStefano occasionally mentioned Costa's concerns. Costa was also friendly with Schwartz and his wife, Sheryl, but for some reason, Costa could feel awkward in Schwartz's presence, perhaps because he was a former owner of the company. "I'm struggling psychologically to keep it real with Barry," Costa said. "And I know that he is real, because he speaks with such excitement about things." Schwartz, though, had a genuine interest in Costa's career. In 2001, he brought Costa's name to Klein's attention. Costa was then at Gucci in London, and when Schwartz, who rarely became involved in design matters, learned that Costa wanted to return to New York, he immediately telephoned Klein.


As with Costa, my first contact with Schwartz was through horses and not dresses. We met at the track. In May 2004, I went to Belmont Park to write about people on the backstretch — grooms and hot-walkers — and we were introduced. A small man with a direct gaze and a quick way of speaking, Schwartz was gracious and funny. I got the impression that in some successful measure he had lived the type of life exalted by Damon Runyon. The next time I saw him was last August at the races in Saratoga Springs, N.Y. He and Sheryl arrived in a gleaming new Maybach. She had on a frilly dress of black-and-cream silk crepe and an elaborate hat of stiffened black net. But it wasn't their money or clothes that stood out that day and to which people in the crowd seemed to respond. It was their enthusiasm and openness. It shamed you into liking them. And for Sheryl, who was 18 when she met her husband, it also must have been the primal source of attraction, this vitality. On their honeymoon he lost all their wedding gifts at a craps table. Surely, after such a start, the words "for richer or for poorer" could not really touch the elation and sense of freedom of "all or nothing at all."


Shortly before Christmas, Schwartz, who is 63, told me he was assisting Costa in his contract negotiations with Calvin Klein. Schwartz felt that Costa needed help, and he had made the offer. At the least, this means that Schwartz, who has not been involved in the company since he left, would be dealing directly with Murry, a man he helped hire. Not only will the outcome of those discussions determine Costa's future but it will also reveal how much power Murry has under PVH's chief executive, Mark Weber. With PVH committed to a strategy of licensing all of Calvin Klein's businesses (in mid-December it announced a new agreement with Warnaco, the underwear giant, to produce several lines, including the collection), Costa may find that Murry doesn't have the authority to make the changes he wants. Still, even allowing for the possibility that Schwartz is acting from self-interests, the offer is extremely generous, and fascinating. Costa has Barry Schwartz at his back.


"Listen," Schwartz told me, "I put 35 years of my life into this company. I'm also a large shareholder in PVH. Francisco is a greater asset to the company than anyone realized. He doesn't have the support that a designer of his stature should have."


Francisco Costa was the second-youngest of five children. His mother, Maria-Francisca, started her factory with dresses commissioned by a traveling salesman; his father, Jacy Neves da Costa, ran a small ranch. They lived in Guarani, a town of 4,000 about a three-hour drive from Rio de Janeiro. It was a Catholic, civic-minded and matriarchal household. "My mom, she was unbelievable," he said. "She ran the whole town. She was like the mayor. There would be 15 people eating at our lunch table. She'd drag people from the street. It was very rich growing up with her."


With the cord abruptly severed by his mother's death, in 1981, Costa decided to leave for New York with a friend. He was 20 and spoke no English. He enrolled in a language class at Hunter College and at night took courses at the Fashion Institute of Technology, though, as he said,
"I couldn't understand a word the teacher was saying." But, in general, Costa's early years in New York seemed distinguished by a series of fortuitous encounters. Costa got a job with Herbert Rounick, a charismatic Seventh Avenue figure whose company made dresses for designers like Oscar de la Renta and Bill Blass. When Rounick died, de la Renta gave Costa a job designing for his Japanese licenses. "My office was literally in the kitchen," Costa recalled. But de la Renta provided him with a window onto the world he would dress. "He taught me the most," Costa said. "And not just the craft, but life. Oscar is so full of life and a genuine interest in what's good." Costa stayed five years. He also became friends with de la Renta's wife, Annette, and her daughter Eliza. "It's family," he explained. "Annette always liked what I did."

 

[DosViolines]

Continued...

In 1990, Costa met DeStefano at George Smith, the furniture store, where Costa worked on Saturdays to supplement his Seventh Avenue income. Although DeStefano had come into the shop with a cousin, and had no interest in sofas per se, he managed to think of 45 minutes' worth of questions to ask Costa. They met again by chance a few weeks later in a Chelsea bar and have been together since. As a couple, they seem to work because of their differences (DeStefano is plodding and masculine, Costa quick and sarcastic), and Costa has become friends as well with trainers and jockeys, like John Velazquez, and has made dresses for their wives.


Costa arrived at Gucci in the mid-90's, an exciting time. Fashion companies were becoming international brands, and this exposed him to the importance of marketing and how to make commercial hay from runway magic. His favorite elements — frothy ruffles and embroidery — were also, at that moment, relevant to Tom Ford. Their first collaboration was the so-called Cher Collection. I once asked Costa what he learned from Ford, and he recalled how, in Florence, Ford had walked into a fitting, glanced at the clothes and pronounced them "terrible."


"He wanted color, sizzle," Costa recalled. "He turned around and looked at the fire extinguisher and said, 'That's the color — I want that red!' This was Thursday, and we were opening the collection in three days. So we jumped. We designed fabrics overnight. We kept the mills open. And on Sunday night we had poppy red. The worst thing is complacency. You can always make it better."


By any reckoning, Calvin Klein is a great name. But, while it has the trappings of luxury — thanks to the provocative blend of sex and cool that Klein projected in his ads and that John Pawson injected into the design of the Madison Avenue flagship store — the brand doesn't represent luxury to consumers the way that Gucci or Prada does. It's about jeans and underwear, and maybe an elegantly simple dress. For Klein, the collection existed to serve his perfectionism and to give illusion to the company's other products. But PVH was under no illusion when it bought Calvin Klein. It was buying a name, with potential for expanding its global presence and revenues. This was clear when I spoke to Murry in mid-December in his Calvin Klein office. I asked how business was. Boyish-looking and with a slight Western drawl, Murry smiled and said: "Well, gosh, our CK stores that we opened in Southeast Asia are doing extremely well. All the underwear stores in Asia are doing well. Jeans in Asia are doing extremely well. Just about everything is doing well." He paused, as if respectfully acknowledging a death: "I'm disappointed about what occurred with Vestimenta."


Murry characterizes the deal with Vestimenta, which was to produce the collection label and provide sales and merchandising support, essentially as one of bad luck. Vestimenta, he explained, decided to get out of the fashion business almost as soon Calvin Klein entered the deal. "They were reticent to spend the necessary money to operate the business properly," he said. "And, of course, that was the source of some of Francisco's frustrations, and we had to work around that to get the shows done and all that." He expressed confidence in the company's new Italian partner, CMI, and he thought that the collection could reach over $100 million in sales. "It's just about execution," Murry said, "and there's no question that with CMI we can achieve those kind of numbers." (However, two weeks after our conversation, the company announced that Warnaco would take over the collection, in 2008, casting doubt on "those kind of numbers.")


I asked if he thought Calvin Klein's image had been damaged by the setbacks. He didn't think so, saying, "The amount of press we were getting for Francisco's collections probably compensated for whatever problems were created by the execution, which were really on a pretty small basis."


A former company executive who left last year told me, "I never had a meeting with anyone there that really meant something." The executive said that when it became apparent Vestimenta couldn't meet its obligations, there were few stopgaps. "I was amazed by the lack of support," the executive said. And while Murry readily granted Costa's requests for tailors, there was also a sense that he didn't want to rock any boats. The executive said, "Tom never says no, but he never says yes, either."


Costa found himself stymied by the passive resistance. Once, when he couldn't get a straight answer from Vestimenta about a seriously delayed shipment of samples, he went over Murry's head to contact Bruce J. Klatsky, who was then PVH's chief executive. "I was desperate," Costa told me. "I had a collection to show, and I had nothing." According to Costa, Klatsky himself volunteered to go to Italy. He didn't make the trip, but at least, Costa said: "They realized I wasn't kidding. I was dealing with a reality that everyone chose to ignore."


In my interviews over the last four months, many people questioned whether PVH cares about the collection business. But an executive who runs one of Calvin Klein's licenses pointed out that PVH is spending $20 million on shows, public relations and design salaries. "So the answer has to be yes," the executive said. "Arguably there is no incentive to make it a big bustling business," and the company, he added, may end up finding "a level of business where you're in the market but not really going after anything." Another rationale for having a collection is that it confers prestige on the brand. When I spoke with Weber, the PVH chief executive, in September, he said that there was no thought of abandoning designer clothes. But he noted its problems were not new: "You could write a textbook about everything that has gone wrong with the collection business at Calvin Klein."


People also forget how unengrossing Klein's clothes became in the 90's. Costa, in a few seasons, changed that. And in spite of everything, he says he wants to stay at Calvin Klein. "My heart is here," he told me in mid-January as he prepared for his fall collection. He has been approached by a prominent European house for its top design job, but it's clear he wants the chance to finish what he has started at Calvin Klein, and he has lately been encouraged by the efforts of the company's new Italian production partner. "We can make this work," he said.


His demands for stable manufacturing and more management support are certainly very minimal. But what if the tide has already turned? This is an age largely concerned with brands. "The collection is the one part of the business that nobody wants," Schwartz told me. He sounded reluctant to admit it.

 

[Deleted member 7575]

I am so shocked that they have no sample making room! How common is it for a high end label to not have one (larger ones, I know smaller ones outsource that work)? I am also shocked to know he and just his assistant put together the collections by themselves. Furthermore, I am shocked to see how little attention PVH gives them. Kudos to Costa for putting out amazing collections and proving the fashion industry to be even more difficult than I realized.

I know with small labels like Doo Ri and Proenza Schouler things are a bit tough (thanks "Seamless") but to have that kind of wishy washy feelings of uncertainty (samples not being ready just a few days before the show!). It's not that PVH doesn't have the resources either. I am reading "Christian Dior and I" and I just finished the chapter about how he puts together his collections. I am still floored that Costa made such great collections with so little resources. Dior employed an army of seamstresses, tailors, and premiers to help him. crazy

 

[dizzytacks]

i remember that with style.com's review of the most recent calvin show that there was something about the future of the business and now i just checked it to post it but it has already been edited, something is up, just never knew what, thanks for the post, i will check the calvin thread to see if it has been posted.

 

[nqth]

thanks for the article, DosViolines:-)

Now it is clear, that CK is bussiness, *not* fashion bussiness:-)
It's good that Cathy Horyn and the NYTimes is supporting the designer.

 

[dizzytacks]

i found this at the calvin klein thread, i read something similar or maybe thhe same thing(my memory fails me but here it is.

What do 1920s Berlin, Lee Miller and a confused customer have in common?
They all inspired Francisco Costa's fall collection for Calvin Klein. Costa is in a hot seat, and he knows it. Given Phillips-Van Heusen's recent solid performance, some observers wonder whether the company's heart is really in the process of reestablishing its designer business. Those coming from a fashion perspective can't imagine the American industry without a thriving designer-level Calvin Klein. It's Costa's job to prove to his bosses that the fashion set has it right. Thus, he proceeded somewhat clinically for fall, building on the appeal of his blockbuster spring collection.
"People liked spring," he said before his show. "Business is tough, and we have to establish our connection to the customer a little bit more." Costa chose to continue two major elements from last season — its airiness and its artistic touches — while shifting his palette from white to black with flashes of bright red, which, of course, is no small change. While spring felt directed to an artsy free spirit, fall bore a darker, hipper edge, perhaps more so than Costa intended.

 

[The Leviathan]

my girlfriend was a design intern for ck collection and she'd be the first one to tell you how many problems the house has. everyday after work she would complain about how over worked and under paid everyone there was. that simple tasts which shouldn't require much thought would go wrong and cause everyone stress. especially in regards to their not being enough samples to send out. personally i don't think an apparel company has any place in designer collections. not only that but the ck name has been liscensed out so many times in so many different places i don't think it has any relavince in designer fashion anymore.

 

[Pastry]

absolutely heartbreaking article...

 

[dizzytacks]

i disagree with you on that "the leviathon", calvin klein is synonymous with new york and american fashion, personally i don't think of ralph, kenneth or donna, all three very mainstream names, but like the article states, calvin klein is huge, i do agree with you on every other part of your statement though, calvin klein is integral to new york fashion, whenever a company is bought out i worry, i put my worries to rest at christian lacroix but has anyone else noticed that his rtw line has become more mainstream, i am starting to worry with jil sander,sorry about my run on sentence.

 

[Meg]

The licensing bit is tricky....CK by Calvin Klein has been licensed to death (like so many others) but not the actual Collection name. it does cause market confusion I'm sure.....thanks for the articles

 

[classic1908]

Good piece. I see Costa's Collection as a loss leader to build the business' image. I doubt that Donna Karan makes money on the high-end stuff -- that is for DKNY. Same with Ralph Lauren and his purple label -- that's image niche stuff. He makes his money elsewhere.