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Can Calvin Klein Escape? : He Built an Empire on Raunch and Elegance. Then, Overpriced Jeans and Junk-Bond Debt Pushed It to the Edge. But Look Out, Here Comes His Spring Collection.

February 23, 1992|Linda Grant | Linda Grant, a contributing editor to this magazine, wrote about the Salomon Brothers scandal last week.

Klein believes the important elements for spring are sheer fabrics, a versatile cardigan jacket and the mixing of patterns. Length is not an issue, he claims, and he backs up his position with an eclectic display of mid-calf, ankle-length and above-the-knee skirts. His opaque fabrics in natural sand colors wrap around bodies in surplice tops. Long skirts in supple silk are shaped close to the body through the hip, then eased into a flair that allows women to move around easily. Some have sexy slits cut high up the leg. Sweaters, dresses and jackets expose decolletage in deep V cuts, and clingy fabrics give new meaning to the word skintight.

Women's Wear Daily declared Klein's spring collection one of the four best, along with those of Donna Karan, Ralph Lauren and Marc Jacobs for Perry Ellis. The Times' fashion editor Mary Rourke wrote, "His clear, single-minded point of view set him apart. He reached back 20 years to his own beginning and revived the stark, yet sensual, styling that earned him the 'Mr. Clean' badge years ago."

Says Joan Kaner, senior vice president of Neiman Marcus in New York: "Calvin's long skirts work because he shows leg and uses sheer fabrics. They feel casual and free instead of dowdy. His pantsuits are wonderful, easy pieces. They're designed for someone who doesn't want to clutter life up with gimmicks."

The raves of fashion mavens are familiar to Klein. Over the long haul, unfortunately, these successful top-of-the-line clothes have accounted for only 10% of sales at Calvin Klein Inc., the closely held company Klein owns with a partner, Barry K. Schwartz. Klein's empire is built upon his once-dominant casual clothes, the division of his company that is now the weakest. Sportswear, which made Klein a household name, has been faltering under the pressures of recession, competition and, some theorize, the changing wardrobes of aging baby boomers. From a high of $240 million in 1987, overall sales slid nearly 20% to $197 million in 1990. The sickening erosion continued during the first three quarters of 1991, when they were off another $20 million from the previous nine months' anemic results.

Profits have been savaged. Klein lost money in 1986, '88 and '90, and managed to eke out a gain of $2.7 million in the first three quarters of last year. Only the steady growth in royalties from licensed products such as underwear, perfume (primarily Obsession and Eternity), shoes, sewing patterns, sleepwear, hosiery, furs, coats, swimwear and socks to about $21 million last year has provided the buoyancy to keep Klein's company afloat. Licensees manufacture items with the designer's label, paying anywhere from 5% to 10% of sales for the privilege.

Klein is not alone in the doldrums. Dozens of apparel manufacturers have filed for bankruptcy. The department stores they rely on to showcase their ideas are struggling under mountainous debt, with the vaunted Federated Department Stores (Bloomingdale's, Abraham & Strauss, Rich's) just emerging from bankruptcy and the Macy's empire (I. Magnin, Bullock's) filing last month for protection from creditors in a Chapter 11 reorganization. Says Millstein, "The '90s will be the final Armageddon for conventional and department stores. This is a decade of the discounter. Price is now more important than fashion."

As the fashion industry girds itself for a more austere era, Klein faces the challenge of reinventing his company for the '90s. Vexed by business problems and irritated by reports of those woes in the press, Klein refused to be interviewed for this story. But when Barbara Walters of ABC's "20/20" asked him in December why his sportswear division wasn't doing well, he didn't mention market research or acknowledge that products similar to his can be bought at the Gap and J. Crew for far less. He responded as only a star could: "I think because it needs my personal touch more."

During a decade of schmoozing with stars idolized by kids who wear jeans, Klein's touch was unerringly on the pulse of American youth. But as the designer settles into sedate midlife and devotes himself to cocooning, the numbers suggest that Klein has lost his ability to make young pulses race.

THE CALVIN KLEIN TOUCH WAS NURTURED IN THE BRONX DURING THE '40S AND'50s, where he grew up around the corner from Ralph Lifshitz, now archrival Ralph Lauren. Young Calvin attended Public School 80 on Mosholu Parkway with his best chum, Barry Schwartz. Calvin's dad ran a grocery store in Harlem, and his stay-at-home mom, along with his grandmother, was passionate about beautiful clothes. Often Calvin would accompany her on forays to Loehmann's, one of the first stylish discounters of designer labels. He went on to graduate in 1962 from Manhattan's Fashion Institute of Technology.

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