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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.

Through the heady years Klein and Schwartz paid themselves handsomely: $4 million each in 1977, $8.5 million in 1981, $12 million in 1984, according to various estimates. Yet when Calvins were at the height of their popularity in 1983, racking up worldwide retail sales of about $400 million, the seeds of Klein's current problems were sown. The jeans were licensed to Puritan, whose owner died that year. Unhappy with the new management, Klein and Schwartz took over the company at a cost of $66 million. Their timing was horrendous. The jeans market started to nose dive shortly thereafter, as aging consumers switched to looser-fitting sportswear such as sweats and tennis warmups.

Bankers who had funded the Puritan takeover grew nervous, so Klein and Schwartz decided to refinance the debt in 1985. Schwartz's good friend Barry Diller, the film-industry potentate, introduced him to Drexel Burnham Lambert junk-bond czar Michael Milken, who issued $80 million in high-interest Klein bonds.

Like many companies that took on expensive debt in the '80s, Calvin Klein Inc. has struggled to meet interest payments, especially as the recession cut into sales. Although Schwartz and Klein own their company, the issuance of debt requires them to file financial data with the Securities and Exchange Commission. Those filings disclose that as of Sept. 28, long-term debt totaled $54.6 million. A principal payment of $15.3 million is due this year, and the same amount next year--heavy burdens indeed for a company barely able to turn a profit.

FROM HIS UNFUSSY 10TH-FLOOR OFFICE ON WEST 39TH STREET, KLEIN LAST summer devised a counterattack against the designers who have usurped his dominance in designer jeans--Guess, Girbaud and Karan's DKNY. Those lines are prospering from the hesitation of many young people to wear the same label that once bedecked the derrieres of their parents.

For his first act, Klein reached back to his tried-and-true formula of voluptuous promotion. But to score, he had to design something more shocking than before. After all, it had been three years since he told Vogue, speaking of his ads, "I've done everything I could do in a provocative sense without being arrested."

Provocation, indeed. A high-gloss, seemingly endless insert in last October's Vanity Fair triggered a chorus of righteous indignation from critics, including apparel professionals, who denounced it as pornographic. Meanwhile, collectors quickly bid its market value up to about $30.

The ad supplement depicts a rock concert, the physical, playful type of event where jeans are customary attire. "Denim and skin, that's what rock concerts are about," Klein told WWD. The collection of sexually ambiguous images features male band members in jeans and leather jackets fondling nude, semi-nude and fully clad women, then undressing themselves and their dates. Included in the narrative are sculpted poses of male and female limbs entwined, two partially dressed men in bed, and a hunk in a shower engaging in what some interpret as masturbation.

Shot in black and white by Bruce Weber, the photographer who produces Klein's fragrance ads, and starring sultry ingenue actress Carre Otis, the supplement is defended by its instigator as "a fantasy, something young, that's sexy, that's provocative." He says it's about jeans, and apparently that message reached its target, because Bloomie's Ruttenstein claims that sales of Klein's jeans jumped 30% the following month. Consumer surveys by Video Storyboard Tests rank Klein's fragrance and jean ads the most popular print campaigns four of the last five years.

On the other hand, some professionals were underwhelmed. "The approach is so tired, so old," moaned a copywriter for J. Walter Thompson. Shoe tycoon Kenneth Cole mocked it in a recent ad: "We briefly considered running an 8 page ad with half-naked models, shot by a famous photographer in some exotic location."

Current Calvin Klein fragrance ads frame male and female bodies in striking poses. On behalf of Obsession, a naked man and woman stand facing on a swing, their swaying bodies pressed together from the waist down. The effect is a gorgeous Y-shaped sculpture that suggests ecstasy and love.

Klein's campaigns have been recognized as avant-garde and artistic as well as scandalous. "Klein's done a fabulous job in consumer goods," maintains Sidney Levy, chairman of Northwestern University's graduate marketing department. "He is one of those leading-edge people who presses at the boundaries of what is acceptable. His ads violate taboos, they give us vivid looks at things we are not supposed to see. He shows nudity, sensuality and intimacy as something human, real, desirable."

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