ARVIND-PVH JOINT VENTURE
SUBMITTED BY: ESHA SOMRA (09) HARSHITA AGARWAL (10) PRIYAL SADH (18) REETU SRI (22)
Arvind-PVH Joint Venture About Arvind
Arvind Brands and Retail Limited is a subsidiary of Arvind Ltd which is India’s largest integrated textile player and is one of the oldest and most respected groups in the Textile Business in India. Arvind is also one of the largest producers of denim fabrics and is supplier to a large number of fashion brands in the world. Arvind has been a pioneer in bringing international brands to India and first brought ARROW to India in the year 1993. Arvind has licensing relationships with many international brands including Gant, ARROW, IZOD, US Polo Association, Elle, Ed Hardy, Hanes, Cherokee, Mossimo and Geoffrey Beene. Arvind also has a portfolio of 12 of its own brands. Arvind also runs the India retail operations of British retailers Debenhams and Next. Arvind has a JV with a subsidiary of PVH Corp. for the Tommy Hilfiger business in India. It also runs India’s largest value retail chain, Mega mart. Strength One of the largest manufacturers of Denims in India and the world. Strong portfolio of domestic and International brand. Arvind runs India's largest Value Retail Chain - Mega mart with over 200 stores. Over 26000 employees form the workforce for Arvind Mills. CSR activities like education (Sharda Trust) etc have enhanced brand image. Weakness Global penetration is limited as compared to a few other international brands. Presence of Indian and international brands offers more offering to customers therefore high brand switching. Opportunity Growth in the garment industry. Rapid growth in target group as well as higher incomes. Global expansion and reach of brands to increase sales. Threats Increasing competition from Indian as well as international brands. Cheaper imports from other countries, and pirated/fake products.
About PVH
PVH Corp., one of the world’s largest apparel companies, owns and markets the iconic Calvin Klein and Tommy Hilfiger brands worldwide. It is the world’s largest shirt and neckwear company and markets a variety of goods under its own brands, VanHeusen, CalvinKlein, TommyHilfiger, IZOD,ARROW , Warner’s and Olg a, and its licensed brands, including Speedo, Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, MICHAEL Michael Kors, Sean John, Chaps, Donald J. Trump Signature Collection, JOE Joseph Abboud , DKNY , Ike Behar and John Varvatos. Strengths Attractive Brands: With Tommy Hilfiger and Calvin Klein, the company possesses a couple of the more-recognizable, better-positioned lifestyle brands in the world. Improving Balance Sheet: Debt levels have finally begun to come down after rising in the aftermath of the large Tommy Hilfiger and Calvin Klein acquisitions.
Weaknesses The Heritage Brands: This still-sizable business ($3.7 billion in 2013), including private labels, licensing goods, and the company-owned Arrow, Izod, and Van Heusen lines, among others, has been struggling, mostly due to its reliance on outof-favour mid-range department store chains, such as Kohl’s (KSS) and JC Penney (JCP).
Opportunities Emerging Markets: The opportunities to leverage both the Calvin Klein and Tommy Hilfiger businesses in these underpenetrated regions are plentiful, and it would expect sales and market-share gains abroad to be a compelling chapter in this growth story. Mix Improvements: It’s seen that profitability levels rising over time, as the Heritage business is downsized and sales ramp across the high-margined Calvin Klein and Tommy Hilfiger lines.
Threats Competition: Apparel is one of the more cut throat industries, especially in the U.S., where PVH still derives the lion’s share of its profits.
About Calvin Klein, Inc.
Calvin Klein, Inc. is one of the leading fashion design and marketing studios in the world. It designs and markets women’s and men’s designer collection apparel and a range of other products that are manufactured and marketed through an extensive network of licensing agreements and other arrangements worldwide. Product lines under the various Calvin Klein brands include women’s dresses and suits, men's dress furnishings and tailored clothing, men’s and women's sportswear and bridge and collection apparel, golf apparel, jeans wear, underwear, fragrances, eyewear, women’s performance apparel, hosiery, socks, footwear, swimwear, jewellery, watches, outerwear, handbags, small leather goods, and home furnishings (including furniture). Strengths Modern and minimalistic brand with excellent brand equity. Company has licenses for cosmetics, jeans, and menswear, sports, watches, jewellery etc and strong brand name and good marketing. Global distributed system is excellent and has a reach in over 21 countries. The advertising campaign is found in high fashion magazines including Vogue, Elle, Harpers Bazaar, and Glamour hence good consumer awareness.
Weakness Products are expensive and premium which means limited target audience, and brand switching Fake imitation and duplicate products are affecting sales.
Opportunities Population growth, development and economic integration. Development of internet, and other mass media where brand penetration can happen Great opportunity in developing countries like India.
Threats Customer needs and changing perception. Global factors like high tax implications, High inflation which affects buying behaviour of consumer
The Joint venture:- Arvind Limited Joins Indian Joint Venture with PVH Corp. for Operation of Calvin Klein Businesses in India PVH Corp. owner of the Calvin Klein trademarks worldwide announced that Arvind Brands and Retail Limited, a subsidiary of Arvind Limited, has replaced PVH’s prior joint venture partners in Premium Garments Wholesale Trading Private Limited, the licensee of the Calvin Klein trademarks in India. In connection with the transaction, Calvin Klein, Inc., a wholly owned subsidiary of PVH, entered into a new license with Premium Garments to distribute Calvin Klein Jeans apparel and accessories and Calvin Klein Underwear products in India. This new arrangement takes advantage of PVH’s control of the brand vision for these two Calvin Klein product categories resulting from its acquisition of The Warnaco Group, Inc. in February 2013 and Arvind’s operational expertise in the region, and is intended to maximize the market opportunities for these product categories throughout India. The joint venture will focus on the expansion and enhancement of the existing Calvin Klein Jeans’s apparel and accessories (including belts, bags, and small leather goods) and Calvin Klein Underwear (including sleepwear and loungewear) businesses. PVH and Arvind are also partners in a joint venture that licenses PVH’s Tommy Hilfiger brand in India. “By having Arvind – a true leader in the Indian apparel industry and established PVH business partner – join this venture, we believe we are well-positioned to execute against and expand upon the growth strategy for the Calvin Klein brand in India,” said Tom Murry , Chief Executive Officer of Calvin Klein, Inc.
Mr.Sanjay Lalbhai,Chairman & MD,Arvind Ltd.
Mr. Sanjay Lalbhai, Chairman & Managing Director of Arvind Limited said, “Calvin Klein is one of the strongest fashion brands in the world and we are delighted
to be JV partners with PVH for Calvin Klein in India. This relationship also strengthens our 20 years association with PVH, which started with the ARROW license and since has been extended to our joint venture with PVH for the Tommy Hilfiger business and the license for IZOD”. strengthens our rich portfolio of brands, said J. Suresh, Managing Director and CEO, Arvind Lifestyle Brands Ltd. “By combining the strengths of the Calvin Klein brand and Arvind’s operational capabilities in the Indian market, we believe we can build Calvin Klein into India’s largest lifestyle brand over the next five years.” “Calvin
Klein substantially
PVH CORP. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Forward-looking statements made in this press release, including, without limitation, statements relating to PVH Corp.’s future plans, strategies, objectives, expectations and intentions, are made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forwardlooking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy, and some of which might not be anticipated, including, without limitation, the following: (i) The Company's plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company; (ii) The levels of sales of the Company's licensees at wholesale and retail, and the extent of discounts and promotional pricing in which the Company's licensees and other business partners are required to engage, all of which can be affected by weather conditions, changes in the economy, fuel prices, reductions in travel, fashion trends, consolidations, repositionings and bankruptcies in the retail industries, and other factors; (iii)
Civil conflict, war or terrorist acts, the threat of any of the foregoing, or political and labor instability in any of the countries where the Company's licensees' or other business partners' products are sold, produced or are planned to be sold or produced;
(iv)
Disease epidemics and health related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas, as well as reduced consumer traffic and purchasing, as consumers limit or cease shopping in order to avoid exposure or become ill;
(v) The failure of the Company's licensees to market successfully licensed products or to preserve the value of the Company's brands, or their misuse of the Company's brands and (vi)
Other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission.
The Company does not undertake any obligation to update publicly any forwardlooking statement, whether as a result of the receipt of new information, future events or otherwise.
Calvin Klein in India is valued at Rs. 180 crore.
J Suresh, MD and CEO, Arvind Lifestyle Brands Ltd
According to J Suresh, MD and CEO, Arvind Lifestyle Brands Ltd and Arvind Retail Ltd, Calvin Klein in India is valued at 180 crore. Arvind Brands, a subsidiary of textile major Arvind Ltd, has replaced PVH’s prior joint venture partner Premium Garments Wholesale Trading Private Ltd.
Arvind Brands replaces Murjanis in Calvin Klein’s India business Arvind Brands and Retail Ltd, a subsidiary of public listed textile and apparel retail firm Arvind Ltd, has acquired 49 per cent stake in Premium Garments Wholesale Trading Private Ltd, an Indian licensee for fashion label Calvin Klein, from Murjanis for an undisclosed amount. Although the deal value stands undisclosed, it is at around Rs 90-100 crore. Murjanis-controlled firm Brand Marketing India Pvt ltd, a firm backed by Matrix Partners, was the previous licensee of Calvin Klein brand in India. In 2011, Murjanis had struck a new agreement with apparel firm Warnaco, which owned the rights for Calvin Klein jeans and underwear globally. Under the agreement, Brand Marketing formed a new JV under Premium Garments Wholesale Trading. At that time, Matrix Partners had exited Brand Marketing by selling its stake to Murjanis. Last year, PVH brought the entire Calvin Klein business under its fold by striking a deal to buy Warnaco for $2.9 billion. Previously PVH held control over the design and product development for the Calvin Klein brands. This global deal made PVH the foreign partner of Murjanis in Premium Garments Wholesale Trading. PVH and Arvind are partners in a separate joint venture, which is the licensee of Tommy Hilfiger brand in India. In this deal, struck in late 2011, Murjanis sold their stake in their 50:50 JV with Arvind to PVH, paving the way for direct presence of the Tommy Hilfiger Group in India, a strategy it has been following in other international markets for consolidating brand management. The Murjanis, led by the group chairman Mohan Murjani, partnered with Tommy Hilfiger to launch the brand and the company in the US way back in 1985. Around a decade ago, the Murjanis launched the brand in India. Through the arrangement, apparel, handbags and footwear were sublicensed to AMB and other products to separate partners. Arvind Group has a successful track record of running branded apparel business of its own, besides some licensed brands and joint ventures for names such as Lee and Wrangler.
Profit to Arvind and Calvin Klein on forming Joint Venture This new arrangement is intended to maximize market opportunities for the different product categories throughout India. A rvind Limited has moved higher by nearly 7% to Rs 157 on the BSE after the company joined Indian joint venture with PVH Corp for operation of Calvin Klein business in India. The stock opened at Rs 148 and a combined 4.15 million shares changing hands on the counter on the BSE and NSE. Arvind Brands and Retail Ltd. expects to triple sales of the jeans and innerwear brand in India in three years. Arvind bought out the stake in the Calvin Klein JV from the Murjani Group and private equity firm Matrix Partners, adding another higher-priced, popular label to its fast expanding portfolio. J. Suresh, chief executive of Arvind’s brands business, said the addition of Calvin Klein will help raise Arvind’s share of the Rs.800 crore “bridge-to-luxury” apparel market to 90%. Bridge-to-luxury is retail jargon for products craved by the upper middle class that are less pricey than luxury brands such as Gucci and Louis Vuitton, but more expensive than other labels. Arvind already sells Tommy Hilfiger and Nautica in this segment. “As income levels go up, the market for bridge-to-luxury is increasing. With Calvin Klein, we’ll own 90% of this segment. We also have big ambitions on innerwear and Calvin Klein helps us with this,” Suresh said. “As a brand, Calvin Klein’s imagery is not restricted to a particular category and it has a wide appeal. So in future, we will introduce formals, suits and blazers, etc.” Arvind, which operates the Megamart retail chain, sells a mix of its own brands such as Flying Machine and Newport as well as licensed international brands including Arrow, Cherokee and Tommy Hilfiger. Over the past two years, the firm has signed deals to sell several international brands such as Hanes and Ed Hardy. US clothing maker PVH Corp. inherited the entire Calvin Klein business when it bought Warnaco Group Inc. for $2.9 billion in February 2013. Until then, PVH owned the right to sell formal wear and sportswear under the Calvin Klein label. Arvind expects to raise annual sales of Calvin Klein to Rs.500 crore and add about 50 stores in three years, from annual sales of Rs.150 crore and 41 stores now, Suresh said. Rishi Vasudev, who used to head the Arrow, Gant and Izod brands at Arvind, will head the Calvin Klein JV.
J. Suresh, chief executive of Arvind’s brands business said the JV’s board will have two directors each from Arvind and PVH, and Arvind will run the operations of the firm. This year, Arvind’s brands and retail business has grown faster than many other retailers. It reported a 36% jump in revenue to Rs.1,413.9 crore for the nine months ended 31 December partly as the firm expanded distribution of brands such as US Polo and Nautica. “Bridge-to-luxury is an attractive and a high-growth segment. Consumers who buy these products are usually people who have travelled abroad and are aware of most of these brands so you don’t need to aggressively advertise as well. The key thing is pricing: the prices need to be reasonable, relative to the segment,” said Abhishek Ranganathan, analyst, PhillipCapital.
Joint Ventures in India The joint-venture is the usual model for businesses that wish to expand anywhere, and South Asia is no exception. Like the Arvind/PVH pact, joint-ventures are generally limited in scope and also limited in time. Within those parameters, the joint-venture is usually defined rather broad to allow for some flexibility on behalf of both parties. The government prefers joint-ventures for several reasons, meaning that your new business venture in India may be able to avoid some government red tape: Purpose: Most joint-ventures are essentially knowledge-based enterprises, meaning that a foreign firm has the opportunity to “dip its toe in the water” and learn more about the domestic market before making a larger commitment. Partnership: A company with a product that may be in demand (such as high-end fashion jeans) can work with an established company (such as Arvind) to help market and distribute that product, thus lowering costs. Profit: In a joint-venture, Indian companies make money. That is the main reason the government likes these arrangements. Many joint-ventures fail because the agreements are inflexible or because of a lack of planning, so be sure and partner with an experienced international lawyer with expert understanding of India Business Law.
Bibliography
http://in.reuters.com/article/2014/03/24/ny-pvhidUSnBw245749a+100+BSW20140324 http://www.thehindubusinessline.com/companies/arvind-ltd-buys-49-stakein-calvin-klein-in-india/article5825456.ece http://www.vccircle.com/news/consumer/2014/03/24/arvind-brandsreplaces-murjanis-calvin-klein%E2%80%99s-india-business http://www.business-standard.com/article/markets/arvind-rallies-onforming-indian-jv-with-calvin-klein-114032500578_1.html http://www.livemint.com/Companies/Tip6rcfQ5DQGpEiHUCcQtK/ArvindBrands-forms-joint-venture-with-Calvin-Klein.html http://indiabusinessandlaw.com/arvind-pvh-announce-joint-venture-ckproducts/
