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Rachel F. Elson Brooklyn New York rachelelson@yahoo.com 415-336-5262		From the New York Post March 9, 2003 Buttoned-up guy Bruce Klatsky's next task may be his most challenging yet - uniting the cultures of workmanlike PVH and design-obsessed Calvin Klein. By RACHEL F. ELSON On a hot autumn day in 1971, a young Bruce Klatsky - then a freshly arrived law school grad - sat on a Lexington Avenue subway train, sweating in his interview suit. He had two interviews lined up: one at Van Heusen, and one downtown at Goldman Sachs. But as the sweltering train crept south, Klatsky made a snap decision - getting off in Midtown and skipping the Goldman interview. Today it seems Klatsky, now 54 - and CEO and chairman of the much-expanded Phillips-Van Heusen Corp., which last month sealed its purchase of Calvin Klein Inc. - made the right call. Klatsky's next task, however, may be his most challenging yet - uniting the cultures of workmanlike PVH and design-obsessed folk at Calvin Klein. Though PVH will keep the Calvin Klein design team cloistered - and, says Klatsky, autonomous - the mass-market pros bring to the merger a profoundly different culture than the one at formerly private CKI. PVH Chief Operating Officer Mark Weber admits he and Klatsky were humbled when they turned up at Calvin Klein's January Milan show - two guys in sportcoats amid a sea of black-clad staffers in head-to-toe Calvin. "Bruce and I were the eyesores," jokes Weber. "It was like everyone got the memo - except us." But Klatsky and Weber - "the best one-two combination in the industry," according to one insider - are unlikely to be derailed by a fashion faux pas. And Calvin is in much better shape than its previous acquisitions. "The last few companies we bought had financial problems," explains Weber. "[Calvin Klein] is one of the first acquisitions we've made that looks better with every day that goes by." In the decade since Klatsky took over PVH as CEO, he has overseen the acquisition and relaunch of the Izod label as well as several new shirt-making licenses (among them Arrow, DKNY and Kenneth Cole); he earlier presided over the acquisition of shoemaker G.H. Bass. In 1998 he promoted longtime colleague Weber - first hired in 1972 as an associate designer (and Klatsky's assistant) - and quickly began reshaping PVH for expansion. "We spent two or three years restructuring the company," Klatsky says. "By 2000 . . . we had a strong infrastructure that could handle a lot more, and we began looking for a vehicle that could provide growth." The Calvin addition is designed to provide a top-line expansion for PVH, Klatsky says: "The Calvin Klein brand is at the top of the pyramid, but the business size is small." The company is hoping to roll out a coordinated fall 2004 launch of several lines. PVH has already inked an outerwear deal and created an internal team to develop an upmarket men's sportswear line. Klatsky and Weber expect to settle on a licensee in the next month or so for a cK Calvin Klein women's line; "The phone has been ringing off the hook" with hungry suitors, Klatsky says. Also on deck are footwear, accessories and retail expansions. Key to the Calvin Klein ramp-up, say observers, is restoring and retaining the label's tarnished prestige. Calvin Klein himself is expected to stick around to provide creative direction - encouraged, perhaps, by a 15-year cash incentive. But execution of the men's and women's designer collections has already been handed off to Italian partner Vestimenta, and much of the planned expansion will be built through licensing relationships. That's an area where Calvin Klein has been burned before - notably in a dispute with Warnaco, which holds Calvin Klein's jeans and underwear licenses - and an area retailers are tracking closely. "One of the main reasons [Klatsky] wanted Calvin Klein was because he wanted . . . a more exclusive brand," said Terry Lundgren, president and CEO of Federated Department Stores. "When [brands] get overdistributed , customers lose interest. . . . He understands that." Culture clashes are another concern. But J.C. Penney CEO Allen Questrom - who has also served as CEO of both Barneys and Federated - says Klatsky's respect for creative talent should help the company bridge the culture gap. "Creative people, people who are successful, don't want people getting in their way," Questrom says. "[Klatsky] is a smart businessman, and he doesn't think he's a creative artist. I think he will interfere very little with Calvin." From the New York Post