The Manny Chirico Exit Interview
The straight talker is stepping out.
When Manny Chirico walks away from PVH Corp.’s corner office on Feb. 1, handing the job of chief executive officer over to Stefan Larsson, he will leave on his own terms.
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“I’ve seen too many people who have gone out at the end and were hanging on too long, that worried too much about legacies,” Chirico told WWD in an exit interview via video conference.
Instead of feeling, “I have to do this to the bitter end,” as he summed up the sentiment among many a business titan, Chirico said he wants to be judged not just on his tenure, but also on the manner of his exit.
“Did I put the right person in the job? Is he going to do a good job? And did I transition him into the role in the right way?” he said, noting, “I feel good about that.”
Chirico said he and Larsson — who had a short stint as CEO of Ralph Lauren Corp., but clashed with the company’s famous founder — work well together
“Our values are the same, our styles are different,” Chirico said. “I approach things from more of the financial, operational side, he’s more of a brand marketing, product guy. His pedigree is more typical for a CEO, especially in this industry.”
While Chirico’s name is on the door to the corner officer for the next few weeks, he really started handing over control of the company last April, when the pandemic began forcing changes that Larsson, who serves as president, is ultimately going to have to see through.
CEO hand-offs often come with a measure of confusion in the best of times. In the midst of the pandemic, which saw PVH furloughing workers and laying off 12 percent of its corporate workforce in North America, eliminating 450 positions, something more than the usual dose of disarray might have been understandable.
“Both of us have been sensitive to the other’s needs and concerns and I think that’s what made it work,” Chirico said of the hand-off. “We were both trying to make it work for each other first. We kept our egos out of it.”
That process — planned out, decisive, with no ego — is classic Chirico.
The Bronx native with a degree from Fordham University’s Gabelli School of Business joined what was the Phillips-Van Heusen Corp. 27 years ago, coming on board as corporate controller and on his way to becoming chief financial officer with no thought of going for the big job.
Although the company was public then — PVH has traded on the New York Stock Exchange for just over 100 years — the Phillips family was still a major shareholder when Chirico joined and he said it was still run like a family operation, making dress shirts in the U.S. and Canada.
But Chirico said PVH was “in the process of becoming a true public company, the board was becoming less a clubby, family kind of board.”
“I think people saw opportunity for me, but I don’t think anybody was thinking of me as the next CEO,” Chirico said. “I didn’t have enough of a track record back then and I was really coming in on the finance side. It just wasn’t on my radar screen.”
What was on his radar screen was the evolving financials of the company, which was respected in its space but was not a big player in high fashion.
That changed with the 2003 acquisition of Calvin Klein, a deal Chirico was right in the middle of as CFO and one that marked a turning point for the firm.
“In many ways, Calvin was the game changer for us,” Chirico said. “We were a moderate men’s dress shirt company. Calvin opened the door and gave us a true global design lifestyle brand. The brand had such power and ability to be so much bigger than it was.”
While Calvin Klein was a marketing and design powerhouse, Chirico said it was operating on a weak operating platform, making it a good complement for PVH, which excelled in the area.
“We weren’t going to Van Heusen-ize Calvin Klein,” Chirico said. “We treated the Calvin Klein transaction as if it were a merger.” He summed up the approach as, “You’re going to continue to run these things [such as branding and design] and we’re going to take care of running all these things that you don’t want to do and you’re no good at.”
Along the way, then-CEO Bruce Klatsky opened Chirico’s eyes to the possibility of eventually becoming head of the company that was very much on the move.
During a performance review, Klatsky encouraged Chirico to get more experience outside of finance. And when Klatsky stepped aside, and Mark Weber was elevated from chief operating officer and president to CEO, Chirico stepped into a broader world and Weber’s old job — a kind of CEO-in-waiting and learning the ropes.
Turns out he had to learn quick as Weber clashed with the board and was out in less than a year, putting Chirico at the top of the company in 2006 and in the midst of the boom time for the industry that saw PVH feeling out its new role in designer fashion.
“It wasn’t a great way to walk into the chief executive officer’s [role] when your immediate predecessor that you’re filling in for was terminated and you’re put in a bit of a tough situation,” Chirico said. “The good news is the company was doing great.”
He also had strong leaders running the divisions, such as Tom Murry at Calvin Klein, and was used to dealing with Wall Street and the banking community, giving him some space to learn in a strong market.
“When business is good — whatever mistakes I did make in those early years, the strong business overwhelmed any of those minor issues,” Chirico said. “The Calvin Klein transition was really just taking off.”
Once the 2008 financial crisis came and went, PVH was looking for its next move.
Calvin Klein had made PVH an international player, but it didn’t have a great international platform. Tommy Hilfiger, on the other hand, had very strong operations in Europe and the company’s owner, Apax Partners, was looking to take the company public or take some money out of its investment with a dividend recapitalization, Chirico said. (Apax was a known quantity for PVH since the private equity firm helped back the Calvin Klein deal).
PVH made its move to buy Tommy Hilfiger — Chirico remembers the day, Dec. 15, 2009.
“The price was really good,” Chirico said. “It was a $3 billion deal, but it was 50 percent stock, 50 percent cash and the Apax guys didn’t want to take on that PVH equity. They came back and took us out to lunch to tell us they’re not going to do the deal. I was down, I was really depressed by the whole thing.”
Chirico was back at it the week after Christmas and the company’s bankers agreed to pony up the cash, but Chirico didn’t want Tommy Hilfiger’s management to keep some skin in the game.
He orchestrated a deal that would work — Apax would get 90 percent cash and the management team would get 40 to 50 percent of the price in PVH stock. It was a bigger risk since PVH would have to borrow more money to make the acquisition.
Apax was game and ready to move forward with that, but also planned to keep looking at other options while details were buttoned up.
“About four days later, Joe Gromek calls me,” said Chirico, referring to the-then CEO of Warnaco Group, which handled the mammoth Calvin Klein underwear business. “They came in and they wanted to buy PVH. They offered, like, a 40 percent premium.”
That put Chirico between a high-debt deal for Tommy on one side and a takeover by an assertive Warnaco, which would see him walk away with a golden parachute in the neighborhood of $40 million.
“When you’re a public company, you and your board, you can say, ‘No,’ but that doesn’t stop someone [such as Gromek and Warnaco] from being more aggressive,” Chirico said. “The pressure was just amazing. The first thing you do in that situation comes up is you call your lead director. Then you go home and talk to your wife.”
Chirico and PVH’s board chose the riskier deal for Tommy Hilfiger — and the role of industry consolidator — instead of the quick payout.
That in turn led to the $2.9 billion deal to buy Warnaco in 2013, which reunited the Calvin Klein apparel and intimates businesses — although the brand subsequently had some hiccups.
Raf Simons’ stint as Calvin Klein’s chief creative officer was praised by the high-fashion set, but didn’t click commercially. The idea was to give the brand one unified vision, but the vision didn’t resonate broadly enough, the 205W39NYC designer collection PVH spent $70 million on didn’t produce the hoped for returns and Simons ultimately left.
“You make good decisions and you make bad decisions,” Chirico said. “Raf Simons was not our finest moment.”
Although he hailed the designer as a great talent and predicted he’d be “unbelievably successful,” Chirico said, “It just wasn’t a good cultural fit.”
“There was a lack of understanding of what the Calvin Klein brand was, how it’s grown,” Chirico said. “We just couldn’t get alignment. It was one of those unfortunate mistakes.”
At least some people saw it coming.
Chirico recalled an investor meeting in 2014 when one person asked of bringing on Simons, “What problem are you trying to solve? Things couldn’t be better at Calvin Klein. Is this too big a move?”
Of course, almost everything is second guessed on Wall Street, but Chirico noted, “In retrospect, we were probably biting off more than we could chew.”
That’s the kind of candid assessment that Chirico is known for — and the kind of thing he’s come to expect from the people who work for him.
Transparency and accountability are “guiding core principles at PVH,” he said.
“It’s clear everybody wants the freedom to run their business and have that autonomy, but what that autonomy and with that right to run your business comes a responsibility to be totally transparent with me, to be totally accountable for results. There’s no giving me half a story or whatever,” he said. “It’s something I’ve always tried to model as the CEO of the company as I’ve tried to deal with the investment community, our own associates, our stakeholders. That’s who I am, I don’t know how to do it any other way.”
Chirico’s tenure as CEO has overlapped with the broader corporate trend toward purpose, a stance PVH has adopted.
“For me personally, we’ve always had what I would describe as a set of core principles,” he said. “It used to be, I could communicate with our associates, I would walk the four floors in our building.”
Now the company has more than 40,000 employees and offices around the world.
“You can’t be everywhere, so we had to develop a platform to communicate our business strategy and our core values and how we’re going to run the company,” he said. “I can’t tell you it was about corporate purpose in 2010, but it was about communicating. It developed into a corporate purpose of, ‘We operate global fashion brands for good and for the good of our associates, our stockholders, our partners.’
“People don’t want to work for a company whose sole purpose is to grow 15 percent a year,” Chirico said. “That grows old pretty quick. You need to walk the talk, it can’t just be a PR campaign, people see through that really quickly. That doesn’t mean you don’t make tough business decisions. You have to do what’s right for the business.”
Now it’s up to Larsson to do what’s right for the business, although Chirico will still be on hand as chairman.
But he said leaving now in the midst of a pandemic is “a little bit strange.”
“I don’t mean this in a negative way,” he said. “There’s no celebration. How can you? How can you celebrate the 15 years in the middle of a pandemic? If this was a normal time, you could be sure we’d be having a big dinner. We’d be celebrating Stefan becoming CEO. Instead it’s just like there’s not time for that ’cause we’re trying to deal with managing the company.
“After 27 years with PVH, there’s a part I’m proudest of and celebrating and there’s a part that’s a little like…part of you going away that you lived every day,” he said. “Every day, I enjoyed getting up and coming to work. PVH is a special place with special people. It was exciting. It was rewarding. It was fun. The good thing was, I got paid for it.”
Manny’s 15-year Run
The key dates, stats and happenings at PVH Corp. during Manny Chirico’s time as chief executive officer.
Feb. 27, 2006
Manny Chirico named ceo.
2007
PVH acquires men’s neckwear business Superba Inc.
2010
PVH acquires Tommy Hilfiger.
2013
PVH buys Warnaco, reuniting “The House of Calvin Klein,” and sells G.H. Bass & Co.
2017
PVH buys intimates e-commerce brand True & Co.
190.5 percent
The increase in PVH’s stock price on his watch, rising to $104.84.
$9.9 billion
2019 annual revenues.
85 percent
Portion of those revenues that came from Calvin Klein and Tommy Hilfiger.
40,000+
PVH’s workforce.
100+
Number of countries PVH operates.
“We power brands that drive fashion forward — for good.”
PVH’s corporate purpose.
Feb. 1, 2021
Chirico hands the job of ceo over to Stefan Larsson.
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