NEW YORK (Real Money) -- Sixteen months ago, PVH Corp. (PVH) paid $2.9 billion for Warnaco, a poorly run apparel company that happened to own the rights to some of the best parts of the Calvin Klein empire. The acquisition looked to be a total no-brainer because it allowed PVH to reunite all of the Calvin Klein branded products globally, giving the company excellent footholds in Asia and Brazil, as well as a struggling European business.
The stock of PVH then spiked to $116 from $91 on the news. Why not? The last time PVH, run by CEO Manny Chirico, had made a major acquisition it scored huge with Tommy Hilfiger. This seemed like the son of Hilfiger.
For a while, it looked to be working as PVH integrated the different parts of the Calvin Klein business within the fold. The stock had its ups and downs but ultimately it trended higher rather than lower. The bet looked like a good one. The Street has always liked Manny; he has been, along with Eric Wiseman, CEO of V.F. Corp. (VFC), about the most bankable exec in the industry, something I write about in Get Rich Carefully.
But late last year PVH missed the quarter -- an almost unthinkable event -- and acknowledged that the integration and product lines of Calvin Klein, particularly the jeans lines, weren't up to snuff and that the management teams inherited by PVH just weren't good enough.
Manny was abject about the miss but promised it would be taken care of and by the second half of 2014, things would indeed be back on track.