Warnaco Group

Dr. Warner's Health Corsets In the late 19th century, Dr. Lucien Warner, a prominent physician gave up his Cortlandville, New York, practice to begin a new career on the medical lecturing circuit, specializing in women's health issues. Dr. Warner lectured about the harmful effects of the rigid steel-boned corsets of the time. After seeing how little influence his lectures had on women's attitudes towards fashion, he returned to his New York home and began a more aggressive approach to fighting the ills caused by the corset. In 1873, he designed a corset that provided both the shape desired by women and the flexibility required to allow some movement and reduce injuries caused by previous designs. The next year, Lucien Warner and his brother Dr. Ira De Ver Warner gave up their medical practices and founded Warner Brothers Corset Manufacturers. Dr. Warner's Coraline Health Corsets, as they were marketed, were made up of two pieces of cloth which were laced or clasped together. These revolutionary undergarments also featured shoulder straps and more flexible boning and lateral bust supports made of Coraline, a product of the fibers of the Mexican Ixtle plant. By 1876, this new, more flexible design had grown in popularity so much so that the company moved its manufacturing operations to Bridgeport, CT, where approximately 1,200 people were employed to produce approximately 6,000 corsets daily. In 1883, ''Harper's Bazaar'' advertised the four most popular corsets in America as Dr. Warner's models Two years later, The Warner Brothers Corset Co. paid $1,500 for Mary Phelps Jacob's patent for the brassiere - a move which helped boost revenues to $12.6 million by 1920. This was a difficult time for the company. Sales through the decade declined and efforts made by the company to adapt to these changing times were met with little success. Depression Era The Great Depression of the 1930s was difficult on the clothing industry and Warner was no exception to this financial suffering. Even as the boyish figure of the previous decade's Flappers fell out of style and curves made a return to fashion, Warner struggled. By 1932, the company had lost more than $1 million. The ABC Alphabet Bra set the standard for bra sizing that is still used today. By the early 1940s, the company was profitable again, bringing in $1 million by 1947. The late 1950s also saw Warner Brothers diversify its product lineup to include menswear and accessories, as well as sportswear for both men and women. Distribution was expanded by sales in large chain department stores such as JC Penney and Sears. The company also expanded production, opening manufacturing facilities in South America and Europe. In 1960, Warner Brothers Company purchased major American shirt manufacturer C.F. Hathaway strengthening the company's foothold in the sportswear market. Warner Brothers went public in 1961 and was soon generating revenues in excess of $100 million. Warnaco The Warner Brothers Company changed its name to Warnaco, Inc. in 1968, and continued to grow its business exponentially through various mergers and acquisitions throughout the 1970s. By the middle of the decade, Warnaco had become a multi-national clothing conglomerate with almost 20 divisions. Despite the company's diverse portfolio, however, Warnaco was struggling to turn a profit. Recognizing the potential failure, Field handed management of the company over to James Walker and Philip Lamoureux. Walker was named CEO in 1977. Lamoureux and Walker turned the company around quickly and in 1982, Lamoureux left the company. A year later, Walker died unexpectedly. former lingerie division president Linda J. Wachner engineered a $550 million hostile takeover. Wachner had previously risen through the ranks at Max Factor, making the declining cosmetics company profitable again within just two years. In 1993, Authentic Fitness had a licensing deal with Oscar de la Renta, Ltd. and had acquired swimwear labels Cole, Catalina, and Anne Cole — each from bankruptcies. That same year, Wachner secured a sponsorship deal for the 1996 Summer Olympics in Atlanta, GA. The remainder of the decade saw Wachner take her company on a buying spree, acquiring designer labels Calvin Klein Underwear, Body Slimmers (purchased from Nancy Ganz, wife of Mitchell S. Steir), ABS by Allan Schwartz, as well as private label sleepwear manufacturers GJM Group, French lingerie company Lejaby-Euralis. Warnaco also acquired the license for Calvin Klein Jeans and Calvin Klein retail stores through its takeover of Designer Holdings, Inc. The license for Calvin Klein children's clothing was purchased from Commerce Clothing Warnaco closed out the 1990s by selling off its underperforming Hathaway label and reacquiring Authentic Fitness. The company's success peaked in 1998 with $1.95 billion in revenue. In 2001, Warnaco filed for Chapter 11 protection and Wachner was fired. A new beginning On 4 February 2003, Warnaco emerged from bankruptcy. As part of its restructuring, the company sold its White Stag trademark to Wal-Mart and later decided to exit the designer swimwear market and focus on strengthening its Speedo products. The company sold off Ocean Pacific to Iconix Brand Group after just three years of ownership. Also sold, were Catalina, Anne Cole and Cole of California brands. This netted the company approximately $25 million. In 2008, the company also ceased operations under the Michael Kors and Nautica labels, citing a collective $1.7 million in losses from the two brands. Warnaco provides private label swimsuits for Victoria's Secret. In order to strengthen its "core intimates" group, (Warner's, Olga, Calvin Klein Underwear), the company shed private label GJM Calvin Klein continues to be a strong performer for the company in both the jeans and intimates sectors. As of 2 January 2010, the company operated over 1,000 Calvin Klein retail stores worldwide as well as three online stores. It also licenses or franchises an additional 624 stores and the Calvin Klein brand accounted for 75% of the Warnaco Group's $2 billion net sales in 2009. and industry analysts expect continued growth. In August 2010 The Motley Fool named Warnaco one of its Top 10 Values in Consumer Durables, citing the stock's low price-to-earnings multiples as well as its low risk and its potential for growth. ==Controversies and criticisms==

Bridgeport Strike of 1915 During the summer of 1915, approximately 1,300 women and girls employed by The Warner Brothers Corset Company factory in Bridgeport, Connecticut, walked off the job. The strike, which was one of 179 strikes recorded that year, was in favor of eight-hour work days On 18 August that year, the nearly 4,000 striking workers — who were organized as part of the International Textile Workers of America union — accepted the management's offer of a 12.5% raise and eight-hour days. One worker was reported injured during this strike. Connecticut newspaper The Day reported "a Miss Jones...who is believed to have objected to the [negotiation] proceedings, is said to have been roughly handled by the other strikers, and to have had her clothing almost torn from her." No one was arrested for this attack. Ultimately 26 U.S. companies and 23 Saipan garment factories would be named as defendants. and in the spring of 1999, was among the first companies to settle. By 2004 all remaining companies – with the exception of Levi Strauss whose case was ultimately dismissed – had settled without admitting to any wrongdoing. The Saipan garment workers had won a collective $20 million as well as better oversight and improved working conditions. SEC investigation On 11 May 2004, the Securities and Exchange Commission announced a settlement in its three-year-long investigation of Warnaco and its auditing firm, PricewaterhouseCoopers. The investigation stemmed from an overstatement of $145 million worth of inventory on Warnaco's 1998 Form 10-K. The SEC alleged that Warnaco knew about this overstatement when they released a press statement lauding the company's "record results" for its fourth quarter and fiscal year ending 1998. This overstatement would force Warnaco to restate its earnings for the three prior years. The commission complained Warnaco "falsely portrayed the inventory write-down as a part of the company's write-off of deferred start-up costs under a new accounting pronouncement." The complaints filed by the SEC claim PwC's role in this alleged cover-up was that they caught the error during an audit but they "failed to object" to Warnaco's "mischaracterization" of this error and that PwC incorporated this mischaracterization into their own audit report. In the suit, the SEC specifically names William Finklestein, who was vice president and CFO at the time of the allegation, claiming "As CFO, Finkelstein directed the offsetting of cash against debt. He also reviewed and signed the quarterly report. In response to Klein's television appearance, Warnaco filed a countersuit accusing Klein of trademark libel for not only maligning Warnaco but also Calvin Klein's own products. The suit was settled in 2001 and sealed with a "fashionista air kiss" on the steps in front of a New York courthouse. While the agreement remains confidential, some of the terms have been made public. Warnaco was able to retain its Calvin Klein licenses, but Calvin Klein was able to regain some of the creative control he had ceded in the original license. The agreement opens: {{blockquote|IT IS HEREBY AGREED by and between Calvin Klein and Warnaco as follows: 1. Calvin Klein and Warnaco agree to work together for their mutual benefit under their existing license and other agreements, except to the extent that those agreements are modified by the terms of this Settlement Agreement. 2. a. Beginning in calendar year 2002, Warnaco will limit its annual gross sales of Calvin Klein jeanswear to mass merchandisers (defined as, for example, KMart, Wal-Mart and Target) and/or warehouse clubs so that the percentage of such sales does not exceed ***% of Warnaco's total gross sales of Calvin Klein jeanswear in 2002 (and the percentage of sales other than excess and close-outs to such channels does not exceed ***% of total gross sales) and ***% in 2003 and thereafter (and the percentage of sales other than excess and close-outs to such channels does not exceed ***% of total gross sales). ***.This provision is without prejudice to the positions of the parties as to the meaning of the license terms. After the mid-1990s acquisition spree, Wachner led the clothing powerhouse once again to the brink of collapse. It was under her management that in 1995 Warnaco failed to make the Fortune 500 for the first time in nearly 30 years. Time magazine referred to Warnaco's reacquisition of Authentic Fitness as "financial gymnastics that helped prop up Wachner's bank account but ultimately loaded Warnaco's balance sheet with an extra $600 million in debt."" Between 1998 and 2000, Warnaco's stock had lost about 75% of its value, yet Wachner continued to draw a base salary of $2.7 million with an additional $12.5 million in bonuses and private stock. Upon her ouster as CEO, Wachner was denied her contractual $25 million golden parachute. She sued the company and in 2002 she accepted $3.5 million in new Warnaco stock and $200,000 in cash, which she said she would donate to cancer research. Wachner stayed on the board of directors until her term expired in 2003. ==Former licenses==

Adapted from the Warnaco 2009 Annual Report: The following table sets forth the Company's trademarks and licenses as of 2 January 2010: Owned trademarks • Warner's • Olga • Body Nancy Ganz/Bodyslimmers • Calvin Klein and formatives (beneficially owned for men's/women's/children's underwear, loungewear and sleepwear) Trademarks licensed in perpetuity Prior to Warnaco's acquisition by PVH, these trademarks were licensed in perpetuity by Warnaco, with the licenses inherited by PVH. Trademarks formerly licensed for a term These trademarks were formerly licensed for a term prior to Warnaco's acquisition by PVH. ==See also==