The Warnaco Group, Inc. was an American
textile/clothing corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
which designed, sourced, marketed,
licensed
A license (or licence) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit).
A license is granted by a party (licensor) to another party (licensee) as an element of an agreeme ...
, and distributed a wide range of
underwear
Undergarments, underclothing, or underwear are items of clothing worn beneath outer clothes, usually in direct contact with the skin, although they may comprise more than a single layer. They serve to keep outer garments from being soiled o ...
,
sportswear
Sportswear or activewear is clothing, including footwear, worn for sport or physical exercise. Sport-specific clothing is worn for most sports and physical exercise, for practical, comfort or safety reasons.
Typical sport-specific garments ...
, and
swimwear
A swimsuit is an item of clothing designed to be worn by people engaging in a water-based activity or water sports, such as swimming, diving and surfing, or sun-orientated activities, such as sun bathing. Different types may be worn by men, wom ...
worldwide. Its products were sold under several
brand name
A brand is a name, term, design, symbol or any other feature that distinguishes one seller's good or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create an ...
s including
Calvin Klein
Calvin Richard Klein (born November 19, 1942) is an American fashion designer who launched the company that would later become Calvin Klein Inc., in 1968. In addition to clothing, he also has given his name to a range of perfumes, watches, and ...
,
Speedo
Speedo International Limited is a distributor of swimwear and swim-related accessories based in Nottingham, England, known for its swim briefs. The company has roots in Australia but is no longer based there. Founded in Sydney in 1914 by Al ...
,
Chaps
Chaps ( or ) are sturdy coverings for the legs consisting of leggings and a belt. They are buckled on over trousers with the chaps' integrated belt, but unlike trousers, they have no seat (the term "assless chaps" is a tautology) and are not jo ...
, Warner's, and Olga.
On 31 October 2012, the company announced that it would be acquired by
PVH for $2.8 billion in cash and stock.
The deal that will give the
PVH more control of the Calvin Klein clothing brand as it will unite Calvin Klein formal, underwear, jeans and sportswear lines. It was acquired by
PVH in Feb 2013.
History
Dr. Warner's Health Corsets
In the late 19th century, Dr. Lucien Warner, a prominent physician gave up his
Cortlandville, NY 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 corset
A corset is a support garment commonly worn to hold and train the torso into a desired shape, traditionally a smaller waist or larger bottom, for aesthetic or medical purposes (either for the duration of wearing it or with a more lasting effe ...
s 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
Ixtle, also known by the trade name Tampico fiber, is a stiff plant fiber obtained from a number of Mexican plants, chiefly species of ''Agave'' and ''Yucca''. The principal source is ''Agave lechuguilla'', the dominant ''Agave'' species in the C ...
plant.
By 1876, this new, more flexible design had grown in popularity so much so that the company moved its manufacturing operations to
Bridgeport
Bridgeport is the most populous city and a major port in the U.S. state of Connecticut. With a population of 148,654 in 2020, it is also the fifth-most populous in New England. Located in eastern Fairfield County at the mouth of the Pequonnoc ...
,
CT, where approximately 1,200 people were employed to produce approximately 6,000 corsets daily.
In 1883
Harper's Bazaar
''Harper's Bazaar'' is an American monthly women's fashion magazine. It was first published in New York City on November 2, 1867, as the weekly ''Harper's Bazar''. ''Harper's Bazaar'' is published by Hearst and considers itself to be the st ...
advertised the four most popular corsets in America as Dr. Warner's models
[.
] The brothers claimed patents and trademarks on "health corset" and they had international manufacturing. The success of the Warners' designs had made the brothers millionaires and in 1894 they retired and turned control of the company over to De Ver's son, D.H. and the Warner Brothers partnership was changed to a corporation.
The Warner Brothers Corset Co.
The turn of the century saw even greater success for the company in the hands of the founders' sons. New products included the rust-proof corset and combination corset and hose-supporter. By 1913 sales reached $7 million and profits averaged $700,000 annually
Two years later, The Warner Brothers Corset Co. paid $1,500 for
Mary Phelps Jacob's patent for the
bra
A bra, short for brassiere or brassière (, or ; ), is a form-fitting undergarment that is primarily used to support and cover breasts. It can serve a range of other practical and aesthetic purposes, including enhancing or reducing the appear ...
ssiere - a move which helped boost revenues to $12.6 million by 1920.
The
Jazz Age and
Flapper movement of the 1920s saw the desire for less restrictive fashions. Women had a more care-free attitude toward life and ditched the corset and pantaloons in favor of breast-binding
bandeau
A bandeau (pl. bandeaux, diminutive of french: bande meaning "strip") is a garment comprising, in appearance, a strip of cloth. Today, the term frequently refers to a garment that wraps around a woman's breasts. It is usually part of a bikini in s ...
s and step-in
panties
Panties (in American English; also called pants, undies, or knickers in British English) are a form of women's underwear. Panties can be form-fitting or loose. Typical components include an elastic waistband, a crotch panel to cover the genita ...
.
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
The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
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 company's troubles were only made worse by the personal deterioration of CEO, D. H. Warner, who was known as a depraved womanizer.
After his wife died in 1931, D.H. continued to finance his debauchery with company profits and drink to excess before dying in 1934 at the age of 66. Control of the company was handed to his son-in-law, John Field.
ABC and IPO
With the corset all but extinct by the mid-1930s, the company's new leadership focused on developing new products. In 1937, the company that revolutionized corsetry revolutionized the brassiere by assigning letters to various cup sizes.
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.
Sales of bras, girdles, and the
cross-promotion Cross-promotion is a form of marketing promotion where customers of one product or service are targeted with promotion of a related product. A typical example is cross-media marketing of a brand; for example, Oprah Winfrey's promotion on her televi ...
of the Merry Widow line of
corselet
In women's clothing, a corselet or corselette is a type of foundation garment, sharing elements of both bras and girdles. It extends from straps over the shoulders down the torso, and stops around the top of the legs. It may incorporate lace in ...
s with the 1952
Lana Turner
Lana Turner ( ; born Julia Jean Turner; February 8, 1921June 29, 1995) was an American actress. Over the course of her nearly 50-year career, she achieved fame as both a pin-up model and a film actress, as well as for her highly publicized per ...
movie of
the same name, led to record profits.
A partnership between
DuPont
DuPont de Nemours, Inc., commonly shortened to DuPont, is an American multinational chemical company first formed in 1802 by French-American chemist and industrialist Éleuthère Irénée du Pont de Nemours. The company played a major role in ...
and Warners lead to the 1959 invention of
Lycra
Spandex, Lycra, or elastane is a synthetic fiber known for its exceptional elasticity. It is a polyether-polyurea copolymer that was invented in 1958 by chemist Joseph Shivers at DuPont's Benger Laboratory in Waynesboro, Virginia, US.
The g ...
, which allowed for new designs in shapewear and more snug-fitting bras.
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
A chain is a serial assembly of connected pieces, called links, typically made of metal, with an overall character similar to that of a rope in that it is flexible and curved in compression but linear, rigid, and load-bearing in tension. A c ...
department store
A department store is a retail establishment offering a wide range of consumer goods in different areas of the store, each area ("department") specializing in a product category. In modern major cities, the department store made a dramatic app ...
s such as
JC Penney
Penney OpCo LLC, doing business as JCPenney and often abbreviated JCP, is a midscale American department store chain operating 667 stores across 49 U.S. states and Puerto Rico. Departments inside JCPenney stores include Mens, Womens, Boys, Gir ...
and
Sears
Sears, Roebuck and Co. ( ), commonly known as Sears, is an American chain of department stores founded in 1892 by Richard Warren Sears and Alvah Curtis Roebuck and reincorporated in 1906 by Richard Sears and Julius Rosenwald, with what began a ...
. The company also expanded production, opening manufacturing facilities in
South America
South America is a continent entirely in the Western Hemisphere and mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere at the northern tip of the continent. It can also be described as the southe ...
and
Europe
Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
. 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.
In 1966, it acquired another large clothing maker, the
White Stag Manufacturing Company.
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.
That year brought in $28.3 million.
However, some of the cost-cutting measures implemented by Lamoureux and Walker — including cutbacks in research and in advertising — hurt the company more than helping it. In 1986, after being away from the company for nine years,
former lingerie division president
Linda J. Wachner engineered a $550 million
hostile takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...
. Wachner had previously risen through the ranks at
Max Factor
Max Factor is a line of cosmetics from Coty, Inc. It was founded in 1909 as Max Factor & Company by Max Factor, Sr., Maksymilian Faktorowicz.
Max Factor specialized in movie make-up. Until its 1973 sale for US$500 million (approximately $ billio ...
, making the declining
cosmetics
Cosmetics are constituted mixtures of chemical compounds derived from either natural sources, or synthetically created ones. Cosmetics have various purposes. Those designed for personal care and skin care can be used to cleanse or protect ...
company profitable again within just two years.
She wasted no time at Warnaco and right away went to work streamlining the company's fifteen divisions into just two categories: menswear and underwear.
The Wachner years
In 1990, Wachner formed a new corporation,
Authentic Fitness Corp.
Authenticity or authentic may refer to:
* Authentication, the act of confirming the truth of an attribute
Arts and entertainment
* Authenticity in art, ways in which a work of art or an artistic performance may be considered authentic
Music
* A ...
, for the purpose of separating Warnaco's activewear lines including
Speedo
Speedo International Limited is a distributor of swimwear and swim-related accessories based in Nottingham, England, known for its swim briefs. The company has roots in Australia but is no longer based there. Founded in Sydney in 1914 by Al ...
and
White Stag
A white stag (or white hind for the female) is a white-colored red deer, wapiti, sika deer, chital, fallow deer, roe deer, white-tailed deer, black-tailed deer, reindeer, moose, or rusa, explained by a condition known as leucism that causes its h ...
ski clothing. Wachner's intention was to transform Speedo from swimwear label to retail concept.
Authentic fitness went public in June 1992 and opened its first Speedo Authentic retail store five months later
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
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
. That same year, Wachner secured a sponsorship deal for the
1996 Summer Olympics
The 1996 Summer Olympics (officially the Games of the XXVI Olympiad, also known as Atlanta 1996 and commonly referred to as the Centennial Olympic Games) were an international multi-sport event held from July 19 to August 4, 1996, in Atlanta, ...
in
Atlanta
Atlanta ( ) is the capital and most populous city of the U.S. state of Georgia. It is the seat of Fulton County, the most populous county in Georgia, but its territory falls in both Fulton and DeKalb counties. With a population of 498,715 ...
,
GA.
By 1991, Warnaco's lingerie division had license agreements with Valentino, Ungaro, Scaasi,
Bob Mackie
Robert Gordon "Bob" Mackie (born March 24, 1939) is an American fashion designer and costumier, best known for his dressing of entertainment icons such as Lucille Ball, Carol Burnett, Diahann Carroll, Carol Channing, Cher, Doris Day, Marlene D ...
,
Victoria's Secret
Victoria's Secret is an American lingerie, clothing, and beauty retailer known for high visibility marketing and branding, starting with a popular catalog and followed by an annual fashion show with supermodels dubbed Angels. As the largest ret ...
and
Fruit of the Loom
Fruit of the Loom is an American company that manufactures clothing, particularly casual wear and underwear. The company's world headquarters is in Bowling Green, Kentucky. Since 2002 it has been a subsidiary of Berkshire Hathaway.
Products manu ...
. The menswear division produced shirts, sweaters, neckties and other accessories under names including
Christian Dior
Christian Ernest Dior (; 21 January 1905 – 24 October 1957) was a French fashion designer, best known as the founder of one of the world's top fashion houses, Christian Dior SE, which is now owned by parent company LVMH. His fashion houses a ...
, Hathaway, Chaps by
Ralph Lauren
Ralph Lauren, ( ; ; born October 14, 1939) is an American fashion designer, philanthropist, and billionaire businessman, best known for the Ralph Lauren Corporation, a global multibillion-dollar enterprise. He has become well known for his co ...
, and
Jack Nicklaus
Jack William Nicklaus (born January 21, 1940), nicknamed The Golden Bear, is a retired American professional golfer and List of golf courses designed by Jack Nicklaus, golf course designer. He is widely considered to be one of the greatest go ...
. At the end of 1991, the company produced $195.4 million in gross profits and Linda Wachner was named Business Woman of the Year by
Fortune Magazine
''Fortune'' is an American multinational business magazine headquartered in New York City. It is published by Fortune Media Group Holdings, owned by Thai businessman Chatchaval Jiaravanon. The publication was founded by Henry Luce in 1929. The ...
.
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
Mitchell Shubow Steir (born August 3, 1955)Lauren Elkies ( .d.Mitchell Steir ''The Real Deal''. Retrieved March 24, 2015. is a commercial real estate broker. He is former chairman and chief executive officer of Savills North America.
Biography
St ...
), ABS by Allan Schwartz, as well as
private label
A private label, also called a private brand or private-label brand, is a brand owned by a company, offered by that company alongside and competing with brands from other businesses. A private-label brand is almost always offered exclusively by th ...
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.
Soon after, however, sales dropped rapidly and — saddled with debt from all the recent acquisitions and mergers — in 2000, the company lost $200 million.
In 2001, Warnaco filed for
Chapter 11
Chapter 11 of the United States Bankruptcy Code (Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, wheth ...
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
A white stag (or white hind for the female) is a white-colored red deer, wapiti, sika deer, chital, fallow deer, roe deer, white-tailed deer, black-tailed deer, reindeer, moose, or rusa, explained by a condition known as leucism that causes its h ...
trademark to
Wal-Mart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
and later decided to exit the designer swimwear market and focus on strengthening its Speedo products.
The company sold off
Ocean Pacific
Ocean Pacific Apparel Corp. (Ocean Pacific or OP) is a clothing company based in Irvine, California, United States. It produces T-shirts, sweatshirts, hoodies, and beverage mugs.
History
The first "Ocean Pacific" trademark brand was started by ...
to
Iconix Brand Group
Iconix Brand Group is an American brand management company that licenses brands to retailers and manufacturers primarily in the apparel, footwear, and apparel accessory industries. Its brands are available in such stores as Kohl's, Kmart, Sear ...
after just three years of ownership.
Also sold, were
Catalina
Catalina may refer to:
Arts and media
* ''The Catalina'', a 2012 American reality television show
* ''Catalina'' (novel), a 1948 novel by W. Somerset Maugham
* Catalina (''My Name Is Earl''), character from the NBC sitcom ''My Name Is Earl''
...
,
Anne Cole
Anne Cole is an American swimwear brand most known for the invention of the tankini, a type of swimsuit. The brand's namesake founder, Anne Cole (1926-2017), invented the tankini.
The swimwear company was originally a division within Cole of Cali ...
and
Cole of California Cole of California is a swimwear brand, known for innovations in fashionable swimwear
Early history and swimwear
Established in 1917 by F.L and Joseph Drane in Vernon, California, West Coast Knitting Mills made men's long knitted underwear and soc ...
brands. This netted the company approximately $25 million.
In 2008, the company also ceased operations under the
Michael Kors
Michael David Kors (born Karl Anderson Jr. August 9, 1959) is an American fashion designer. He is the chief creative officer of his brand, Michael Kors, which sells men's and women's ready-to-wear, accessories, watches, jewelry, footwear, and f ...
and
Nautica
Nautica is an American apparel brand of Authentic Brands Group featuring primarily men's, women's, children's apparel and accessories, as well as home, watches, and fragrance. Nautica was founded in 1983 by clothing designer David Chu and a par ...
labels, citing a collective $1.7 million in losses from the two brands.
In further efforts to boost its swimwear line, Speedo renewed its contract with 8-time
Olympic
Olympic or Olympics may refer to
Sports
Competitions
* Olympic Games, international multi-sport event held since 1896
** Summer Olympic Games
** Winter Olympic Games
* Ancient Olympic Games, ancient multi-sport event held in Olympia, Greece b ...
gold medal
A gold medal is a medal awarded for highest achievement in a non-military field. Its name derives from the use of at least a fraction of gold in form of plating or alloying in its manufacture.
Since the eighteenth century, gold medals have bee ...
ist
Michael Phelps
Michael Fred Phelps II (born June 30, 1985) is an American former competitive swimmer. He is the most successful and most decorated Olympian of all time with a total of 28 medals. Phelps also holds the all-time records for Olympic gold me ...
, extending his endorsement through the next
Summer Games.
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
and high-end lingerie brand Lejaby.
Since emerging from bankruptcy, Warnaco Group's annual income Reports have shown steady growth.
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.
At the end of 2010's second quarter (ending 3 July), Warnaco reported that all three divisions — Intimates, Swimwear and Sportswear — contributed to its 14% growth in net revenues to $519.3 million
and industry analysts expect continued growth.
In August 2010 ''
The Motley Fool
The Motley Fool is a private financial and investing advice company based in Alexandria, Virginia. It was founded in July 1993 by co-chairmen and brothers David Gardner and Tom Gardner, and Erik Rydholm, who has since left the company. The compa ...
'' 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, CT,
walked off the job.
The
strike
Strike may refer to:
People
*Strike (surname)
Physical confrontation or removal
*Strike (attack), attack with an inanimate object or a part of the human body intended to cause harm
*Airstrike, military strike by air forces on either a suspected ...
, which was one of 179 strikes recorded that year,
was in favor of
eight-hour work days and a 20% increase in wages.
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.
Only one worker was reported injured during this strike. Connecticut newspaper ''
The Day The Day may refer to:
Film and television
* ''The Day'' (1914 film), an Australian silent film
* ''The Day'' (1960 film), a short film
* ''The Day'' (2011 film), a Canadian film
* ''The Day'' (2022 film), a Bangladeshi–Iran joint production ...
'' reported "a Miss Jones...who is believed to have objected to the
egotiationproceedings, 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.
Made in the U.S.A.
![Saipan Garment Factory 1](https://upload.wikimedia.org/wikipedia/commons/0/01/Saipan_Garment_Factory_1.JPG)
Early in 1999, Warnaco was one of 18 companies initially named in three
class-action lawsuit
A class action, also known as a class-action lawsuit, class suit, or representative action, is a type of lawsuit where one of the parties is a group of people who are represented collectively by a member or members of that group. The class action ...
s filed under US Federal
RICO
The Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization.
RICO was en ...
statutes. The lawsuits were filed by several labor and human rights groups on behalf of more than 50,000 workers from
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
, the
Philippines
The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no),
* bik, Republika kan Filipinas
* ceb, Republika sa Pilipinas
* cbk, República de Filipinas
* hil, Republ ...
,
Bangladesh
Bangladesh (}, ), officially the People's Republic of Bangladesh, is a country in South Asia. It is the eighth-most populous country in the world, with a population exceeding 165 million people in an area of . Bangladesh is among the mos ...
and
Thailand
Thailand ( ), historically known as Siam () and officially the Kingdom of Thailand, is a country in Southeast Asia, located at the centre of the Indochinese Peninsula, spanning , with a population of almost 70 million. The country is bo ...
.
Ultimately 26 U.S. companies and 23 Saipan garment factories would be named as defendants.
The suits claimed that the garment factories — located in
Saipan
Saipan ( ch, Sa’ipan, cal, Seipél, formerly in es, Saipán, and in ja, 彩帆島, Saipan-tō) is the largest island of the Northern Mariana Islands, a Commonwealth (U.S. insular area), commonwealth of the United States in the western Pa ...
,
Northern Mariana Islands
The Northern Mariana Islands, officially the Commonwealth of the Northern Mariana Islands (CNMI; ch, Sankattan Siha Na Islas Mariånas; cal, Commonwealth Téél Falúw kka Efáng llól Marianas), is an unincorporated territory and commonw ...
, a
United States Commonwealth — regularly employed immigrant laborers who were duped into paying a "recruiting fee" of up to $7,000
so they can work in The United States. Upon arrival in Saipan, the workers are forced to surrender their passports and work off the money they owe, in effect making them
indentured servant
Indentured servitude is a form of labor in which a person is contracted to work without salary for a specific number of years. The contract, called an " indenture", may be entered "voluntarily" for purported eventual compensation or debt repayment ...
s. These factories produce clothing for the companies named in the suit. The workers further claimed that they were forced to sign "shadow contracts" waiving basic human rights, including the freedom to date or marry. And they emphasize the poor working and living conditions for workers. The suits allege they work and live in crowded, unsanitary factories and shanty-like housing compounds that are in flagrant violation of federal law.
Almost immediately, Warnaco denied any wrongdoing, stating that they hire subcontractors that strictly follow U.S. law
and in the spring of 1999, was among the first companies to settle.
By 2004 all remaining companies – with the exception of
Levi Strauss
Levi Strauss (; born Löb Strauß ; February 26, 1829 – September 26, 1902) was a German-born American businessman who founded the first company to manufacture blue jeans. His firm of Levi Strauss & Co. (Levi's) began in 1853 in San Francisco ...
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
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
announced a settlement in its three-year-long investigation of Warnaco and its auditing firm,
PricewaterhouseCoopers LLP (PwC). The investigation stemmed from an overstatement of $145 million worth of inventory on Warnaco's 1998
Form 10-K A Form 10-K is an annual report required by the U.S. Securities and Exchange Commission (SEC), that gives a comprehensive summary of a company's financial performance. Although similarly named, the annual report on Form 10-K is distinct from the of ...
. 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.
" Linda Wachner was also named in the suit as she was president and CEO at the time. In its press release announcing the settlement of the suit, the commission stated "at the time she approved and signed the 1998 annual report, Wachner knew or should have known that the restatement of the company's financial results was caused by material flaws in the cost accounting and internal control systems at one of the company's largest divisions and was not related to the write-up of deferred start-up or start-up related costs." The commission also found that "Wachner knew or should have known that the division's inventory costing control system was inadequate to ensure the accuracy of Warnaco's books and records and failed to ensure that proper internal controls were in place.
" Stanley P. Silverstein, who was Warnaco's general counsel at the time was also named, as he, too, signed off on the report.
PricewaterhouseCoopers settled with the SEC and agreed to pay a $2.4 million penalty. Wachner was found to have caused the oversight and was ordered to pay $1.3 million in
disgorgement
Disgorgement is defined by ''Black's Law Dictionary'' as "the act of giving up something (such as profits illegally obtained) on demand or by legal compulsion."
Overview
Disgorgement is a remedy or penalty used in US securities law. For exampl ...
. Finkelstein was ordered to pay $189,464 in disgorgement as well as a civil penalty of $75,000. He was barred for four years from serving as an officer or director of a public company. Silverstein was
censure
A censure is an expression of strong disapproval or harsh criticism. In parliamentary procedure, it is a debatable main motion that could be adopted by a majority vote. Among the forms that it can take are a stern rebuke by a legislature, a spir ...
d and ordered to pay $165,772.
Calvin Klein, et al. vs. The Warnaco Group, et al.
On 30 May 2000, Calvin Klein, Inc. filed suit against Warnaco Group, Inc. and its CEO, Linda Wachner. The suit alleged that Warnaco had
diluted the Calvin Klein brand name by producing merchandise that was not authorized or approved by Calvin Klein and that Warnaco was distributing Calvin Klein jeanswear through unapproved discount outlets, such as
warehouse clubs
A warehouse club (or wholesale club) is a retail store, usually selling a wide variety of merchandise, in which customers may buy large, wholesale quantities of the store's products, which makes these clubs attractive to both bargain hunters ...
, like
Costco
Costco Wholesale Corporation (doing business as Costco Wholesale and also known simply as Costco) is an American multinational corporation which operates a chain of membership-only big-box retail stores (warehouse club). As of 2022, Costco i ...
and
BJ's.
Klein, himself appeared on
CNN's Larry King Live
''Larry King Live'' was an American television talk show hosted by Larry King on CNN from 1985 to 2010. It was the channel's most watched and longest-running program, with over one million viewers nightly.
Mainly aired from CNN's Los Angeles s ...
shortly after the suit was filed and stated these practices have been taking place since Warnaco acquired the license three years prior. Calvin Klein had sought to regain control of its jeanswear license. Warnaco's initial response to the suit, which
King
King is the title given to a male monarch in a variety of contexts. The female equivalent is queen, which title is also given to the consort of a king.
*In the context of prehistory, antiquity and contemporary indigenous peoples, the tit ...
read on the air, called the complaint "without merit." The statement further accused Calvin Klein of "throwing stones at Warnaco," in a "desperate attempt... to cover up and distract focus from the highly deteriorated business state of CKI".
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:
Red ink and golden parachute
When Linda Wachner forcibly took over the reins of Warnaco, she reduced the company's debt by 35% within four years.
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
The ''Fortune'' 500 is an annual list compiled and published by ''Fortune'' magazine that ranks 500 of the largest United States corporations by total revenue for their respective fiscal years. The list includes publicly held companies, along ...
for the first time in nearly 30 years.
''
Time Magazine
''Time'' (stylized in all caps) is an American news magazine based in New York City. For nearly a century, it was published weekly, but starting in March 2020 it transitioned to every other week. It was first published in New York City on Mar ...
'' 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
A golden parachute is an agreement between a company and an employee (usually an upper executive) specifying that the employee will receive certain significant benefits if employment is terminated. These may include severance pay, cash bonuses, s ...
. 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
*
Seaside Institute
The Seaside Institute in Bridgeport, Connecticut is a Richardsonian Romanesque rock-faced granite, brick, brownstone and terracotta building designed by Warren R. Briggs and completed in 1887 at the corner of Lafayette and Atlantic avenues, not ...
References
Further reading
*
Woman's Hand-Book in Health and Disease' By Lucien Calvin Warner, via
Google Books
Google Books (previously known as Google Book Search, Google Print, and by its code-name Project Ocean) is a service from Google Inc. that searches the full text of books and magazines that Google has scanned, converted to text using optical c ...
, published in 1886.
*
Talks upon practical subjects' edited by
Marion Harland
Mary Virginia Terhune (née Hawes, December 21, 1830 – June 3, 1922), also known by her penname Marion Harland, was an American author who was prolific and bestselling in both fiction and non-fiction genres. Born in Amelia County, Virginia, sh ...
, with chapter contributions from Lucien C. Warner, M.D.
"The Nerves" and Ira De Ver Warner, M.D.
"Clothing"; via Google Books, published in 1895.
*
Personal memoirs of Lucien Calvin Warner', By Lucien Calvin Warner, via The
Internet Archive
The Internet Archive is an American digital library with the stated mission of "universal access to all knowledge". It provides free public access to collections of digitized materials, including websites, software applications/games, music, ...
, published in 1915.
External links
Warnaco Warnaco Group, Inc. corporate website
{{Phillips-Van Heusen
Companies formerly listed on the New York Stock Exchange
Companies established in 1874
Clothing retailers of the United States
Clothing brands of the United States
History of clothing (Western fashion)
Lingerie brands
Underwear brands
Swimwear manufacturers
1874 establishments in New York (state)
2013 mergers and acquisitions
Defunct manufacturing companies based in New York City