The Warnaco Group, maker of Calvin Klein jeans and Speedo and Lauren swimsuits, filed for bankruptcy yesterday in New York, saying it was unable to service its $3.1 billion (#3.68 billion) debt amid sluggish retail sales, increased competition and legal disputes.
Led by its high-profile chief executive, Ms Linda Wachner, Warnaco was a Wall Street favourite throughout the 1990s, returning consistent profit and revenue. But its fortunes have slumped in the last 18 months as it lost market share and its brands lost favour with consumers.
Calvin Klein sued the company on the grounds that Warnaco improperly sold merchandise to discount chains. The dispute was settled in January and Warnaco retained the Calvin Klein licence which represents one quarter of Warnaco's $2.25 billion revenues, but the negative publicity affected sales.
Warnaco stock traded at $44 in mid-1998 but is now practically worthless. Last year the company reported a loss of $338.3 million, or $6.41 per share, compared with a profit of $97.8 million, or $1.72 per share, in 1999. It has trimmed its work force by 5,000 and is seeking to restructure.
The troubled company also faces class-action lawsuits from two groups of shareholders claiming that executives buoyed the stock by making false statements about the company's financial performance. The Securities and Exchange Commission is also investigating past financial statements.
