California Apparel News

With Roger Williams at the helm, Authentic Fitness sails toward new opportunities.

When apparel giant The Warnaco Group Inc. declared bankruptcy in 2001, industry veteran Roger Williams set out to get the company back on track, starting with its $305 million swimwear division, Authentic Fitness Corp. First, however, he had to restructure the company’s operations and design groups.

Warnaco emerged from Chapter 11 last February, and Authentic Fitness—which produces swimwear for Speedo, Catalina, Cole of California, Anne Cole, Sunset Beach and Oscar de la Renta—continues to make headway in the market. The company recently acquired the license to produce swimwear for Nautica and Calvin Klein’s CK swimwear worldwide.

California Apparel News Manufacturing Editor Claudia Figueroa recently sat down with Williams to discuss survival techniques.

How did you come to Authentic Fitness?

The Warnaco Group retained my consulting practice in 2001. I worked with Authentic Fitness Corp., helping them restructure certain aspects of the business. Shortly after, Tony Alverez, the acting chief executive officer and chief restructuring officer of Warnaco [who stepped in after the former chief executive officer Linda Wachner left the company], asked me to join Authentic Fitness. I accepted that day. It was a great opportunity to grow great brands. I already knew the company because I had been the executive vice president and chief financial officer at Warnaco from 1986 to 1990. When Warnaco decided to sell Authentic Fitness in 1990, I bought Speedo with Linda Wachner and was here on the West Coast for two years along with the management of the company. [Warnaco reacquired Authentic Fitness in 1999.] I knew Authentic Fitness’ brands and loved them. From late 2001 to now, I have been a Warnaco employee as the president of Authentic Fitness.

For a while, there was a rumor going around that executives from Warnaco wanted you to move to the East Coast and serve as company president.

There were a lot of rumors, but that one is not true. There was a search for a president of Warnaco, and they hired Joe Gromek to be president. I was not a candidate, and I did not want to be a candidate. I love what I do for a living—I love the swimwear business, and I love California. I think everybody at Warnaco knows that, too. I’m flattered by anybody who believed that, but it’s not true.

A few years ago, Authentic Fitness’ parent company, The Warnaco Group Inc., declared bankruptcy, and your company had to make many changes in order to keep afloat. Now, Warnaco is out of the red. What was Authentic Fitness’ role in the reconstruction process?

Warnaco had great brand names, but its problems were lack of some key management and too much debt. The new Warnaco executive team, realizing this, began the process of hiring three group heads. They hired Tom Wyatt to run the intimates group, John Kourakos to run the sportswear group and me to run the swimwear group [known as Authentic Fitness]. Authentic Fitness had the job of fixing any operational problems and making sure to focus on growth opportunities. We’re at the point now where people perform at the highest level in terms of customer service and deliveries to our customers.

From an operating-group standpoint, we had tremendous support from Warnaco, which funded additions to our design and marketing efforts. Susan Guensch is the Speedo division president and has been with the company for 19 years. She is the reason the company has developed and grown over the years. In the designer division, we recruited Kathy Van Ness. With Van Ness, we began to update our designer brands, which, quite frankly, we thought had become a little dated. In addition, we insured that the price points were right for the target consumer. We introduced Anne Cole Locker, which is swimwear for the active lifestyle—you can wear it as swimwear or active leisurewear. It has been a tremendous success at retail. For Anne Cole, overall, there was an increase in sales of 35 percent between 2002 and 2003.

Now that the company is no longer in the red, do you have plans to expand Authentic Fitness’ offerings?

Recently, we’ve added two significant licenses: Nautica and Calvin Klein. We also continue to expand our product offerings in the companies we have, including the Speedo division, which is going after the missy woman [category]—not racing swim or aquatic swim but real fashion, which we call “beach.” In girls’, we added a 4 to 6 line. In boys’, we expanded to surfinspired looks. In men’s, we added waterproof pockets to all our shorts. In the accessories area, we expanded the offering of footwear and added new watches, new bags, a line of towels and many more products. In the designer division, we brought back the junior brand Sunset Beach and added the Nautica license for introduction in July 2003 and the Calvin Klein and CK license for July 2004.

How did the restructuring process affect the design direction of your brands?

It really was to take all of our brands and identify the channel we were going to service, whom that customer was, and what she liked and didn’t like about our product and to make sure that we were doing the things that make brands successful. We adjusted all the designs in the designer area. For example, Anne Cole has always been known for the sensuality she puts into the garment, and she’s done a tremendous job of doing that over the years. We didn’t want to change that; we just wanted to make sure that we were doing it at the right price point and provide more opportunities for her and her team to do that. So those were the kinds of changes to things that we made.

Recently, Authentic Fitness ended a licensing agreement with Ralph Lauren for swimwear.

We ended a licensing agreement amicably with Ralph Lauren. The reason that we did that was because it was not as profitable for us as we thought it could be. Obviously, it is a great brand and a great name, but the way our contract was structured, it wasn’t as profitable as it could have been. So we both decided it was time to end the relationship. Warnaco stills works very closely with Ralph Lauren in the sportswear group, where it has the license to produce Chaps sportswear.

Swimwear manufacturers, beset by more than two years of industry weakness following the events of Sept. 11, began to express cautious optimism about swim’s Cruise 2003 season. But it seems to have gotten off to a slow start this year. What’s slowing it down?

The weather. Certainly, this year has been one of the most difficult years weather-wise. It was actually just last week that the weather broke for the first time. And with the complexities and turmoil of what’s happening in the world around us, to have poor weather didn’t make for the greatest swimwear year. Despite those conditions, we are having a tremendous year. The weather has turned, so many retailers across the nation are seeing a big pop in sellthroughs. We’re just hoping for another few weeks of warm weather here. Most of the sales from last week are more than double what they were previously.

What is your retail strategy?

We’re kind of a unique swimwear company in that we’re in every channel that you can be in. Many of our brands are sold in mid-tier department stores, such as Kohl’s, Sears and JCPenney. Brands such as Anne Cole, Cole of California and Speedo are sold in better-department-store channels. Speedo is also in all of the major sporting-goods stores. Additionally, our brands are sold through specialty swim shops across America. That would include all Authentic Fitness brands except Catalina, which is sold exclusively at Wal-Mart. We’ve touched all channels of where swimwear is sold, and we do some private-label business.

What is Authentic Fitness’ sourcing strategy, and how does the company keep production costs low?

Like most apparel companies, we find it hard to produce in the United States and be competitive. Several years ago, Warnaco built three state-of-the-art sewing facilities in Tlaxcala, Mexico, about two hours from Mexico City. We have grown those facilities to 4,000 workers, which handle all of our women’s and girls’ production. The balance of our requirements we now have moved to outside of the United States, mainly Asia, with the exception of goggles, which we produce in our own injection-molding plant in Canada. Over the past two years, the company’s offshore production has increased from 20 percent to 40 percent.