Warnaco Sells Three Key Swim Brands
New York–based apparel giant The Warnaco Group has announced the sale of the Anne Cole, Cole of California and Catalina swim brands to the New York–based In Mocean Group in a deal valued at approximately $26 million. The deal is part of Warnaco’s ongoing plan to whittle down its swim business and focus resources on its Calvin Klein division.
Warnaco operates its $389 million swim business out of the Warnaco Swimwear Group, a division based in Commerce, Calif. The sale plan, which is a bid to bolster its Calvin Klein business and enhance the $1.8 billion company’s profitability, calls for the sale of some of its swimwear brands—which include Michael Kors, MICHAEL Michael Kors and four Nautica brands—and discontinuing others, including its license to produce Ocean Pacific’s juniors swimwear, which it kept after selling the Op brand to the New York–based Iconix Brand Group in 2006. In papers filed with the Securities and Exchange Commission, Warnaco said it plans to keep only the Calvin Klein and Speedo brands in its swimwear program.
“While Anne Cole, Cole of California and Catalina are strong brands with important positions in their respective channels, their sale allows our team to focus its time and resources on those brands and businesses with the greatest long-term growth potential for Warnaco,” said Helen McCluskey, president of Warnaco’s intimate-apparel and swim groups, in a statement.
In Mocean’s first collections for Anne Cole, Cole of California and Catalina will debut for Cruise 2008 at the Miami Swim Show in July, said Zvi Ben-Haim, the company’s president. “We consider ourselves to be one of the premier manufacturers and importers in the United States. We sell to department stores all the way through to discount stores. Our only void was that we didn’t own our own major brands. With this purchase we bought three brands that run the gamut of all the levels of swimwear,” he said.
The company will focus on growing its three new brands, Ben-Haim said. “I think they are a better fit for us. We’re going to use our resources and strengths to enhance their market share,” he said.
In Mocean, which owns overseas factories and produces swimwear and apparel, employs more than 300 people worldwide.
The sale of the three brands is the latest step in Warnaco’s reorganization. Other changes at the company include shifting from owned manufacturing to outsourced production and exiting all private-labeling and designer-swimwear business by the end of June 2008. Warnaco will sell its swimwear-manufacturing facilities in Mexico and a goggle-manufacturing facility in Canada. The repositioning will rack up an estimated $30 million to $32 million in charges.
Sources tally Calvin Klein’s total business, including denim and sportswear, at $1.2 billion in net revenues. Within Warnaco’s swim division, Speedo’s swimwear and related accessories accounted for approximately 24.6 percent of the swimwear group’s net revenues in 2006. Still, the swimwear group’s gross profits overall plummeted $2.7 million in 2006.
