California Apparel News

Twelve floors below the new Speedo headquarters, located in a downtown Los Angeles high rise, the sound of gunfire ricochets off the concrete walls in this urban territory.

It’s not real gunfire, mind you. Just the fake kind used in movies and television shows.

Along the asphalt road in front of the building, thick, dark electric cords snake along the blocked-off thoroughfare to power lights and generators. Cameras roll as a rag-tag crew clad in black jackets films an episode of “Knight Rider,” a television series broadcast on NBC.

“There’s always some excitement around here,” observes Paula Schneider from her office, which is hundreds of feet above the action.

Schneider, president of Warnaco Swimwear Group, which designs and makes Speedo for North America and Calvin Klein swimwear, is in her sleek, contemporary office, with its neat lines, dark-gray carpet and new blonde furniture accented with red chairs. A fragrant candle burns on her rectangular meeting table. Piles of CDs with soothing music are stacked on the shelves next to her CD player. Photos of her two teen-aged daughters and other family members line her bookshelves.

The view from this urban aerie is spectacular—skyscrapers, ribbons of busy freeways, the famous Hollywood sign and a hint of the ocean on the horizon.

“To us, it is like nirvana to be able to look out a window,” Schneider says, enjoying her view, a contrast from the bunker-like headquarters Speedo used to occupy until November. “It just stimulated the creativity. It is like a new day for us.”

In the past year, Warnaco’s swimwear group has gone through a major transformation. After spending 16 years working out of a boxy warehouse of a building in the city of Commerce, an industrial neighborhood east of downtown Los Angeles, Warnaco vacated the 450,000-square-foot space and moved to a classier corporate neighborhood in the heart of downtown Los Angeles.

The new digs are in a 20-acre complex known as the Los Angeles Center Studios, the only independent movie studio in the downtown area. The complex houses six sound studios to film TV shows and movies. It underwent a major renovation in the late 1990s after Unocal, which built the high-rise in 1957 to accommodate 1,500 workers, relocated to El Segundo, Calif., a Los Angeles suburb closer to the ocean.

Warnaco is the latest addition to the center’s corporate world, occupying the top two floors of the towering structure, which is made of dark gray glass and sleek steel. With 38,000 square feet, the swimwear group’s office inhabits less than one-tenth of the space of the company’s old headquarters, which came with an outdoor swimming pool.Slim fast

Just as Warnaco’s offices have slimmed down in size, so has the company’s stable of swimwear lines. Until recently, Warnaco, a division of The Warnaco Group Inc., a publicly traded apparel company in New York, was not only making the Speedo label but also designer labels such as Cole of California, Anne Cole, Catalina, Michael Kors, Ocean Pacific, Nautica and Calvin Klein. Last year, Cole of California, Anne Cole and Catalina were sold to the In Mocean Group in New York for $26 million. Michael Kors is being manufactured by New York–based Swimwear Anywhere Inc., and the Ocean Pacific label was purchased in 2006 by the Iconix Brand Group, which has snapped up a number of well-known labels such as Mossimo, Joe Boxer, Rampage, Mudd, Badgley Mischka and Danskin.

The only designer label Warnaco kept was Calvin Klein, which also is designed and managed out of the Los Angeles office.

“There were quite a few labels, and the idea was we would refocus on the power brands, and those power brands were Speedo and Calvin Klein,” said Schneider, who came to Warnaco in 2006 as president of the designer swimwear division. She worked with Roger Williams, president of the Warnaco Swimwear Group, until his retirement in early 2007.

Schneider arrived at a time of great excitement and great turmoil. Speedo was gearing up for the 2008 Summer Olympics in Beijing, with heavy money riding on Olympic swimmer Michael Phelps, who would be wearing Speedo’s new LZR Racer suit in the games.

In addition, reorganization of the company was in the wind, which is one of the reasons Williams thought Schneider, a seasoned apparel executive who once headed Laundry by Shelli Segal under Liz Claiborne Inc., would be an asset to the company.

“She had experience as president of an apparel division which needed a lot of reshaping to increase profitability and grow, both of which she did,” the former executive, now retired in the Philippines, wrote in an e-mail. “The other trait I saw in Paula was her enthusiasm for her work and how high she rated compassion for those around her. Tough people decisions are a way of life in corporate America, but being able to execute through those with respect for others is what often makes the difference between a leader and a boss.”

Schneider, named president of the Warnaco Swimwear Group several months after Williams’ departure, had to exercise those people skills when she announced scores of layoffs in the fall of 2007 after the decision was made to sell off most of the designer labels. But what made this even more difficult was that Schneider, now 50, had been diagnosed with breast cancer. “I came in and announced layoffs on Sept. 16 and 17, announced to the staff that I had breast cancer on Sept. 18, and went into chemo on Sept. 19,” she recalled.

Schneider worked on the days she felt good and stayed home when the chemo overwhelmed her. Her treatments ended in January 2008, allowing her to concentrate full-time on expanding the company’s two swimwear brands, overseeing the launch of the LZR Racer suit and moving the corporate headquarters to downtown Los Angeles.

The LZR Racer, introduced in February 2008, grabbed headlines with its amazing technology and space-age design. The suit is only made in one factory, located in Portugal, and it has three sections with seams that are ultrasonically welded. It was developed in association with NASA, Ansys Inc., which provided fluid-flow analysis software, and the Australian Institute of Sport.

Phelps won gold medals in eight events, a record, while wearing the one-piece suit, which clings to a swimmer’s body like skin and reduces drag in the water. Twenty-nine of the 32 swimming gold medals in Beijing were won with the help of the LZR Racer suit, said Craig Brommers, Speedo’s vice president of marketing.

He estimates the company will make about 80,000 of the suits this year, a small number compared with Speedo’s annual production of about 6 million swimsuits.

The LZR Racer, whose various styles retail for between $450 and $600, has turned into a must-have commodity for serious swimmers. At the Lane Four Swim Shop in Austin, Texas, owner Hector Inga said he hasn’t been able to stock enough LZR Racer suits. “We’ve sold maybe 30 to 40 suits and probably could have sold more, but Speedo had a tough time delivering them,” he said. “They are all high-level swimmers and high school swimmers who want them, hoping it will shave enough time off their record to get them into college on a swimming scholarship.”

The suit, however, is not easy to get into. Inga said it takes about 20 minutes for his sales staff to help male swimmers squeeze into a jammer suit. It takes about 30 minutes for women to cram themselves into a longer suit.

Inga is a long-time Speedo customer. About 60 percent of his suits are Speedo, and the other 40 percent are Tyr, Nike and a few other brands. But Tyr has been gaining territory with its price points, which are $3 to $8 cheaper than Speedo’s.

“If you get 200 kids on a team, and there is a $3 difference on the price, that is $600 less,” Inga said.

Swim teams are Speedo’s No. 1 consumers, Schneider said. The company also has about 40 percent of the lifeguard business, she added.Olympic boost

Phelps’ star power has helped boost everyone’s swim business, whether for Nike, Tyr or Speedo. Schneider noted that swim-team memberships jumped 18 percent after the Olympics. “There [is] a tremendous amount of new young people in the sport,” she said.

Despite all the Olympic hoopla, Warnaco’s swimwear-group revenues are up only 2 percent to $213.8 million during the first nine months of 2008, compared with the same period last year. Part of that can be attributed to the fact that Warnaco no longer has the same long list of swimwear labels it once had in 2007.

Other divisions of the parent company, however, have grown their sales aggressively during the same time. The sportswear group, which makes Calvin Klein jeans, saw its revenues jump 25 percent to $866.3 million and intimate-apparel revenues, which include Olga and Warner’s underwear, climbed 20 percent to $540.6 million.

Going forward, Speedo hopes to continue its successful ride with Michael Phelps’ star power. The swimmer has been on a whirlwind tour promoting himself and all his sponsors. His face is on cereal boxes, TV commercials and magazine covers. He hosted the comedy show “Saturday Night Live,” and Sports Illustrated named him the “Sportsman of the Year.”

After eight years together, the company’s sponsorship with Phelps sunsets at the end of 2009. But Brommers is working on seeing that renewed. “We are both working on extending the relationship into the future,” said Brommers, who declined to divulge how much Speedo pays Phelps to be the voice of Speedo. “Michael is the most well-paid Olympian on the planet,” he said, “and you can assume we contribute to that.”

Speedo, however, did make public that it gave Phelps a $1 million bonus for winning eight gold medals at the Beijing Olympics, events that Schneider and Brommers both watched happen. The swimmer took that bonus and donated it to the Michael Phelps Foundation to encourage youth swimming.

Going to the Olympics is one of the perks of Schneider’s job. “I’ve said I’ll have to plan my career in terms of the Olympics,” the swimwear president said. “We’re shooting for London in another four years.”