Apparel maker The Warnaco Group Inc revealed late yesterday (3 December) that it is in talks with Palmers Textil AG over the sale of its Lejaby intimate apparel business.

The two companies have signed an exclusivity agreement, but Warnaco stressed that although negotiations are proceeding there are no guarantees that a definitive contract will be signed.

However Austrian-based Palmers has already informed Warnaco that if a deal is reached it intends to continue operating Lejaby out of its headquarters in Lyon, France.

Palmers is one of Europe's largest lingerie and underwear groups, selling its lines through 297 owned and franchised shops in Austria, Germany, Central and Eastern Europe.

Since 2004 it has been owned by two institutional investor groups, and employs 900 people.

The talks follow a decision by Warnaco in September to explore strategic alternatives for its Lejaby intimate apparel and related swimwear business and focus instead on brands like Calvin Klein and Speedo that it believes will deliver sustainable long-term growth.

Warnaco is also trying to sell nearly all of its designer swimwear brands such as Catalina, Anne Cole and Cole of California, and intends to exit all of its private label swimwear businesses by 30 June 2008.
Going forward, it plans to focus on expanding its direct-to-consumer business and increase its international presence.

In November Warnaco, which also makes apparel under the Chaps and Nautica brands, reported a 70% slump in third quarter profit as higher sales were offset by the cost of restructuring its swimwear business.

The company said net income dropped to $4.4m from $14.5m in the same period last year, while sales were up 13% to $474.8m.

Warnaco had previously tried to sell Lejaby in 2001 but failed to reach its asking price.

Lejaby, France's second leading lingerie maker behind Chantelle, employs around 600 staff and posted a 2006 turnover of EUR71m. It has four plants in France turning out mid to top of the range underwear and also has production centres abroad including Tunisia and south-east Asia.