Blog: Leonie BarriePVH eyeing Warnaco?

Leonie Barrie | 31 August 2006

Is Phillips-Van Heusen Corp lining up as a potential suitor for Warnaco? That’s the buzz doing the rounds at the Magic Marketplace trade show in Las Vegas a Reuters news report said yesterday. Although no-one’s commenting on such speculation – which has been persisting now since June – the rumours are apparently based on calls from shareholder Barington Capital Group LP, which owns a 5.6% stake in Warnaco and last week urged it to consider a possible sale of the whole company. The fund also suggested Warnaco should consider selling off brands and licenses that aren't central to its business, such as the company's underwear and swimwear segments.

Earlier this month Warnaco, which licenses apparel under names including Speedo, Calvin Klein Jeans and Nautica, reported a 46% slide in second-quarter profit. It has recently been hit by a series of mis-steps, including a financial restatement, missed revenue and profitability targets, and extra costs associated with the implementation of a new software system in its swimwear division.

There’s no doubt Warnaco and Phillips-Van Heusen would be a good fit, especially since Warnaco licenses the Calvin Klein brand from Phillips-Van Heusen. But there are also suggestions that a private equity buyer might also be waiting in the wings. Just look at recent examples: Bain Capital was a frontrunner in the bidding for Jones Apparel Group, and Goldner Hawn Johnson & Morrison has taken a majority stake in Allen-Edmonds Shoe Corporation. Obviously time will tell which way it’s going.


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