Warnaco to Sell A.B.S., Retain Swim Labels
Los Angeles-based contemporary line A.B.S. by Allen Schwartz is one of several labels set for sale by New York-based apparel giant Warnaco.
The news came on the heels of company chairman and chief executive officer Linda Wachner’s resignation on Nov. 16.
“I’m proud to have worked with all of our West Coast companies; they helped me build the best apparel brands in the business,” Wachner said. “But now the company has a certain agenda and it’s the right time for me to move on.”
Wachner built Warnaco into a multi-million-dollar business with core group brands including Calvin Klein jeans and Speedo swimwear but has been under scrutiny since the company filed for Chapter 11 bankruptcy protection in June.
Part of the company’s current restructuring plan includes shedding several brands, with A.B.S. among them.
“It’s a small shock,” said Allen Schwartz, who learned of the news during a conference call with Warnaco’s new management the morning Wachner resigned. “It was a painful eight months running the business but when new financing came in things finally started to right themselves.”
Antonio C. Alvarez Jr. will take up Wachner’s responsibilities as CEO. Alvarez, who joined Warnaco in May 2001 as the company’s chief restructuring officer, said the company is reevaluating all aspects of its sportswear and accessories division, streamlining the business into three key product groups—sportswear, intimate apparel and swimwear.
Along with A.B.S., Alvarez announced that the company has decided to sell five other divisions: Lejaby, GJM, Penhaligon, Izka and Ubertech.
Joel Weiden, a spokesman for Warnaco, said Alvarez has no intention of pulling back on the key brands that make up the 19-brand group’s core assortment and plans to keep West Coast swim labels Anne Cole, Cole of California, Catalina and Speedo/Authentic Fitness under Warnaco’s umbrella.
Weiden said the company plans to capitalize on its swim brands because in recent years their revenues have been higher than those of the other brands. For example, for fiscal year 2000, A.B.S. contributed $44.4 million from sales to Warnaco’s net revenues compared to Authentic Fitness’s $355.2 million.
“These have been very tough times with lots of uncertainties and now I think it’s a new beginning,” Schwartz said. Schwartz, who sold his company to Warnaco in 1999 for $59.7 million, said he has considered making A.B.S. a private company again but added that being part of a corporate entity was a better fit for his company.
“I like being a part of a bigger mix and I think my company has a lot to offer,” he said.
Neil Morganbesser, managing director of mergers and acquisition at Bear Sterns, the investment banking firm hired by Warnaco to handle the sale of A.B.S. , said his firm is in the process of discussing interests of potential parties and acquisitions with Schwartz. “Right now we’re open to exploring a broad range of potential buyers and their interests, such as what they’re planning to do with the brand going forward, future growth of the brand and how it relates to the design talent of A.B.S. ,” he said.
Morganbesser said the company could be sold as soon as the beginning of next year. He declined to give names of potential buyers but said the firm is looking for a company with “an understanding of what A.B.S. and Allen bring to the table in terms of quality and fashion sense and a vision that will allow them to take the company to the next level.”
