The Warnaco Group announced additional moves last week to “lower costs and improve efficiency”, including the closure of all remaining Speedo Authentic Fitness stores and the sale of the White Stag trademark to Wal-Mart. Warnaco also sold its Honduran production facility for intimate apparel and will downsize its European operations.
While the company will close the last of its 45 SAF stores in the U.S., they plan to continue to operate the Speedo consumer direct e-commerce site. The Speedo Authentic Fitness retail stores account for less than 5%of overall sales of Warnaco's Swimwear Group, which reported sales of $38.6 million in the most recent quarter and $300.9 million in the nine-month YTD period.
The company said that the store closures will enable the Swimwear Group to “focus on maximizing organic growth and product extension opportunities” in the wholesale business, which saw approximately 20% growth in the 2003 nine-month YTD period.
Warnaco also announced that it has entered into an agreement to sell its White Stag trademark to Wal-Mart Stores. Wal-Mart had licensed the trademark on an exclusive basis from Warnaco since 1993. Warnaco will continue to design the White Stag women's sportswear line at Wal-Mart's expense through 2006.
Under the terms of the sale agreement for the White Stag trademarks, Wal-Mart will pay Warnaco $10 million in cash and an additional net present value of $18.7 million (at a discount rate of 8%) in cash over the next three years. Warnaco will continue to design the White Stag women's sportswear line at Wal-Mart's expense and will receive design incentive fees of no less than $3.6 million in the aggregate through 2006.
