The Warnaco Group, Inc. entered into an agreement to sell its Lejaby business to Palmers Textil AG for approximately €32.5 million (approximately $47 million) in cash and €12.5 million (approximately $18 million) in an interest free note due December 31, 2013. The sale leaves Warnaco with only the Speedo and Calvin Klein brands in its swimwear business.

Terms of the transaction include a customary working capital adjustment and the provision of temporary transition services to Palmers Textil AG. The company notes that the sale of Lejaby is subject to customary closing conditions and expects the sale to be concluded during the first quarter of fiscal 2008.

Commenting on the transaction, Helen McCluskey, Warnaco’s Group President of Intimate Apparel and Swimwear stated, “We would like to thank the Lejaby team for its contributions over the years. Under Palmer's ownership, Lejaby will continue to be operated from Lyon, providing continuity to its core employees. In the future, we believe that, under Palmer’s ownership, Lejaby will benefit from new opportunities. Today’s announcement completes the strategic realignment we announced in November, including the company’s exit from all owned manufacturing. We believe Warnaco is now well positioned to focus our efforts on our brands and businesses with the greatest long-term potential for Warnaco and its stakeholders.”

“We are thrilled by the acquisition of the Lejaby business. We believe adding Lejaby, an iconic and well established brand, to our portfolio will surely enhance our future growth opportunities,” commented Thomas Weber, CEO of Palmers Textil AG.