NEW YORK -- Calvin Klein Inc. is reportedly close to signing a deal with The Warnaco Group involving the sale or license of Klein's lucrative $85 million men's underwear business.
Linda J. Wachner, chairman and chief executive officer of Warnaco, and officials of Calvin Klein declined to comment.
The deal could be a bonanza for Klein and his partner, Barry Schwartz. Under a licensing agreement, Klein could potentially receive a significant upfront payment on the highly profitable business, in addition to a steady stream of royalties.
Such an injection of cash could be used to help pay back a $58 million loan Klein received from Citibank last June. The loan enabled Klein to buy back his company's bonds from entertainment tycoon David Geffen. The loan is collateralized entirely by Klein's royalty income.
Warnaco's Wachner attended Klein's spring '94 Collection show in Bryant Park
last November and at that time indicated that she had a strong interest in doing business with the designer, but she said that there were no talks under way.
Calvin Klein Inc. owns its men's underwear business outright, unlike the significantly smaller Klein women's underwear business, which is licensed to Heckler Manufacturing & Investment Group. The women's business reportedly will not be affected by the impending deal with Warnaco.
John Heckler, chairman and ceo of Heckler Manufacturing, told WWD Thursday that he anticipated no changes in his licensed Klein business.
Klein's men's underwear business has been a highly profitable mainstay of the designer's broad stable of merchandise.
With a combination of deep ad pockets, a controversial pitchman -- rapper Marky Mark -- and innovative styling, Klein has turned a basic commodity into a conversation piece.
His ads have been plastered on billboards and buses, have appeared between music videos on MTV and were even flown over the fashionable beaches of Fire Island and the Hamptons.
In an interview with WWD last summer, Klein, after a recapitalization of his business, said, "It's like the perfume. It's got all the ingredients. It's the product, the quality and the value. And the advertising has really helped. And so have the in-store shops. We command a large proportion of the underwear departments [at retail]."
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