NEW YORK -- Gitano Group Inc. put itself on the block Monday after an ultimatum from Wal-Mart Stores to sell the company or lose its business.
Gitano said that its principal customer -- which it did not identify -- said it could not continue doing business with the company because of its recent guilty pleas to U.S. Customs law violations.
Gitano added that the customer said it would continue buying its products from another company not related to it. A spokeswoman for Wal-Mart said that the chain has notified Gitano it would no longer be buying goods from Gitano, but declined to give any further details. According to the manufacturer's 1992 annual report, Wal-Mart is Gitano's largest customer, accounting for about 35 percent of Gitano sales.
The Customs violations occurred in 1991 and 1992 and new management has been installed since then. Robert E. Gregory Jr., chairman and chief executive officer, said Monday that the board had decided to sell the company "to preserve the value of the Gitano brand name."
Gregory said it was unfortunate that efforts of new management to rebuild the company had been undermined by the Customs situations that took place under prior management.
Gregory said the objective is to complete a transaction as soon as possible "to avoid any interruption of the $500 million in retail volume" expected to be sold under the Gitano brand in 1994.
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