By  on April 14, 1994

NEW YORK -- The CK Calvin Klein jeans business appears to be in play.

With the news that the pending deal with Rio Sportswear to take over the business may be on shaky ground, other jeans wear manufacturers have begun expressing interest.

It was learned that at least one of them, Pepe Jeans USA, had talks with Calvin Klein officials last week. And another highly interested company, according to reports emerging late Wednesday, is Fruit of the Loom, the Chicago-based underwear and casualwear maker that last month bought The Gitano Group.

William Farley, chairman of Fruit of the Loom, was unavailable for comment Wednesday, but Lawrence Stroll, chief executive officer of Pepe, confirmed that his company had talks with the Klein firm.

"We are speaking to Barry [Schwartz, chairman of Calvin Klein Inc.], but I don't know what the outcome will be," said Stroll.

Sources said that Klein officials, despite the meeting, do not seem interested in hooking up with Pepe. Reportedly, a different deal is in the works.

A spokeswoman for Calvin Klein Inc. said the company had no comment.

As for Pepe's interest level, Stroll, who in addition to his Pepe holdings is a principal in the company controlling the Tommy Hilfiger men's wear business, said, "Honestly, I don't know. We're very happy with the businesses we own in Tommy Hilfiger and Pepe."

Arnold Simon, president of Rio Sportswear, which had been negotiating to acquire the CK jeans license since February, couldn't be reached for comment Wednesday. On Monday, Simon said the deal "seems to be moving ahead."

A letter of intent was signed in February for Rio to buy Calvin Klein's women's and men's jeans division for about $35 million, plus ongoing royalty payments.

Now, sources say that deal may have fizzled because Rio might not be able to finance it and because of what was described as a clash of personalities between Calvin Klein and Simon.

The Calvin Klein jeans business, a pacesetter in the designer denim field, was launched through a licensing pact with Puritan Fashions Corp. in 1978 and by 1983 -- when Klein and Schwartz acquired Puritan -- had reached sales of about $220 million. But a year of so later, the volume had declined to about $130 million.

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