NEW YORK -- Wal-Mart, in its latest move to build a potentially huge branded apparel business, has entered into preliminary negotiations with AC Holdings to create "some kind of deal" with the Faded Glory brand.

John Lupo, senior vice president and general merchandise manager of Wal-Mart, said the mass retailer and AC Holdings, which owns Faded Glory, are "talking" about a deal that would make Faded Glory essentially an exclusive brand for Wal-Mart.

Wal-Mart, based in Bentonville, Ark,. recently stated its intention to become more brand-oriented in apparel.

Wal-Mart's talks with Faded Glory come on the heels of last week's news that the retailer is preparing to launch a Kathie Lee Collection built around television personality Kathy Lee Gifford. Wal-Mart also said it will add the Catalina label for sportswear and activewear. Both the Kathie Lee Collection and Catalina will be introduced at Wal-Mart this spring.

Charles Dayan, chief executive officer of AC, said Faded Glory would become exclusive for Wal-Mart, beginning with next year's back-to-school season. Current licensees would be released from their contracts, he said, and all sourcing would be done through the store.

Lupo said exclusivity had not been agreed upon yet, but did say that if that happened, Wal-Mart would source the brand. He emphasized that the Faded Glory talks are "in the concept phase."

"It's still too early to say what this will or will not be," said Lupo. But he added, "As far as women's apparel, we don't have anything yet in the denim and denim-related category."

Faded Glory, a fully licensed denim and casual sportswear brand here, was being repositioned for the mass market from its moderate-price department store distribution. Faded Glory is a brand from the Sixties that was acquired and revived 2 1/2 years ago by AC, whose principals are Charles and Avi Dayan.

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