Executives at Burlington Coat Fact-ory are miffed about the negative publicity they are dealing with for unknowingly selling coats with designer labels glued on to less expensive ones. The Levy Group, which supplied the mislabeled Perry Ellis and Joseph Abboud men’s top coats and raincoats, has taken full responsibility.

This story first appeared in the March 10, 2009 issue of WWD. Subscribe Today.

Once alerted to the problem following a consumer-sparked investigation in Connecticut by WFSB, a CBS affiliate, Burlington Coat Factory conducted its own national investigation and is in the process of pulling the entire shipment of men’s wool coats from its stores. The Levy Group, which holds the license for Perry Ellis and Joseph Abboud, “immediately took the blame” and agreed to take the entire order back, according to Gary Graham, senior vice president of marketing for the 408-unit Burlington chain. Perry Ellis and Joseph Abboud labels had been ironed on Wal-Mart’s private label, George, and Macy’s private label, Alfani.

Graham estimated that mislabeled coats accounted for 25 percent of the shipment, or less than half of 1 percent of the chain’s total coat inventory. Rather than weed through the offerings to find the fraudulent ones, Burlington Coat Factory executives asked to return all the remaining merchandise to The Levy Group, which immediately complied.

“It’s not our job to decide which ones have problems and which ones don’t. This is not something we would check for — we buy hundreds of thousands of coats a year,” Graham said. “We’re kind of the first victim here, and Perry Ellis and Joseph Abboud are the second and third ones.”

Levy Group president Donald Levy said, “A guy working for a newly acquired division took it upon himself without the knowledge or consent of The Levy Group to put labels on those coats. We certainly don’t condone it. As soon as we heard about it, we had the coats removed from the stores.”

Perry Ellis International, an $864 million operation, is working with The Levy Group to make sure safeguards are in place to avoid such future incidents, said Francisco Hoffmann, vice president of investor relations and strategic initiatives. “We want to stress The Levy Group is being very cooperative. We believe this was an honest mistake or oversight,” he said.

However, Perry Ellis is reserving the right to take legal action, should the commitment The Levy Group made to the company not be fulfilled, Hoffmann said.

JA Apparel, which owns the Joseph Abboud trademark, also is weighing its legal options, according to Marty Staff, chief executive officer.

Shoppers who purchased mislabeled merchandise can return their coats to the chain for a full return and a 20 percent discount for a future purchase. Burlington Coat Factory will continue to do business with The Levy Group, but Graham said, “We’re exploring our options.”