A Platform for Consistently Positive Performance An Interview with Joseph R. Gromek, President and Chief Executive Officer, The Warnaco Group, Inc., New York

EDITORS’ NOTE Joseph Gromek tations. In general, our brands ented employees in key positions has served as president and CEO and our business are well posi- within the company? of Warnaco since April 2003. A tioned for continued growth. Candidly speaking, I was pleasantly fashion industry veteran, he Are you optimistic surprised by the quality of people within served as president and CEO of for growth in all of your the company. I was expecting to have to Brooks Brothers, Inc., from 1996 business groups? do a massive overhaul. However, once we to 2002, and held senior man- We believe we have or- empowered our team, by and large, they agement positions with Saks ganic growth opportunities in responded appropriately. Other than Fifth Avenue; Limited Brands, each of our business segments. recruiting a few phenomenal executives Inc.; and Ann Taylor Stores Cor- Intimate apparel is a part of our from the industry, for the most part, we poration. He is the chairman of company heritage, and the have been able to promote from within, the board of Volunteers of Amer- charge is being driven by Calvin and the results have been very gratifying. ica and a member of the board Joseph R. Gromek Klein underwear. We see a How do you define your role as of governors of the Parsons steady growth in both our the president and CEO of Warnaco? School of Design in New York. women’s and men’s Calvin Klein under- I spend a lot of time developing wear businesses. I’m also pleased with the strategies for the company. Also, in order COMPANY BRIEF Headquartered in New recent performance of the Warner’s brand. to be successful in the apparel industry, York, The Warnaco Group, Inc., (NAS- It’s one of the drivers of top-line revenue you have to get the product right. So I DAQ: WRNC), is a leading apparel com- growth, the retailers are experiencing spend time and energy on working with pany engaged in the business of designing, strong sell through, and the new launches our people to develop the best product. marketing, and selling intimate apparel, are all doing quite nicely. Helen We’ve hired additional design staff to help menswear, jeanswear, swimwear, men’s McCluskey, the president of the intimate us get “fashion right.” Our mission is to and women’s sportswear, and accessories apparel group, and her product people make terrific products and make money under such owned and licensed brands as really have us going in the right direction. selling them. Warner’s®, Olga®, Lejaby®, Body Nancy In our sportswear businesses, we’ve What made the opportunity to Ganz™, Speedo®, Anne Cole®, Op®, seen dramatic improvement in profitabil- lead Warnaco so appealing to you? Ocean Pacific®, Cole of California®, and ity. While these brands have always had a I thought Warnaco’s portfolio of Catalina®, as well as Chaps® sportswear respectable revenue base, they weren’t as brands was not being leveraged to its full and denim, J. Lo by Jennifer Lopez® lin- profitable as they could have been. How- potential. I hoped we could take the com- gerie, Nautica® swimwear, Michael Kors® ever, right now, sportswear’s profitability pany’s separate and distinct business units swimwear, and Calvin Klein® men’s and is running neck and neck with intimate – intimate apparel, sportswear and women’s underwear, men’s, women’s, apparel. Calvin Klein Jeans has come a swimwear – and meld them into one pow- junior women’s and children’s jeans, and long way, and we believe Chaps repre- erful corporation, and leverage that power women’s and juniors’ swimwear. For fis- sents our single largest revenue-growth to wow our retailers with our brands. To cal 2004, the company reported net rev- initiative and with solid profitability. accomplish this, we moved most of our enues of approximately $1.42 billion and We are the largest swimwear maker operations into our building on Seventh net income of $42.5 million. in the world, with what we believe to be Avenue in New York, and now we can take the best brands in the world. Our license, our retailers through eight floors of our After a troubled patch in the com- in perpetuity, for Speedo in North Amer- offices and showrooms. People are just pany’s history, are you confident that ica gives us the single largest penetration amazed with the energy and power that Wall Street now understands the path in competitive swimming, with a 66 per- we generate here. I thought if we could you have started Warnaco on? cent market share. We’ve added three accomplish that unification, we would We have made excellent progress in new brands to our portfolio for 2006: have a good chance at success. And it has assembling and developing a portfolio of Calvin Klein Swim in the U.S., Michael worked in our favor. powerful brands and the organization, Kors around the world, and Ocean Pacific, What are your other key priori- infrastructure, and platform for consistent a brand which we acquired in 2004. We ties for Warnaco in the future? performance. We believe our accomplish- still own two state-of-the-art manufactur- We have to continue to develop and ments have been recognized by the invest- ing facilities in Mexico where we produce ensure the continuity of our leadership. ment community. In addition, our cus- over 20 million swimsuits annually, result- We need to have an infrastructure of peo- tomer base has always been supportive, and ing in great quality at a great value. ple and processes in place to support our we are now living up to their expectations When you took over as Warnaco’s growth. We will continue to recruit the by providing them with products and ser- president and CEO in April 2003, did necessary people in order to maximize our vices that meet and/or exceed their expec- you make it a key initiative to put tal- business opportunities in the future.• 50 LEADERS POSTED WITH PERMISSION. COPYRIGHT © LEADERS MAGAZINE, INC. VOLUME 29, NUMBER 1 Marrying Functionality and Design

An Interview with Frank Tworecke, President, Sportswear Group, The Warnaco Group, Inc., New York

EDITORS’ NOTE A 30-year vet- image in the appropriate chan- eran of the retail and apparel nels of distribution – has a sig- industries, Frank Tworecke nificant opportunity to grow assumed his current post in May its business. Both Calvin Klein 2004. From 1999 to April 2004, and Chaps have a good her- Tworecke served as president itage. We believe we have a sig- and COO of Bon-Ton Stores, and nificant opportunity to build he has also served as president these two brands in the mar- and COO of Jos. A. Bank. In ketplace. addition, he has held senior What demographics do management positions with your brands target? MGR, Inc.; Rich’s Lazarus Gold- We appeal to a broad cus- smith; and John Wanamaker. Frank Tworecke tomer base in both Calvin Klein Jeans and Underwear, as Are you pleased with the performance well as Chaps Sportswear. In Calvin Klein, of Warnaco’s sportswear brands? we focus on the 25- to 40-year-old fashion Yes, we’ve made great strides in a customer who has a modern, sexy view- number of different brand-positioning ini- point. In Chaps, our target is also on the tiatives. First and foremost, the manage- 25- to 40-year-old but one whose fashion ment team is clearly focused on delivering quotient is traditional with a current, Do you think Wall Street now the best quality product, with the aesthet- updated point of view. has an effective understanding of ics that support brand image, supported What are your key initiatives for where Warnaco is headed? by multi-faceted marketing campaigns. the sportswear division for the near Our management has communicated Second, we have built an exceptional future? timely and effectively with Wall Street. We group of senior executives that support To move forward and gain market have consistently outlined our strategic and lead their teams in the implementa- share and to continue to grow our busi- initiatives with the street and have consis- tion of these initiatives. ness to maximize the opportunities that tently delivered on results. We are getting Did you have to bring on many exist worldwide. We are in a competitive recognition today for our current market new people when you took up your business – we can’t become complacent position, as well as our potential. current position with Warnaco? with design, distribution, marketing, or Is it a challenge for you to keep We had a strong talent pool of execu- sourcing. Specifically, we are focusing on your eyes on the big picture, and not tives at Warnaco when I arrived. Where growth and market share gains in our become heavily immersed in the de- necessary, we supplemented the existing existing distribution channels and expand- tails of running the business? management team with new personnel. ing our owned retail store initiative by pro- My role is not to pick the color of a Where does Warnaco distribute viding innovative, fashion-right product. T-shirt to be put in our line. Rather, I have its sportswear brands? Since you joined Warnaco in May a much more strategic role, determining Calvin Klein Jeans are sold in depart- 2004, have things progressed the way how to position the brand and market our ment stores and specialty stores in North you expected they would? products. On the other hand, retail is and South America. Chaps Sportswear is Retail is a business of change. The detail, and I get involved to levels that are distributed in both the department store progress made met my initial expecta- necessary to accomplish our objectives. and mid-tier channel in North and Central tions and we also responded successfully My goal is to keep an appropriate balance America. We own the Calvin Klein trade- to the unexpected shifts in the market- between tactics and strategy. mark for underwear, intimate apparel, and place, such as department store consoli- Are you ever satisfied? sleepwear, which is sold globally in dation. We have shifted our perspective Yes, at times. For instance, with a department stores, specialty stores, and to the design function. We don’t just project well executed, an individual pro- direct to the consumer through owned make “pretty” things. The more we moted from within, a creative marketing and licensed retail stores as well as marry functionality with design, the promotion effectively implemented, through our e-commerce site CKU.com. more powerful the product line and the delivering bottom line numbers, etc. How do you position your brands easier it is to communicate to our cus- There are many times when I’m satisfied in a competitive sportswear market? tomer that our products have substance. with great tactical implementation and A brand with good DNA – one that As a result, we’ve altered our processes results. But having said that, we have not has, over time, consistently delivered to make sure that we include function reached our full potential and, until then, quality product that supports the brand with design. I won’t be satisfied.• VOLUME 29, NUMBER 1 POSTED WITH PERMISSION. COPYRIGHT © LEADERS MAGAZINE, INC. LEADERS 51 Intimate Apparel’s Three-Level Strategy

An Interview with Helen McCluskey, President, Intimate Apparel Group, The Warnaco Group, Inc., New York

EDITORS’ NOTE In her current is the most likely to expand post as president of the inti- globally. mate apparel group since July How do you demon- 2004, Helen McCluskey previ- strate to retailers and con- ously served as group president sumers what makes War- of the moderate women’s naco brands different in the sportswear division of Liz Clai- marketplace? borne Corporation and presi- Over the course of the dent of Playtex Apparel, among last 10 years, it has certainly other marketing, operations, become more difficult to dif- and general management posi- ferentiate. There are more tions with that company. She brands competing for space spent 18 years in Sara Lee Cor- Helen McCluskey with fewer retailers, and retail- poration’s intimate apparel ers are allocating less space to divisions. intimate apparel. Fortunately, Warnaco’s How do you define your role as brands have a strong heritage. the leader of Warnaco’s intimate ap- What are Warnaco’s key intimate ap- Warner’s is one of the oldest intimate parel division? parel brands? apparel brands in the market. We can cap- A year ago, my job was to roll up my We have a portfolio of brands. Other italize on our heritage while contemporiz- shirtsleeves, dig in, determine the condi- than Calvin Klein underwear, which today ing it to make our products relevant to tion of the business and solve problems. is managed out of our sportswear group, today’s consumer. That’s what has been Today, now that we are headed in a better Warner’s is our largest domestic intimate working for Warner’s specifically. We are direction, I have more of an oversight apparel brand. It is part of the foundation also repositioning Olga, our full figure role. I have to make sure that we continue of the company and is experiencing a heritage brand. The combination of her- to have the right people in the right roles good deal of growth right now. We also itage, which gives us credibility, and inno- and that they are focusing on the right have Olga, a figure enhancement brand, vative fashion is how we can differentiate things and making progress. I also spend and Body Nancy Ganz Shapewear, which our brands. a lot of time communicating with the round out the U.S. core intimate apparel Do Warnaco’s intimate apparel broader scale organization about our divi- business. We also own Lejaby, a French brands target a specific market? sion’s status versus our objectives and our fashion brand. It is currently the number- We have a very diverse portfolio of future plans. So, in the past year, I have two premium-priced brand in France and brands. Lejaby has a high-end niche mar- seen my role evolve from one that was enjoys worldwide distribution. While ket. Warner’s and Olga appeal to a much focused on managing the specifics of the Lejaby is largely concentrated in Europe broader percentage of the population. business into one that is focused on man- we have recently expanded it to Asia. We have a mixture of brands that appeal aging people and communications. So the growth of Warnaco’s inti- to different consumers, and that’s what In the coming years, what will be mate apparel brands will occur on a is great about our intimate apparel your key priorities for Warnaco’s in- global basis. group. It’s just up to us, as the keeper of timate apparel brands? Yes. We have a three-level strategy the brands, to make sure that we keep Well, now that we have stabilized the for the intimate apparel group. First, we each brand focused and distinct. business and stopped the decline, we need to fully leverage our portfolio to When you joined the company in absolutely have to generate top-line broaden our reach and appeal to con- July 2004, you had already had a suc- growth. We all have to stay completely sumers. Currently, we’re competing in cessful career with many well- focused on delivering the absolute best about 17 percent of the U.S. market. So known, well-thought-of brands. What product in the marketplace and then sup- there are still segments within U.S. inti- excited you about the opportunity? port that with great marketing. Secondly, mate apparel where we can be compet- And, looking back now that you’ve we have to continue to focus on internal ing in a bigger way. Second, we will focus been here some time, has it been disciplines and execution in our cost-con- on channel diversification within the what you expected? trol measures. We made incredible U.S., looking for mass market and spe- What excited me about joining War- progress in 2005, and we cannot lose that cialty retailer opportunities. Third, we naco was the opportunity to become part of focus as we strive to grow the topline. So are looking at geographic expansion. As a new management team whose objective we have to stay buttoned up, improve our mentioned, we’re bringing Lejaby to the was to transform the company both organi- profitability, and drive top-line growth, Asian market, and have set up an office in zationally and operationally. It has proven to continuing on the path we’re traveling Taiwan. Among our U.S. brands, Warner’s be a very enriching experience so far. today.• 52 LEADERS POSTED WITH PERMISSION. COPYRIGHT © LEADERS MAGAZINE, INC. VOLUME 29, NUMBER 1 Building and Capitalizing on Strong Brands

An Interview with Roger A. Williams, President, Swimwear Group, The Warnaco Group, Inc., New York

EDITORS’ NOTE Roger Williams grow because they are new natives, such as retail outlets, but that is first served the Warnaco Group licenses with worldwide reach. not on the immediate horizon. as COO of Olga intimate ap- Speedo and OP both enjoy How are your brands differenti- parel, group president of War- strong brand recognition. His- ated in the marketplace? naco retail, and EVP and CFO torically we have grown Speedo Each of our brands has unique char- of Warnaco from 1982 to 1990. through product extensions, acteristics that are obvious to their ulti- Prior to assuming his current adding men’s water shorts, mate consumers. For instance, the Anne post in May 2002, Williams women’s aquatic fashion swim- Cole line targets a female customer who owned his own consulting firm, wear, and children’s swimwear wants both a sexy suit to wear on vacation which he founded in 1998. to the core performance swim- with her husband and a more modest, yet From 1994 to 1997, he served as wear business. In the equip- very attractive suit that she can wear at the executive vice president of ment area, Speedo has grown pool with her kids. The Michael Kors line Guess?, and prior to that as Roger A. Williams to a 65 percent share of the is very fashionable and shows Michael executive vice president of goggle and other related water- Kors’ influence in its design, while Speedo Donna Karan from 1992 to 1994 and exercise equipment markets in North Amer- is a sports-oriented brand. We do not buy COO of Authentic Fitness Corporation ica. While Speedo continues to grow in the or license brands that compete directly from 1990 to 1992. swim categories, we are also expanding with one another, insuring they each have beyond the pool and beach. We continue different design characteristics that distin- What brands fall under the Warnaco to expand the $40 million-dollar footwear guish them from their competitors. swimwear umbrella? business we started three years ago. How does technology affect the The Warnaco swimwear group is the Activewear is another area we are expand- design of your swimsuits? largest swimwear company in the market, ing and it should also be a key driver of Technology has led to innovations, with distribution in all channels – from Wal- growth for us. We’re leveraging the perfor- most notably in the design of our fabrics. Mart and Target to mid-tier retailers like mance and fashion elements of the Speedo For instance, the Speedo line for the last Kohl’s, Sears, and JCPenney, and from brand to extend our range of products. OP Olympics was constructed of what we call sporting goods and specialty stores to high- offers growth for us in swimwear as well as Fast Skin, which creates less drag in the end department stores. Our biggest brand young men’s and juniors apparel both water than the human body. The con- is Speedo – an iconic name and number domestically and internationally. struction of the Fast Skin suits is also aero- one in the sports swimwear field. With Does Warnaco distribute the dynamic and the suits themselves are men’s, women’s, and children’s lines, Speedo brand globally? made specifically for the stroke the swim- Speedo has a tremendous amount of brand Warnaco has the license rights for mer is using. Speedo XD suits, introduced recognition and visibility in the market. It’s Speedo in North America and the Car- this year, are coated with a substance that the number-one swimwear brand in the ribean Islands in perpetuity, handling all doesn’t absorb water. So they dry a lot world, with a 40 percent market share in the design, manufacturing, distribution, quicker, move faster in the water and the women’s and a 50 percent market share and sales. We also collaborate with Pent- keep the swimmers warmer. In our Anne in the men’s sporting-goods channels. land International, which owns Speedo Cole line, we have Suddenly Slim suits, In the department store channel we International, on worldwide sports mar- which are constructed in a way to have Anne Cole, Nautica, Michael Kors, keting and product technology. The fun enhance a woman’s figure. Those are and Calvin Klein. Our Calvin Klein license part of our involvement with the Speedo highly engineered garments. is worldwide, as is our license with Michael brand is our sponsorship of the world’s What are Warnaco swimwear’s Kors. We also manufacture private brands top swimmers and volleyball players. At key priorities for the years ahead? like Apartment Nine for Kohl’s, Bijou Bijou the last Olympics, more than 25 percent To continue capitalizing on our for JCPenney, and Merona for Target. Fur- of all of the medals won by Team USA growth opportunities with Speedo, Calvin ther, in the mass channel we own the were won by Warnaco-sponsored athletes. Klein, and Michael Kors worldwide. Ocean Catalina brand, which sells at Wal-Mart. In Do you sell any of your brands Pacific also presents significant opportuni- August of 2004, Warnaco acquired Ocean to the consumer via the Internet? ties. We bought that brand specifically Pacific [OP], a brand that offers swimwear We have an e-commerce site for because of its brand recognition. It was a and apparel that is sold in department Speedo, www.speedousa.com, which has tremendous asset with tremendous stores, specialty stores, and surf shops. been in existence for a number of years, growth potential. We have strategic Which of those brands present and represents a profitable segment of growth opportunities domestically and the strongest growth opportunities? our business. We are exploring e-com- internationally that fit well within the War- We have several growth opportuni- merce opportunities for our other brands, naco strategy of building and capitalizing ties. Calvin Klein and Michael Kors should as well as other direct-to-consumer alter- on strong brands.• VOLUME 29, NUMBER 1 POSTED WITH PERMISSION. COPYRIGHT © LEADERS MAGAZINE, INC. LEADERS 53