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Thursday, June 1, 2000 - Page updated at 12:00 AM

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Calvin Klein sues firm over sales to Costco

Bloomberg News

NEW YORK - Calvin Klein Inc. sued Warnaco Group, maker of its jeans and underwear lines, claiming the manufacturer hurt the designer's namesake brand by improperly selling clothing to Costco Wholesale and other wholesale clubs and discount chains.

Closely held Calvin Klein said Warnaco sold large volumes of regular merchandise, rather than irregular and discontinued items, to the discount retailers. Warnaco officials declined to comment on the lawsuit.

Calvin Klein also accused Warnaco of making unapproved design changes and not meeting its quality standards. The clothing-design company said it wants to terminate its agreement with Warnaco and is seeking unspecified damages.

Warnaco bought the CK underwear business for $64 million in 1994 and is licensed to make CK jeans until 2034, according to The Wall Street Journal.

The suit says Warnaco chief Linda Wachner and companies she controls "have become a cancer on the value and integrity of" Calvin Klein's trademarks. It claims that as Wachner's "business empire has deteriorated," she has embarked "on a program of discounting and mass-marketing of products" bearing Calvin Klein marks.

"It's all a matter of maintaining the integrity of the brand," said Harvey Robinson, an analyst at Chapman Co. "If you've spent years building the reputation of your brand, you certainly wouldn't want to see it in the discount houses."

The suit says that despite protests by Calvin Klein, Warnaco continued to solicit orders from discount retailers, including 1 million "units of jeanswear items" to Costco and Sam's Club in the summer of 1999.

Copyright (c) 2000 Seattle Times Company, All Rights Reserved.

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