Calvin Klein vs. Warnaco

Calvin Klein vs. Warnaco

Strongest points raised by CK group:

1. Quality of merchandise manufactured by Warnaco was not up to CKI standards. Cheap quality jeans degrade the Calvin Klein image.

2. The distribution channels used by Warnaco, such as warehouse clubs, violated contractual obligations and did not live up to the prestige of Calvin Klein. Regardless of sales increase, any retail distribution unapproved by CKI is a breach of contract.

3. Warnaco took advantage of a onetime deal with Costco and continued to sell to unapproved retailers.

4. Calvin Klein is CKI’s sole priority whereas Warnaco has many other entities and is overextended; not to mention in debt.

5. Warnaco has lost previous licenses due to poor quality, i.e. Dior.

Strongest points raised by Warnaco group:

1. The agreement views both past and present channels appropriate for distribution. Warehouse clubs fall into this category.

2. Calvin Klein jeans continued to receive satisfactory customer approval and were the best selling jeans in the junior department.

3. Warnaco claims Calvin Klein delayed design approvals and missed deadlines.

4. Calvin Klein has put out irresponsible and offensive advertising. Advertising was called “Kiddy Porn”; diluted the brand name and involved FBI investigation.

5. Calvin Klein reaped royalties for years before issuing a public complaint. Defaming Warnaco is a selfish attempt to rebrand the Calvin Klein name.

At the time, I selected the Calvin Klein group as my winner for the debate; even though the Warnaco group provided astounding statistics of sales growth and brand loyalty. In spite of sales, Calvin Klein lost consumers due to poor quality goods and misleading prices; resulting in a tarnished image for the company. Warnaco and Calvin Klein share a partnership in which both parties must reach an agreement to enhance the company. Though Warnaco is as much of an owner of the brand trademark and has invested millions...