Old News: Fashion Cat Fight (by Todd Porter | 06-02-2000)
Calvin Klein launched a lawsuit to break his licensing agreement with Warnaco Group WAC, which currently makes Calvin’s underwear and jeans brands. Calvin claims that Warnaco has diluted the quality of his image by selling clothes with his name on it at mass-market discounters. Now, I’m no expert on fashion, but I have to agree with Calvin on this one. If they’re selling huge piles of underwear with your name on it at B.J’s Wholesale Club, you’ve hit a glamour bottom.
What makes this fight so fun is that Calvin and his partner dished out plenty of personal attacks with his lawsuit. In the suit and subsequent interviews, they called the chief executive of Warnaco, Linda Wachner, an unprofessional, vulgar, abusive liar, who runs her company like a monarchy, uses disgusting language, and is a cancer on the Calvin Klein brand. Moreover, they strongly hinted that Calvin’s feelings, and those of his people, had been hurt. The business press describes Wachner as formidable, flint-tough, hard-driving, and one of the most powerful people in the fashion industry, but, tellingly, made no mention of her being sensitive to Calvin’s needs.
In the dry world of economics, this spat falls in the category of principal/agent problems. Calvin sold the right to produce and market clothes with his name on them to a profit-maximizing agent. It’s in her interest to sell clothes to anyone who wants them, not necessarily to perserve the mystique of the Klein brand. In a case like this, it’s tough to write a contract that can adequately mediate the conflicting interests of the parties. Throw in the contrasting personalities, and it becomes the theoretically intractable problem of sensitive principal/tough agent, which dooms Calvin and Linda’s relationship to a delicious, public explosion.
Wachner hasn’t yet responded to the personal attacks, but when she does, it’s going to be ugly. I predict a Wachner knockout in the third round.
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