Sad State of Celebrity Endorsement Deals

Even the rich and powerful can’t save the world from the financial crisis. At least, not in the case of Warnaco Group Inc. Though the company just released its third quarter earnings, posting huge gains in revenue and EPS, its stock dropped to its year low on Thursday.

Which, makes it almost official: Even with help from the entire U.S. Olympic Swim Team (read: Michael Phelps) and Eva Mendes, Warnaco can’t catch a break.

Unless you lived under a rock this summer, you probably know that Michael Phelps won 8 Olympic gold medals. Much talk was made of the suit he wore, Speedo’s LZR Racer Swimsuit. Though Warnaco arguably has positioned itself atop the list of swimwear manufacturers, the company has yet to see any profit from the suit.

During last week’s third quarter conference call, executives acknowledged the problem.

“The third quarter is not a significant revenue or profit generating quarter for the swimwear group,” said Helen McCluskey, president of Warnaco’s Intimate Apparel sector.

In fact, the swimwear group–which saw a 4 percent decline in revenue–was the only sector of Warnaco NOT to see any growth.

Clearly, word-of-mouth and visibility for the LZR suit was everywhere–even before the Olympics began.

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The company spent at least $3 million on a publicity push right around the August mark, but wasn’t able to capitalize on the buzz.

It wasn’t just Michael Phelps and Team USA that failed to garner sales. Also over the summer, actress Eva Mendes endorsed “Secret Obsession” for Calvin Klein and also helped promote a new line of underwear called “Seductive Comfort.”

Mendes created some controversy with her affiliation to Warnaco: her advertisement was banned and considered “too sexy” for American TV. Still, her endorsement deal hasn’t really penetrated into the U.S. and Warnaco admits that its underwear sales–which were a bright spot previously for the company–have slowed as the global economy worsens.

So, what can Warnaco do to generate interest/sales/profit? Well, there’s always Oprah.

[Image of Paris Hilton: Courtesy Mioliz; Image of Paula Abdul: Courtesy Give Me My Remote].

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