You're Fired

Yesterday, Warnaco announced that it is laying off 7 percent of its corporate staff in an effort to combat the weakening global environment. While I’m sure the workers losing their jobs aren’t happy, some say that this is actually good news.

The artcile from Reuters states, “Brean Murray, Carret & Co retail analyst Eric Beder said Warnaco is doing the right things in this tough environment, in which consumers are pulling back on discretionary spending as a weakening economy stokes fears of a global recession.”

Warnaco’s CEO Joe Gromek stated: “We will control the things that we can control,” Gromek said. “We will align our costs to reflect current economic conditions.”

So, is laying off these workers a sign that Warnaco is going to re-evaluate current plans? Maybe yes, maybe no. While shrinking its corporate work force, Warnaco is not planning to dial down company expansion. In 2009, Warnaco still plans to add nearly as many stores as it did in 2008.

The move certainly didn’t show any encouragment for Warnaco’s stock price. At Wednesday’s close, Warnaco once again hit its 52-week low, finishing at $13.29. However, there was a bit of a silver lining, as Warnaco’s competitors fell even lower.

Warnaco shares fell 13.7 percent, but still outperformed rival apparel makers such as Jones Apparel Group Inc, Liz Claiborne Inc, and Perry Ellis International Inc, whose shares closed down 21 percent, 32 percent and 19 percent, respectively.

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