OPERATIONS

Gap Takes Steps to Stem Child Labor

BY CSA STAFF

San Francisco, Gap Inc. is pulling 50% of its orders placed with a vendor whose subcontracting led to children sewing some of the retailer’s clothes in squalid conditions in India, according to the Associated Press.

The penalties disclosed Wednesday wrapped up the company’s investigation into an episode that attracted headlines around the world and renewed concerns about abusive labor practices in overseas factories.

To help address the problem, Gap said it would make a $200,000 grant aimed at improving the working conditions in India and would try to recruit retailers from around the world to participate in a forum next year to address child-labor issues.

Gap said it would also partner with the Global March Against Child Labour and other organizations to provide independent monitoring of hand embroidery and beadwork that is typically done in informal settings, not factories. Grants would help establish community centers in India where such work could be performed under better-monitored conditions.

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Kellwood rejects (second) buyout bid

BY CSA STAFF

St. LOUIS (AP) Apparel maker Kellwood has rejected a $543.9 million buyout offer from Sun Capital Securities Group on Tuesday.

This is the second time in one month Kellwood has rejected the investment firm’s proposal.

Sun Capital, which owns a 9.9% stake in Kellwood, first made its bid of $21 a share in September. Kellwood’s board rejected it in October, saying the offer undervalued the company and was not in the best interest of shareholders.

On Monday, Sun Capital reaffirmed its same proposal and said it was prepared to take the offer straight to shareholders.

Kellwood, however, is standing by its previous decision.

“The Kellwood board strongly believes in the company’s ability to successfully execute its strategic plan and provide greater value to its shareholders than Sun Capital’s proposal,” Kellwood said in a written statement.

Kellwood shares rose $1.85, or 11.2 %, to close at $18.36 Tuesday. But that is still about 19 percent below the price Sun Capital is offering. Kellwood has traded in a 52-week range of $14.21 to $34.84.

Earlier this month, Kellwood announced plans to sell its Smart Shirts business and related real estate assets in separate deals generating a combined $161 million. Proceeds will be used to repurchase shares and reduce debt.

Kellwood is one of the nation’s largest apparel makers with branded and private-label products. The brands it owns include Sag Harbor and Phat Farm, while it produces clothing under licensing agreements for brands that include Calvin Klein and Claiborne.

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Tesco opens in Vegas, next stop Phoenix

BY CSA STAFF

LAS VEGAS Tesco followed up its U.S. debut last week with a second round of openings on Nov. 14 in Las Vegas. Tesco opened five Fresh & Easy Neighborhood Markets in the Las Vegas area, adding to the six it rolled out in Southern California on Nov. 8.

Tesco has also scheduled its first openings in the Phoenix market for Dec. 5 with four stores slated to open that day. The chain also plans to enter San Diego in late November or early December. Tesco chief marketing officer Simon Uwins said the retailer hopes to have 50 Fresh & Easy stores open in California, Nevada and Arizona by February 2008.

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