CIT, the large specialty lender that has been walloped by the sub prime mortgage mess, has stopped approving credit for about $40 million in orders to Mervyns, a struggling sunbelt department store chain, Fortune has learned.

The development is yet another example of how Wall Street’s problems are impacting Main Street. As the credit crunch snakes its way through the economy, banks are growing stingier with lending. Among the casualties are Talbots and Sears, which both saw credit lines suspended in recent weeks. At the same time, debt-laden consumers are curtailing what they spend at the mall, resulting in dozens of bankruptcy filings, including those of furniture makers Bombay and Levitz as well as gadget retailer Sharper Image.

The result is a squeeze for retailers unlike any in recent history. The most vulnerable are those like Mervyns, which was already on shaky ground before the economy turned south. Since former parent Target (TGT) sold the company in 2004 to a group of private equity firms that include Sun Capital Partners and Cerberus Capital, Mervyns has found itself under siege.

There have been massive layoffs, store closings and management upheaval. In March, Mervyns hired John Goodman, a former Levi Strauss executive known for turning around the Dockers brand, as its chief executive, the third person to hold that post in as many years.

As a private company, Mervyns no longer reports financial data. According to the research firm Hoovers, Mervyns, based in Hayward, Calif., had $2.5 billion in sales in 2007. Most of its stores are located in sunbelt states that have been hit hard by the housing meltdown. “Mervyns has not been performing well,” said one source.

While other large lenders, Wells Fargo (WFC) and Milberg among them, have not curtailed credit to Mervyns’ suppliers, “the action by CIT is causing them to take a closer look,” this person said.

CIT (CIT) is one of the largest lenders to Seventh Avenue firms. Its ill-fated foray into sub-prime mortgages — which has forced the lender to sell assets and draw down credit lines — has weighed on those in the fashion industry that depend on CIT’s ability to extend credit.

Without a guarantee from CIT, small and mid-sized firms are loath to ship directly to retailers, especially troubled ones, for fear of not being paid. It was unclear how much of CIT’s belt tightening was the result of its own financial troubles, as opposed to a growing concern over Mervyns health.

CIT spokesman Curt Ritter declined to comment on the firm’s relationship with Mervyns or other retailers.

Mervyns Chief Financial Officer Chuck Kurth also declined to comment specifically on the company’s relationship with suppliers or financial partners.

But he did say that only one-fifth of Mervyns business is done through specialty lenders like CIT, known in industry parlance as factors. The rest of the retailer’s merchandise comes directly from large companies like Nike and Levi Strauss. As such, Kurth added, “we are very comfortable with our liquidity position.”

Designer Kenneth Cole, who has been seeking to relinquish day-to-day operations of the company he founded to a seasoned leader, on Tuesday appointed Jill Granoff, a highly respected cosmetics and apparel executive to the position of chief executive.

The move signals a sharp change in management style for Cole, 54, who has held the position of CEO and chairman of Kenneth Cole Productions since its inception in 1982, and is known as a notorious micro-manager. As the company, with $510 million in sales, has struggled in recent years, the need to bring in an outsider with deep operational experience took on greater urgency. Cole launched a formal search for someone to succeed him as CEO five months ago, and personally called Granoff, 46, who had been a division vice president at Liz Claiborne, to offer her the job. He will remain chairman and chief creative officer.

Fortune broke the news that Cole was looking for a CEO in November.

Company founders can be especially difficult to work for, especially someone like Cole who for years has had cart blanche to run his company according to his own ideas. Although Kenneth Cole Productions went public in 1994, Cole remains the controlling shareholder with 47 percent of the Class A stock and all of the Class B stock, which carry 10 votes per share. The company’s most recent president, Joshua Schulman, left in July after six months on the job. Although his predecessor Paul Blum held the post for 15 years, he was said to be president in name only. Cole was known for making most of the decisions, from the height of a heel to the length of a skirt, himself.

In hiring Granoff, Cole has shown a willingness to pull back from day-to-day decision making to focus on the creative and strategic vision of the company, including his hallmark of clever advertising. He has also turned to someone who has had experience working with company founders. At Liz Claiborne, where Granoff had been executive vice president of direct brands, she worked closely with the founders of Juicy Couture and Lucky Brand Jeans. Previously, as chief operating officer of Victoria’s Secret Beauty, Granoff worked with Les Wexner, founder of parent company Limited Brands. She also did a stint at Estee Lauder, where her duties were intertwined with the Lauder family.

Her departure is a blow to Liz Claiborne, which has been undergoing a major restructuring. Granoff helped to bring discipline to the burgeoning Juicy Couture, Lucky and Kate Spade brands, which, along with Mexx, are considered the company’s growth drivers. Liz Claiborne is not expected to replace her, meaning that the direct brands will report to CEO William McComb.

At Kenneth Cole, Granoff, who will also join the board, will face considerable challenges when she starts her new job on May 5. An attempt by the company to make its shoe and apparel lines more luxurious and upscale has so far hit snags. Last year, Kenneth Cole had $7.1 million in net income, down from $26.8 million a year earlier. The stock, which traded as high as $27 a year ago, is now languishing around $17.45.

Nautica has shut its women’s sportswear division.

Traditionally known for its men’s casual clothing with a nautical theme, Nautica introduced a line of women’s sportswear in 2006. But the clothing never gained traction and fell victim to the sluggish sales environment of the department stores in which it was sold.

The withdrawal from the women’s sportswear market underscores larger problems at Nautica, which has been owned by the VF Corporation since 2003. Once considered a powerhouse in men’s clothing, along with Tommy Hilfiger and Polo Ralph Lauren, Nautica has listed badly in recent years as new competitors like Ted Baker and Sean John have taken market share. An attempted revitalization in 2005 fell flat and executives are now working on yet another revival aimed at bringing Nautica closer to its heritage of classic styles with a modern twist.

To bolster its management ranks, Nautica CEO Denise Seegal in September hired Karen Murray, formerly of Liz Claiborne, as president of men’s sportswear. Also newly on board is Creative Director Mirian Lamberth — the first to hold that position since founder David Chu left the company in 2004.

Nautica notified its employees and business partners of its decision to close the women’s division last week. In a statement e-mailed to FORTUNE, VF said the decision would allow the company to “focus our resources on continuing to build our men’s, licensed and direct-to-consumer businesses.” Nautica will continue to sell women’s apparel in select company-operated retail stores, and will still make women’s swimsuits and pajamas.

Nautica has traditionally had a tough time cracking the women’s market. Soon after VF bought the company, it closed its women’s jeans business.

For more evidence of economic woes beyond Wall Street, look no further than Main Street. J.C. Penney (JCP) today warned that first quarter earnings and sales will come in well below expectations, becoming the latest in a string of retailers to ratchet down guidance.

What is remarkable is how quickly the business has deteriorated. As of Jan. 1, Thomson Financial had predicted year-over-year first quarter earnings growth of 8 percent for consumer stocks, which in addition to retailers, also include homebuilders and auto companies. Today, that prediction of growth has been replaced by one of contraction. Thomson now expects the group to report an 8 percent drop. Excluding homebuilders, which account for a large chunk of the swing, earnings are still expected to shrink by 2 percent.

Take J.C. Penney. Just over one month ago, the company predicted first quarter earnings of 75 cents to 80 cents. New guidance issued today pegs that amount at 50 cents a share. The earnings free fall is mainly the result of plummeting sales. For March, sales at stores open at least a year are now expected to fall by double-digits, compared with a prediction of a low-single-digit drop back in February.

“Consumer confidence is at a multi-year low,” said Myron Ullman, III, chairman and chief executive of J.C. Penney. “J.C. Penney counts half of American families as its customers, and they are feeling macro-economic pressures from many areas, including higher energy costs, deteriorating employment trends and significant issues in the housing and credit markets.”

As of midday, shares of JCP had plunged $2.84 cents, or 7 percent, to $37.68, helping to drag down the broader S&P Retail Index.

JCP isn’t the only retailer to see its customers curtail spending. For every time a consumer-related company has raised forecasts this year, there have been more than three instances of guidance reductions, according to Thomson Financial. That compares with a ratio of 1-to-2 for the broader S&P 500. Retailers that have reduced their earnings outlook include Wal-Mart (WMT), TJX Companies (TJX), Kohl’s, (KSS) Nordstrom (JWN) and Limited Brands (LTD) — though none of those downwardly revised earnings estimates were as big as J.C. Penney’s. And retailers still have another month to go before they can close the books on the first quarter, meaning that a further tempering of expectations is likely.

“On the surface, discretionary spending was awful last year,” said David Dropsey, senior research analyst with Thomson Financial. “But if you dug beyond the homebuilders, it was clear that retailers, restaurants and hotels were doing okay. This year, the curb on spending seems to be much broader based.”

The big question is whether checks set to arrive in consumers’ mailboxes in about two months as part of a government financed stimulus package, will have the desired effect. Goldman Sachs analyst Adrianne Shapira expects second half sales to pick up as consumers start spending that money, which could total as much as $1,000 to $2,000 per family. She also points out, in a research note published Friday, that the first quarter contributes the least amount to full-year sales. That makes the period the most susceptible to earnings shortfalls if sales miss expectations.

Not everyone is a big believer that the government issued checks will provide the necessary magic bullet. “While the economic stimulus package may provide some temporary benefit, we expect the continuation of a difficult environment over the course of 2008,” Ullman said. Better to temper expectations now than later.

Perry Ellis (PERY), which earlier this year bought the Laundry label from Liz Claiborne, is in talks to bring back the brand’s founder, designer Shelli Segal, Fortune has learned.

The discussions with Segal are part of a broader plan to revive the label, known for its dresses, which underwent a series of changes following Liz Claiborne’s 1999 acquisition. Headquarters were moved from Los Angeles to New York, and following Segal’s split from the company in 2007, the name was changed to Laundry By Design from Laundry by Shelli Segal.

Sales of Laundry merchandise today are estimated at $30 million, down from $100 million when Liz Claiborne acquired the brand.

Perry Ellis President Oscar Feldenkreis told Fortune that he is moving the Laundry studio back to L.A. to recapture the label’s California heritage. He has also hired a new design team, many of who, including Claudia Cordic, worked for Laundry as part of the original team. Perry Ellis also plans to change the company’s name back to Laundry by Shelli Segal and relaunch the label for the holiday season. “I’ve met with Shelli and we are talking to her about coming back as a consultant,” Feldenkreis said. Segal was not immediately reachable for comment.

The moves by Perry Ellis are part of a broader trend in fashion, where companies ranging from Gap to Lord & Taylor are wooing big-name designers to try to revive ailing brands.

Don’t expect Gap Inc. (GPS) to return to growth in 2008.

That was the between-the-lines message from CEO Glenn Murphy, who delivered fourth quarter results on Thursday. “We know at some point, this business has to show improvement on the top line,” Murphy told analysts on a conference call after the markets closed. But Murphy made clear that the company’s priority for 2008 was to grow profits by better managing costs.

That strategy has so far delivered results for Gap, the $16 billion owner of the Gap, Old Navy and Banana Republic chains that once defined casual dressing before losing its way earlier this decade. Fourth quarter profit rose to $265 million, or 35 cents a diluted share, compared with $219 million, or 27 cents, the year earlier, largely because inventory and other expenses were kept in check. Gap’s inventory per square foot, for instance, was down by 15% at the end of the fourth quarter, compared with the same period a year ago.

The results pushed Gap shares higher by $1.15, or nearly 6 percent, to $20.60 in after hours trading.

But cost reductions and better expense management can only take Gap so far. If the San Francisco-based retailer is ever to emerge from the funk of the last few years, it will need to start growing sales. Fourth-quarter sales fell 5% to $4.68 billion, compared with $4.92 billion a year ago. Sales at stores open at least a year were down 3% in the period, compared with a 7% drop the prior year. The recently-completed fourth quarter contained one less week of sales than did the same period a year ago, partially accounting for some of the fall-off.

Gap does not provide sales guidance, but CFO Sabrina Simmons said that the challenging economic environment would make it more difficult for the company to grow comparable store sales this year.

As a result, Gap is proceeding cautiously with capital expenditures, which are expected to total $500 million this year, down from $682 million in 2007. The company plans to open 100 stores, mainly abroad, and close 85 locations, most of them Gap stores. In the United States, the company said it intends to be very “selective” about opening new stores, and is looking instead at making existing locations more profitable.

One way to keep investors happy in the absence of growth is to buy back stock. The company spent $613 million to repurchase 30 million shares in the fourth quarter, and authorized a new $1 billion buyback. Of that amount, about $158 million will be repurchased from the Fisher family, which founded Gap in 1969 and collectively owns slightly more than one-third of the company’s outstanding shares. Gap also said it would increase its annual dividend by 6% to 34 cents a share.

The company’s Gap and Old Navy brands are undergoing the biggest changes. Gap recently parted ways with Old Navy president Dawn Robertson over what Murphy called “philosophical” differences on how to move the brand forward. Current marketing did not focus enough on the brand’s value message, an imbalance that Murphy said he hopes to have adjusted by the back-to-school shopping season.

That is about the time that Old Navy’s newly installed creative director, the designer Todd Oldham, will start to have an impact on merchandise in the stores. A few months later, in the fall, designer Patrick Robinson’s new looks for Gap will start to hit store shelves. If the designers’ clothes connect with consumers, Gap stands to win big. Given its tighter expense structure, even the slightest improvement in same-store sales would provide a boost to the bottom line.

For now, however, Murphy is keeping expectations low. Gap and Old Navy have tried to reinvent themselves several times in the last few years to no avail. “It would be easy for us to get ourselves too excited too soon,” Murphy said.

If Eddie Lampert wants to compare Sears Holdings (SHLD) to the Super-Bowl-winning New York Giants, as he did in a quarterly letter to shareholders released today, he should try a different playbook.

Like the Giants, who stumbled through much of the early season, Sears has performed dismally this year. Sears today reported that fourth-quarter profit plunged 47% to $426 million, or $3.17 a diluted share, compared with $811 million, or $5.27 a share. Domestic sales at stores open at least a year fell 4% at Sears and 5.2% at Kmart in the period. Despite increased promotional activity to markdown goods, inventory continued to rise, up 1% compared with the prior year, according to Morgan Stanley analyst Gregory Melich.

Unlike the Giants, who were able to regroup for an upset championship win, Sears shows no signs of turning the corner anytime soon. Notably, January sales were the weakest of the quarter. “Extrapolating January trends leads us to believe that top line shortfalls are likely to continue (at least into 1Q),” wrote Adrianne Shapira of Goldman Sachs in a note to clients.

Sears shares declined 36 cents to $101.24 in morning trading. Though that’s well off a 52-week-high of $195, some analysts said the shares have further to fall. Melich of Morgan Stanley considers a fairer price to be in the mid-$70-range.

“Like Eli Manning,” wrote Lampert (who happens to be a Jets fan), referring to the Giants MVP quarterback, “we know what it’s like to be underestimated and questioned, but we intend to keep working on our game to achieve our full potential.”

So far Lampert has focused on the blocking and tackling of retailing — expense management, markdown discipline and systems — without addressing the bigger picture: What does Sears stand for today, and why should consumers shop there instead of competitors like Best Buy (BBY), Target (TGT) or Wal-Mart (WMT)? Each of those competitors has a clear mission. Best Buy is the place for electronics, Target is fashion at a price, and Wal-Mart is everyday low prices. What is Sears?

Until that question is answered, it’s no wonder that Lampert considers big investments in Sears’ stores to be a losing proposition. In the letter to shareholders, he made the case that he could get a better return simply by keeping the money in cash.

Much about the company’s future will depend on who Sears hires to replace outgoing chief executive Aylwin Lewis, who was let go in January as part of a broader strategy to shake up the company by dividing it into five business units.

Sears’ ability to attract Eli-Manning-like talent is complicated by Lampert’s involvement in the company as chairman and largest shareholder. Though Lampert has suggested he would relinquish oversight of day-to-day operations, reports suggest otherwise. According to the Chicago Tribune, for example, candidates who have been contacted about the CEO job are worried they may not have the freedom to make unfettered decisions without Lampert playing Monday-morning quarterback. And that could mean another losing season for Sears.

Someone’s in the kitchen with Martha: celebrity chef Emeril Lagasse.

After searching for an acquisition for years, Martha Stewart Living Omnimedia (MSO) on Monday said it bought the rights to Lagasse’s television programming, cookbooks, website, licensed kitchen products and food such as the Bam! B-Q sauce, spices and marinades. The agreement excludes Lagasse’s 11 restaurants and corporate offices.

The deal, for $45 million in cash plus $5 million in stock, marks the first time Stewart has deigned to share the spotlight with another celebrity inside her company and is a solid step toward diversifying away from her omnipotent presence. As Fortune reported last month, MSO has been looking to bring another tastemaker into the fold. The company has held talks in recent months with the designer Cynthia Rowley and Jonathan Adler, known for his home décor, but both deals unraveled.

Investors applauded the move pushing shares up $1.06, or 17.29 percent, to $7.19.

But before getting too carried away, it’s worth noting that the Emeril Lagasse business, like so many of MSO’s other new ventures, is still tiny. The company generated just $14 million in 2007 revenue.

Meanwhile, it’s unclear how some of MSO’s other initiatives are performing, notably the launch of a home line at Macy’s. Morgan Joseph analyst David Kestenbaum noted in a report to clients published Tuesday that MSO has so far failed to provide any clear-cut evidence of the launch’s success at a time when Macy’s is struggling with sub-par sales and store closures.

MSO has an even bigger problem looming this year in the form of Kmart royalties, which are expected to drop to $20 million from $65 million.

“Given the uncertainty of ramping up nascent initiatives in a difficult operating environment, we are downgrading to hold until we can see more clarity on Martha Stewart in 2008,” Kestenbaum wrote.

Gap’s ongoing attempts to right itself suffered a further setback Tuesday, when it said the president of its Old Navy chain would leave the company effective immediately.

Though the decision appears to have been mutually arrived at by the Old Navy president, Dawn Robertson, who had been in the job less than 16 months, and Gap’s (GPS) Chief Executive Glenn Murphy, her departure shows that the specialty apparel retailer still has a long way to go to turn itself around.

Robertson, 52, known for her high-energy management and even higher sense of style, made some progress breathing new life into Old Navy by upping the fashion quotient, speeding up merchandise deliveries and jettisoning its trademark campy advertisements in favor of sleeker marketing.

Despite those improvements, Robertson has so far failed to deliver the bump in sales and traffic counts that Murphy is looking for, suggesting that she may have overreached in her broader vision to reposition Old Navy away from its roots as a discount store for the family and make it more appealing to twenty-something shoppers looking for fashion at a price. “A lot of strategies were put in place under Dawn, and so far the results are mixed,” said Gap spokeswoman Stacy MacLean. “We were disappointed with fall and holiday.”

MacLean said Robertson’s departure was not just motivated by a lack of financial progress but also included other factors, such as cultural fit. Sources said the Robertson and Murphy differed philosophically over how to run the company.

Robertson is known for a strong personality that can be infectious and motivating — “like a cheerleader on steroids,” said one person who has worked with her– but also difficult to contain. Her preference for designer clothing, Gucci and Chanel are favorites, may also have contrasted with the more laid-back style of Gap’s San Francisco headquarters, where khakis and button downs are the norm.

Asked whether Old Navy would stick with Robertson’s strategy, MacLean said the company planned to move forward with some elements of the plan and proceed more cautiously with others. “We think a faster pipeline is in the interest of our customers,” she said, referring to Robertson’s initiative to speed up the delivery of merchandise to stores. “But we do not want to alienate our core customers in any way.”

In late January, Old Navy hosted a fashion show in New York to introduce the press to its new image. Designer Todd Oldham, whom Robertson had hired as creative director, edited the line, which included safari themes. Many of the updated looks are just hitting stores now, leading some observers to wonder whether Robertson was given enough time to achieve her goals. Because of long lead times, it is often difficult to affect a turnaround in retailing in less than two years.

The shakeup at Old Navy, largely unexpected by Wall Street analysts, is the latest in a series of management changes aimed at improving sales at Gap, which in addition to Old Navy also operates the Gap and Banana Republic chains. Gap shares lost 47 cents, or 2.39 percent, to close at $19.23 Tuesday.

Former CEO Paul Pressler was let go in January 2007, just three months after he hired Robertson, who had previously served as a managing director of Myer, an Australian department store chain. Marka Hansen was moved from her post atop Banana Republic to run the Gap division, and one of her deputies, Jack Calhoun, was placed in charge of Banana Republic in October. Gap today named Tom Wyatt, a seasoned apparel executive, who joined the company in 2006 and was most recently running its outlet division, as the interim head of Old Navy while it searches for a permanent replacement.

Robertson was to receive an annual salary of $900,000 (she was paid $242,308 for the three months she worked during fiscal 2007) plus a signing bonus of $300,000. Though Robertson’s contract calls for repayment of the bonus if she were to leave voluntarily within two years, MacLean, the Gap spokesman, said the company has no plans to recoup the money.

Analysts seemed divided over what Robertson’s departure would mean for Old Navy, with some worrying that too much change could be troublesome for the chain. “When you are on a course, and then all of a sudden you correct and go in another direction, that can be a negative too,” said Christine Chen of Needham & Co.

For Sun Capital, acquiring Kellwood - the maker of Calvin Klein sportswear and Phat Farm urban apparel - may turn out to be the easy part. Turning the business around is likely to be far tougher.

After five months of not-so-friendly courtship, Sun Capital finally has the prize in its sights. A deal looks imminent, providing that a majority of Kellwood’s (KWD) shareholders tender their stock by tomorrow, a likely outcome given that several large investors have indicated their support for the $21 a share offer. After previously rejecting Sun’s bid twice and then telling shareholders to make up their own minds, Kellwood’s board today came out in favor of the proposal, which values the company at $543 million based on the number of shares outstanding as of Nov. 3. Kellwood also agreed to terminate its cash tender for up to $60 million in senior notes, further paving the way for a deal. Kellwood’s shares rose 39 cents, or 1.9 percent, to $20.92.

If the tender is successfully completed, it would bring to an end one of the odder takeover battles on Seventh Avenue, a world where hostile deals are still a rarity. “Nothing about this deal was by the book,” said Louis Meyer, an analyst with Oscar Gruss & Son.

And questions persist. Why would Kellwood’s board agree to an offer of $21 a share in February when it deemed that same offer inadequate in September? And why would Sun Capital want to acquire one of the weaker competitors in an apparel industry going through an enormous shakeout? With stronger players like Liz Claiborne (LIZ) and the Jones Apparel Group (JNY) struggling to survive, the prospects for Kellwood - which derives the bulk of its revenue from out-of-favour moderate labels like Sag Harbor - look bleak.

Let’s start with the first question. Back in September, Kellwood’s board was confident that the company’s management could execute on its turnaround plan, which included an upscale repositioning with the acquisition of trendy labels such as Vince, known for its sweaters sold at Saks Fifth Avenue and Hanna Andersson, a children’s brand. Then the economy unravelled and the turnaround was suddenly much harder to achieve. So Kellwood’s board went shopping for an offer that would beat out Sun Capital. No offers materialized, and with a recession looming if not already here, Sun’s proposal looked a lot more attractive.

The foot-dragging approach of directors has not won a lot of fans on Wall Street. “The board’s job is to stand up and make the call, and this call should have been made long before today,” Meyer, the analyst, said.

With Kellwood nearly in its grasp, how does Sun Capital plan to keep the apparel maker from sinking further? The stock is down 33 percent from its July high and would be even lower if not for Sun’s interest. So far the private equity firm isn’t saying much, beyond this statement issued today by Sun Capital Vice President Jason Bernzweig: “We are prepared to commit substantial resources beyond the purchase price to build Kellwood’s business.” Sun Capital Spokesman Richard Hurwitz declined to elaborate.

What that likely means is an investment in the higher-tier brands such as Vince and Hollywould, another contemporary clothing maker, and a consolidation of the ailing moderate labels. “I could see them cutting costs, improving the supply chain and consolidating divisions — all things that can be done more easily as a private company than a public company,” said Paul Charron, the former Chief Executive of Liz Claiborne who is now an advisor to Warbug Pincus.

But building those upscale brands into sizeable businesses is going to take a long time. When Kellwood bought Vince in 2006, it said the brand was on track to do $45 million in sales. Even if Kellwood doubled the size of the business over the past two years, Vince would still only account for a fraction of Kellwood’s nearly $2 billion in overall revenue. “I’m not sure how Sun is going to fix this company, beyond doing what management was already doing,” Meyer said.

The fate of that management, including Chief Executive Robert Skinner, is so far unclear. “Our intention is to work with the management to turn around the business,” Hurwitz said. But no one is ruling out the possibility of an executive shake-up if results don’t materialize. As for a more radical makeover such as a break-up of the company, don’t bet on it. No analyst that I’ve talked to estimates that the sum of the parts is worth more than the whole.

Sun Capital acquired its roughly 11.4 percent stake in Kellwood at a price that averaged in the high $20-a-share range, considerably more than it is paying for the remainder of the stock. By that measure, it appears as if Sun is getting a bargain. Given the state of Kellwood’s business and the health of the apparel sector, this deal may turn out to be not such a good buy after all.