Exhibit 10.2.1

            SECOND AMENDMENT TO CREDIT AGREEMENT


     THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this  "Amendment"),  dated as of
December  18, 1998,  is by and among Cluett  American  Corp.  (the  "Borrower"),
Cluett American  Investment  Corp. (the "Parent"),  Cluett American Group,  Inc.
("Interco")  and  the  certain  subsidiaries  of the  Parent  identified  on the
signature pages hereto (together with the Parent and Interco, the "Guarantors"),
the  lenders   identified  on  the  signature  pages  hereto  (the   "Lenders"),
NationsBank,  N.A., as agent for the Lenders (in such capacity, the "Agent") and
Gleacher  NatWest  Inc., as  documentation  agent (the  "Documentation  Agent").
Capitalized terms used herein which are not defined herein and which are defined
in the Credit Agreement shall have the same meanings as therein defined.

                     W I T N E S S E T H

     WHEREAS,  the  Borrower,  the  Guarantors,  the Lenders,  the Agent and the
Documentation  Agent have entered into that certain Credit Agreement dated as of
May 18, 1998 and as amended as of May 27,  1998,  (as so amended  the  "Existing
Credit Agreement");

     WHEREAS,  the parties to the Existing Credit Agreement have agreed to amend
the Existing Credit Agreement as provided herein;

     NOW, THEREFORE,  in consideration of the agreements  hereinafter set forth,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:

                           PART 1
                         DEFINITIONS

     SUBPART 1.1 Certain  Definitions.  Unless  otherwise  defined herein or the
context  otherwise  requires,  the  following  terms  used  in  this  Amendment,
including its preamble and recitals, have the following meanings:

         "Amended  Credit  Agreement"  means the Existing  Credit
     Agreement as amended hereby.

         "Amendment No. 2 Effective  Date" is defined in Subpart 
     3.1.

     SUBPART  1.2 Other  Definitions.  Unless  otherwise  defined  herein or the
context otherwise requires, terms used in this Amendment, including its preamble
and recitals, have the meanings provided in the Amended Credit Agreement.




<PAGE>


                           PART 2
           AMENDMENTS TO EXISTING CREDIT AGREEMENT

     Effective  on (and  subject  to the  occurrence  of) the  Amendment  No.  2
Effective  Date, the Existing  Credit  Agreement is hereby amended in accordance
with this Part 2. Except as so amended,  the Existing  Credit  Agreement and all
other Credit Documents shall
continue in full force and effect.

     SUBPART 2.1 Definition of Consolidated EBITDA Adjustment. The definition of
"Consolidated EBITDA Adjustment" set forth in Section 1.1 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:

         "Consolidated  EBITDA  Adjustment" means (i) the sum of (A) for each of
     the fiscal quarters ending September 30, 1997,  December 31, 1997 and March
     28, 1998,  the amount  indicated  for  Consolidated  EBITDA for such fiscal
     quarter on Schedule 1.1A,  plus (B) for each of the fiscal  quarters ending
     December 31, 1997,  March 28, 1998,  June 27, 1998,  September 26, 1998 and
     December 31, 1998, the amount indicated for such fiscal quarter on Schedule
     1.1A-1  in  respect  of  losses  for  such  period   associated   with  the
     discontinuance  of the Burberrys and Yves Saint  Laurent  licensed  product
     lines, and (ii) for any fiscal quarter after March 28, 1998, the amount, if
     any, of reorganization  charges taken during such fiscal quarter in respect
     of (A) up to $3.3  million of  facility  closing and  re-engineering  costs
     accrued by the Borrower and its Subsidiaries prior to the Closing Date, (B)
     up to $550,000 of losses accrued by the Borrower and its Subsidiaries prior
     to the Closing Date associated  with (1) the Canadian retail  operations of
     the  Borrower  and its  Subsidiaries  and (2) the  Mexican  and  Guatemalan
     operations of the Borrower and its Subsidiaries,  (C) up to $4.0 million of
     bankruptcy   reorganization   costs   incurred  by  the  Borrower  and  its
     Subsidiaries on or prior to the Closing Date and (D) the costs and expenses
     of the Parent,  the Borrower and its  Subsidiaries  incurred in  connection
     with the Recapitalization, in each case calculated in accordance with GAAP.

     SUBPART 2.2 New  Schedule  1.1A-1.  A new  schedule in the form of Schedule
1.1A-1  attached hereto is added to the Existing  Credit  Agreement  immediately
following existing Schedule 1.1A thereof.

                           PART 3
                 CONDITIONS TO EFFECTIVENESS

     SUBPART 3.1 Amendment No. 2 Effective  Date.  This  Amendment  shall be and
become effective as of September 30, 1998 (the "Amendment No. 2 Effective Date")
when all of the conditions  set forth in this Part 3 shall have been  satisfied,
and  thereafter  this  Amendment  shall be  known,  and may be  referred  to, as
"Amendment No.
2."

         SUBPART 3.1.1 Execution of  Counterparts of Amendment.  The Agent shall
     have received counterparts of this Amendment, which collectively shall have
     been duly executed on behalf of each of the Borrower,  the  Guarantors  and
     the Required Lenders.

         SUBPART  3.1.2 Other Items.  The Agent shall have  received  such other
     documents,  agreements or information which may be reasonably  requested by
     the Agent.

                           PART 4
                        MISCELLANEOUS

     SUBPART 4.1 Representations and Warranties.  Borrower hereby represents and
warrants  to the  Agent  and the  Lenders  that,  after  giving  effect  to this
Amendment,  (a) no Default or Event of Default exists under the Credit Agreement
or any of the other Credit Documents and (b) the  representations and warranties
set forth in Section 6 of the  Existing  Credit  Agreement  are,  subject to the
limitations set forth therein,  true and correct in all material  respects as of
the date hereof (except for those which expressly relate to an earlier date).

     SUBPART 4.2  Reaffirmation of Credit Party  Obligations.  Each Credit Party
hereby ratifies the Credit  Agreement and acknowledges and reaffirms (a) that it
is bound by all terms of the Credit  Agreement  applicable to it and (b) that it
is responsible for the observance and full performance of its respective  Credit
Party Obligations.

     SUBPART 4.3  Cross-References.  References in this Amendment to any Part or
Subpart  are,  unless  otherwise  specified,  to such  Part or  Subpart  of this
Amendment.

     SUBPART  4.4  Instrument  Pursuant  to  Existing  Credit  Agreement.   This
Amendment  is a  Credit  Document  executed  pursuant  to  the  Existing  Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered  and applied in  accordance  with the terms and  provisions  of the
Existing Credit Agreement.

     SUBPART 4.5  References  in Other  Credit  Documents.  At such time as this
Amendment No. 2 shall become effective pursuant to the terms of Subpart 3.1, all
references in the Credit Documents to the "Credit  Agreement" shall be deemed to
refer to the Credit Agreement as amended by this Amendment No. 2.

     SUBPART 4.6  Counterparts/Telecopy.  This  Amendment may be executed by the
parties hereto in several  counterparts,  each of which shall be deemed to be an
original  and all of  which  shall  constitute  together  but  one and the  same
agreement. Delivery of executed counterparts of this Amendment by telecopy shall
be  effective  as an original  and shall  constitute  a  representation  that an
original shall be delivered.

     SUBPART 4.7  Governing  Law.  THIS  AMENDMENT  SHALL BE DEEMED TO
BE A CONTRACT  MADE UNDER AND  GOVERNED  BY THE  INTERNAL  LAWS OF THE
STATE OF NEW YORK.

     SUBPART 4.8  Successors and Assigns.  This Amendment  shall be binding upon
and inure to the benefit of the parties hereto and their  respective  successors
and assigns.



<PAGE>



     IN WITNESS  WHEREOF the Borrower,  the Guarantors and the Required  Lenders
have caused this Amendment to be duly executed on the date first above written.

BORROWER:              CLUETT AMERICAN Corp.

                       By:                   
                       Name:                      
                       Title:                     


GUARANTORS:            Cluett American Investment Corp.,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     


                       Cluett American Group, Inc.,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     


                       CONSUMER DIRECT CORPORATION,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     


                       ARROW FACTORY STORES, INC.,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     




[Signatures Continued]

<PAGE>



                       GAKM RESOURCES CORPORATION,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     


                      CLUETT PEABODY RESOURCES CORPORATION,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     


                       CLUETT PEABODY HOLDING CORP.,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     


                       CLUETT, PEABODY & CO., INC.,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     


                       BIDERTEX SERVICES INC.,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     





[Signatures Continued]

<PAGE>



                       GREAT AMERICAN KNITTING MILLS, INC.,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     


                       CLUETT DESIGNER GROUP, INC.,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     


                       BIDERMANN TAILORED CLOTHING, INC.,
                       a Delaware corporation

                       By:                   
                       Name:                      
                       Title:                     



LENDERS:               NATIONSBANK, N. A.

                       By:                   
                       Name:                      
                       Title:                     


                       NATIONAL WESTMINSTER BANK PLC

                       By:                   
                       Name:                      
                       Title:                     


                       FLEET BANK, N.A.

                       By:                   
                       Name:                      
                       Title:                     


                       BANKBOSTON, N.A.

                       By:                   
                       Name:                      
                       Title:                     


                       SANWA BUSINESS CREDIT CORPORATION

                       By:                   
                       Name:                      
                       Title:                     


                       BANK AUSTRIA CREDITANSTALT
                       CORPORATE FINANCE, INC.

                       By:                   
                       Name:                      
                       Title:                     

                       By:                   
                       Name:                      
                       Title:                     



<PAGE>


                       FIRST SOURCE FINANCIAL LLP,
                       By:  First Source Financial Inc., its manager

                       By:                   
                       Name:                      
                       Title:                     


                       THE LONG-TERM CREDIT BANK OF JAPAN,
                       LIMITED, NEW YORK BRANCH

                       By:                   
                       Name:                      
                       Title:                     


                       SUMMIT BANK

                       By:                   
                       Name:                      
                       Title:                     


                       MARINE MIDLAND BANK

                       By:                   
                       Name:                      
                       Title:                     


                       AG CAPITAL FUNDING PARTNERS, L.P.
                       By:  Angelo  Gordon & Co.,  L.P. as  Investment
Advisor

                       By:                   
                       Name:                      
                       Title:                     


                       NEW YORK LIFE INSURANCE COMPANY

                       By:                   
                       Name:                      
                       Title:                     




<PAGE>


                       SENIOR DEBT PORTFOLIO
                       By:  Boston Management and Research,
                              as Investment Advisor

                       By:                   
                       Name:                      
                       Title:                     


                     ML CLO XX PILGRIM AMERICA (CAYMAN) LTD.

                       By:                   
                       Name:                      
                       Title:                     


                       STRATA FUNDING LTD.

                       By:                   
                       Name:                      
                       Title:                     


                     SANKATY HIGH YIELD ASSET PARTNERS, L.P.

                       By:                   
                       Name:                      
                       Title:                     


                       MORGAN STANLEY SENIOR FUNDING, INC.

                       By:                   
                       Name:                      
                       Title:                     


                       MERRILL LYNCH SENIOR FLOATING
                       RATE FUND, INC.

                       By:                   
                       Name:                      
                       Title:                     





<PAGE>






SCHEDULE 1.1A-1

ADDITIONAL FINANCIAL INFORMATION


-------------- ----------- ------------ ------------- -------------
For the        For the     For the      For the       For the
Fiscal         Fiscal      Fiscal       Fiscal        Fiscal
Quarter Ended  Quarter     Quarter      Quarter       Quarter
December  31,  Ended       Ended        Ended         Ended
1997           March 28,   June    27,  September     December
               1998        1998         26, 1998      31, 1998
-------------- ----------- ------------ ------------- -------------

                                                      The lesser of $2.3
$0.7 million   $0.5        $1.1         $3.2 million  million and actual
               million     million                    lossesof Cluett
                                                      Designer Group, Inc.
                                                      associated with the
                                                      discontinuance of the
                                                      Burberrys and Yves
                                                      Saint Laurent
                                                      licensed product
                                                      lines for such fiscal
                                                      quarter
-------------- ----------- ------------ ------------- -------------