Exhibit 10.2.2

             THIRD AMENDMENT TO CREDIT AGREEMENT


   THIS THIRD  AMENDMENT TO CREDIT  AGREEMENT  (this  "Amendment"),  dated as of
March 19, 1999, 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").

   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 and  December  18,  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. 3 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. 3 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 Amendments to Section 1.1.

   (a) The pricing grid contained in the  definition of "Applicable  Percentage"
appearing in Section 1.1 of the Existing Credit  Agreement is hereby amended and
replaced with the pricing grid set forth below:
<TABLE>
-----------------------------------------------------------------------------------------
<CAPTION>       
                             Applicable
                             Percentage For    Applicable
                             Revolving         Percentage
                             Loans and         For  Tranche B
                             Tranche A         Term Loan
                             Term Loan
                             -------------------------------
                 Applicable                                      Applicable  Applicable
        Senior   Percentage                                      Percentage  Percentage
Pricing Leverage For        Eurodollar Base    Eurodollar Base   For         for
Level   Ratio    Unused     Loans      Rate    Loans      Rate   Standby     Trade
                 Fee                   Loans              Loans  Letter of   Letter
                                                                 Credit Fee  of Credit Fee
<S>    <C>       <C>        <C>        <C>     <C>        <C>    <C>         <C>
I      >2.50     1/2%       2-1/2%     1-1/2%  3%         2%     2-1/4%      1-1/8%
       to
       1.00
------------------------------------------------------------------------------------------ 
II     <2.50     1/2%       2-1/4%     1-1/4%  2-3/4%     1-3/4% 2%          1%
       -
       to
       1.00
       but >
           -
       2.00
       to
       1.00
-----------------------------------------------------------------------------------------
III    <2.00     3/8%       2%         1%      2-1/2%     1-1/2% 1-3/4%      7/8%
       to
       1.00
       but >
           -       
       1.75
       to
       1.00
----------------------------------------------------------------------------------------
IV     <         3/8%       1-3/4%     3/4%    2-1/2%     1-1/2% 1-1/2%      3/4%
       1.75
       to
       1.00
========================================================================================
</TABLE>
   (b) The definition of "Consolidated  EBITDA"  appearing in Section 1.1 of the
Credit  Agreement  is hereby  amended and  restated  in its  entirety to read as
follows:

     "Consolidated  EBITDA" means,  for any period,  the sum of (i) Consolidated
     Net Income for such period, plus (ii) an amount which, in the determination
     of  Consolidated  Net Income for such  period,  has been  deducted  for (A)
     Consolidated Interest Expense, (B) total federal,  state, local and foreign
     income,  value added and similar taxes,  (C)  depreciation and amortization
     expense,  (D) letter of credit fees, (E) non-cash  expenses  resulting from
     the grant of,  or the  obligation  to  grant,  stock and stock  options  to
     employees  of  the  Parent,   the  Borrower  or  any  of  their  respective
     Subsidiaries  pursuant to a written plan or  agreement  and (F) step-ups in
     inventory  valuation  as a result  of  purchase  accounting  for  Permitted
     Acquisitions, all as determined in accordance with GAAP; provided, however,
     that  Consolidated  EBITDA for the fiscal  quarters  ending June 30,  1998,
     September  30, 1998 and  December 31, 1998 shall be equal to the sum of (i)
     the amount  determined  pursuant to the first clause of this definition for
     the  one-quarter  period,   two-quarter  period  or  three-quarter  period,
     respectively,  then  ended  plus  (ii) the  aggregate  Consolidated  EBITDA
     Adjustment for each fiscal quarter occurring during such period.

   (c) The definition of "Consolidated  EBITDA Adjustment"  appearing in Section
1.1 of the Credit  Agreement  is hereby  amended and restated 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 sum of (A) the amount, if any,
     of  reorganization  charges taken during such fiscal  quarter in respect of
     (1) up to $3.3 million of facility closing and re-engineering costs accrued
     by the Borrower and its  Subsidiaries  prior to the Closing Date, (2) up to
     $550,000 of losses accrued by the Borrower and its Subsidiaries on or prior
     to December 31, 1998 associated with (x) the Canadian retail  operations of
     the  Borrower  and its  Subsidiaries  and (y) the  Mexican  and  Guatemalan
     operations of the Borrower and its Subsidiaries,  (3) up to $4.0 million of
     bankruptcy   reorganization   costs   incurred  by  the  Borrower  and  its
     Subsidiaries on or prior to the Closing Date, (4) the costs and expenses of
     the Parent,  the Borrower and its Subsidiaries  incurred in connection with
     the  Recapitalization  and (5) up to $700,000 for non-cash facility closing
     and re-engineering costs accrued by the Borrower and its Subsidiaries on or
     prior to December 31, 1998,  plus (B) the amount,  if any, of charges taken
     during such fiscal quarter in respect of (1) the  establishment on or prior
     to December 31, 1998 of a litigation  reserve of up to $1.6 million and (2)
     failed  deal  costs of up to  $500,000  incurred  by the  Borrower  and its
     Subsidiaries  on or prior to December 31, 1998, in each case  calculated in
     accordance with GAAP.

   (d) The  definition  of "Excess  Cash Flow"  appearing  in Section 1.1 of the
Credit  Agreement  is hereby  amended and  restated  in its  entirety to read as
follows:

     "Excess  Cash Flow"  means,  with  respect to any fiscal year period of the
     Consolidated  Parties  on a  consolidated  basis,  an  amount  equal to (a)
     Consolidated  EBITDA  for  such  period  minus  (b)  Consolidated   Capital
     Expenditures  for such period minus (c)  Consolidated  Interest Expense for
     such period minus (d) Federal,  state and other income taxes payable by the
     Consolidated  Parties on a  consolidated  basis in  respect of such  period
     minus (e)  Consolidated  Scheduled  Funded Debt  Payments  made during such
     period minus (f) prepayments  applied to the permanent  reduction of Funded
     Debt of any Consolidated Party;  provided that in the case of any revolving
     Funded Debt,  such  prepayment  shall  correspondingly  permanently  reduce
     commitments  with  respect  thereto,  plus/minus  (g)  changes in  non-cash
     working  capital for such period minus (h) without  duplication of any item
     included under clause (c) above, Restricted Payments made by the Parent and
     the Consolidated  Parties during such period to the extent permitted by the
     terms of  Section  8.7 minus  (i) for each of the  fiscal  quarters  ending
     December 31, 1997,  March 28, 1998,  June 27, 1998,  September 26, 1998 and
     December 31, 1998, the Consolidated EBITDA adjustment referred to in clause
     (i)(B) in the definition of "Consolidated EBITDA Adjustment".

   SUBPART 2.2 Amendments to Section 7.11.  Section 7.11 of the Existing  Credit
Agreement is hereby amended and restated in its entirety to read as follows:

   7.11  Financial Covenants.

   The Credit Parties shall cause:

     (a) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of the
     last day of each  fiscal  quarter  of the  Consolidated  Parties,  to be at
     least:

              (i)  for  the  period  from  the  Closing  Date  to  and
         including December 31, 1998, 1.00 to 1.00;

              (ii) for the period from January 1, 1999 to and including December
         30, 1999, 0.75 to 1.00; and

              (iii)  for the  period  from  December  31,  1999 and at all times
         thereafter, 1.00 to 1.00.

     (b) Interest  Coverage Ratio.  The Interest  Coverage Ratio, as of the last
     day of each fiscal quarter of the Consolidated  Parties, to be greater than
     or equal to:

              (i)  for  the  period  from  the  Closing  Date  to  and
         including December 31, 1998, 1.65 to 1.00;

              (ii) for the period from January 1, 1999 to and including December
         30, 1999, 1.45 to 1.00;

              (iii) for the period from December 31, 1999 to and including March
         30, 2000, 1.65 to 1.00;

              (iv) for the period from March 31, 2000 to and including  December
         30, 2000, 1.85 to 1.00;

              (v)  for  the  period  from  December  31,  2000  to and
         including December 30, 2001, 2.00 to 1.00;

              (vi)  for the  period  from  December  31,  2001 to and  including
         December 30, 2002, 2.25 to 1.00; and

              (vii)  for  the  period  from  December  31,  2002  and  at  all 
         times thereafter, 2.50 to 1.00.

     (c) Senior Leverage Ratio. The Senior Leverage Ratio, as of the last day of
     each fiscal quarter of the Consolidated  Parties,  to be less than or equal
     to:

              (i)  for  the  period  from  the  Closing  Date  to  and
         including December 31, 1998, 3.25 to 1.00;

              (ii) for the period from January 1, 1999 to and including December
         30, 1999, 3.75 to 1.00;

              (iii) for the  period  from  December  31,  1999 to and  including
         December 30, 2001, 3.50 to 1.00;

              (iv)  for the  period  from  December  31,  2001 to and  including
         December 30, 2002, 3.00 to 1.00;

              (v)  for  the  period  from  December  31,  2002  to and
         including December 30, 2003, 2.75 to 1.00; and

              (vi) for the period from December 31, 2003 and at all times 
         thereafter, 2.50 to 1.00.

     (d) Total Leverage  Ratio.  The Total Leverage Ratio, as of the last day of
     each fiscal quarter of the Consolidated  Parties,  to be less than or equal
     to:

              (i)  for  the  period  from  the  Closing  Date  to  and
         including December 31, 1998, 6.50 to 1.00;

              (ii) for the period from January 1, 1999 to and including December
         30, 1999, 7.00 to 1.00;

              (iii) for the period from December 31, 1999 to and including March
         30, 2000, 6.25 to 1.00;

              (iv) for the period from March 31, 2000 to and including  December
         30, 2000, 5.50 to 1.00;

              (iv)  for the  period  from  December  31,  2000 to and  including
         December 30, 2001, 4.75 to 1.00; and

              (v) for the period from December 31, 2001 and at all times  
         thereafter, 4.00 to 1.00.

   SUBPART 2.3 Amendments to Section 7.14.  Section 7.14 of the Existing  Credit
Agreement is hereby amended and restated in its entirety to read as follows:

     7.14Furtherance Assurances.

     The Borrower shall use its reasonable  best efforts to deliver to the Agent
     on or  before  April  30,  1999  with  respect  to the  leasehold  or other
     ownership  interest of the  Borrower in the Austell  Property at such time,
     such real  property  documents,  instruments  and other  items of the types
     required to be delivered  pursuant to Section 5.1(e),  in each case in form
     and substance reasonably acceptable to the Agent.

   SUBPART 2.4  Amendments  to Section 8.7.  Section 8.7 of the Existing  Credit
Agreement is hereby amended and restated in its entirety to read as follows:

   8.7   Restricted Payments.

     The Credit Parties will not permit the Parent or any Consolidated Party to,
     directly or indirectly,  declare,  order,  make or set apart any sum for or
     pay any  Restricted  Payment,  except (i)  payments  and  distributions  to
     consummate the Recapitalization pursuant to the Recapitalization  Documents
     (a) on the Closing Date or (b) to the extent consisting of the distribution
     of the Parity Notes (and  interest  thereon) and cash in lieu of fractional
     amounts thereof,  (ii) the repurchase,  redemption or other  acquisition or
     retirement  for value of any Equity  Interests  in the  Parent  held by any
     member of the  executive  management  of the Parent  and its  Subsidiaries,
     provided that the aggregate price paid for all such repurchased,  redeemed,
     acquired or retired Capital Stock shall not exceed $1,000,000 in any fiscal
     year,  (iii) any payment by the Parent in connection with the repurchase of
     outstanding  shares  of  Employee  Preferred  Stock (or any class of Equity
     Interests into which such shares of Employee Preferred Stock are converted)
     following the death, termination,  disability, retirement or termination or
     other  separation  of  employment  of any employee  that is the  beneficial
     holder  thereof,  (iv) payments by any  Consolidated  Parties to the Parent
     pursuant to a tax  sharing  agreement  under  which each such  Consolidated
     Party is  allocated  its  proportionate  share of the tax  liability of the
     affiliated group of corporations that file consolidated  federal income tax
     returns (or that file state or local  income tax returns on a  consolidated
     basis),  (v) the  repurchase  of Equity  Interests  of the Parent  with the
     proceeds of any issuance by the Parent to the Sponsor or its  Affiliates or
     designated  co-investors or any of the officers,  directors or employees of
     the Parent or a Consolidated  Party of any Equity  Interests of the Parent,
     (vi) to the extent not  permitted  pursuant  to the  immediately  preceding
     clause (v),  payments  made to or for the benefit of  beneficiaries  of the
     Consolidated Parties' employee bonus plan in lieu of the issuance to or for
     the benefit of such  beneficiaries of Employee  Preferred  Stock,  provided
     that such payments are made with the proceeds of any issuance by the Parent
     to the Sponsor or its Affiliates or designated  co-investors  or any of the
     officers,  directors or employees of the Parent or a Consolidated  Party of
     any Equity  Interests of the Parent,  and (vii) provided that no Default or
     Event of Default exists either before or after giving effect  thereto,  (A)
     loans,  advances,  dividends or distributions by any Consolidated  Party to
     the  Parent not to exceed an amount  necessary  to permit the Parent to pay
     its costs (including all professional fees and expenses) incurred to comply
     with its reporting obligations under federal or state laws or in connection
     with  reporting or other  obligations  under this Credit  Agreement and the
     Credit  Documents,  (B) loans or advances by any Consolidated  Party to the
     Parent  not to exceed an amount  necessary  to permit the Parent to pay its
     interim expenses  incurred in connection with any public offering of equity
     securities  the net  proceeds  of which  are  specifically  intended  to be
     received by or  contributed or loaned to the Borrower,  which,  unless such
     offering  shall  have  been  terminated  by the board of  directors  of the
     Parent,  shall be repaid to the  Borrower  promptly  out of the proceeds of
     such offering and (C) loans,  advances,  dividends or  distributions by any
     Consolidated  Party to the Parent to pay for corporate,  administrative and
     operating expenses in the ordinary course of business.


   PART 3
   CONDITIONS TO EFFECTIVENESS

   SUBPART 3.1 Amendment No. 3 Effective  Date.  This Amendment  shall
be and become  effective  December  30,  1998 (the  "Amendment  No. 3 
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. 3."

         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 Amendment Fee. By its execution of this  Amendment,  the Borrower
agrees  to pay an  amendment  fee (the  "Amendment  Fee")  equal to 0.15% of the
Commitment of each Lender which executes this Amendment on or prior to March 19,
1999. The Amendment Fee shall be due and payable on or before March 30, 1999.

   SUBPART 4.4  Cross-References.  References  in this  Amendment to any Part or
Subpart  are,  unless  otherwise  specified,  to such  Part or  Subpart  of this
Amendment.

   SUBPART 4.5 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  4.6  References  in Other  Credit  Documents.  At such  time as this
Amendment No. 3 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. 3.

   SUBPART  4.7  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 4.8  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 4.9 Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their  respective  successors and
assigns.





10

   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:                     


                  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:                     



                  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:                     


                  FLEET BUSINESS CREDIT CORPORATION
                  (successor in interest to Sanwa Business Credit
Corporation)

                  By:                    
                  Name:                      
                  Title:                     




                        [Signatures Continued]









<PAGE>


                  BANK AUSTRIA CREDITANSTALT
                  CORPORATE FINANCE, INC.

                  By:                    
                  Name:                      
                  Title:                     

                  By:                    
                  Name:                      
                  Title:                     


                  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:                     


                  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:                     


                  MERRILL LYNCH SENIOR FLOATING
                  RATE FUND, INC.

                  By:                    
                  Name:                      
                  Title:                     


                  EATON VANCE SENIOR INCOME TRUST

                  By:                    
                  Name:                      
                  Title: