UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X] QUATERLY REPORT UNDER SECTION 13 OR 15(d) OF THE 
          SECURITIES AND EXCHANGE ACT OF 1934 
     For the quarterly period ended September 26, 1998

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) 
          OF THE SECURITIES EXCHANGE ACT OF 1934
     For the transition period from_______to_______


                       Commission File Number: 333-58059

                              Cluett American Corp.
             (Exact name of registrant as specified in its charter)

Delaware                                                   22-2397044
(State or other jurisdiction of                           (IRS Employer
incorporation or organization)                         Identification No.)

                     48 West 38th Street New York, NY 10018
              (Address of principal executive offices) (Zip code)

                                  212-984-8900
                         (Registrant's telephone number)


Indicate by check mark whether  registrant (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that registrant was required
to file such reports),  and (2) has been subject to such filing  requirement for
the past 90 days. Yes X No


     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be filed by  Sections  12, 13 or 15 (d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes X No



<PAGE>



                                     INDEX

PART I. FINANCIAL INFORMATION

Condensed Consolidated Balance Sheets as of September 26, 1998 and 
December 31, 1997........................................................2

Condensed Consolidated Statements of Operations for the thirteen 
and thirty-nine weeks ended September 26, 1998 and 
September 27, 1997.......................................................3

Condensed Consolidated Statements of Stockholders' Deficit 
for the thirty-nine weeks ended September 26, 1998.......................4

Condensed Consolidated  Statements of Cash Flows for the 
thirty-nine weeks ended September 26, 1998 and 
September 27, 1997.......................................................5

Notes to Condensed Consolidated Financial Statements 

Management's Discussion and Analysis of Financial Condition and 
Results of Operations...................................................10


PART II - Other Information

Item 6 - Exhibits and Reports on Form 8-K...............................15

Signature...............................................................18

Exhibit - Financial Data Schedule





<PAGE>


                              Cluett American Corp.
                      Condensed Consolidated Balance Sheets
                      (In Thousands, except per share data)

                                                     September 26,  December 31,
                                                         1998           1997
                                                  ------------------------------
                                                      (Unaudited)

                                   Assets
Current assets:
 Cash and cash equivalents.......................      $    1,651    $  10,019
 Accounts receivable, net........................          54,226       48,442
 Inventories (Note 3)............................          92,233       78,236
 Prepaid expenses and other current assets.......           3,387        4,234
                                                    ----------------------------
   Total current assets..........................         151,497      140,931
 Property, plant and equipment, net..............          47,495       47,698
 Pension asset...................................          31,722       30,227
 Deferred financing fees.........................          11,572            -
 Other noncurrent assets.........................           1,769        1,161
                                                    ----------------------------
Total assets.....................................        $244,055     $220,017
                                                    ============================

                  Liabilities and stockholders' deficit 
Current liabilities:
 Accounts payable and accrued expenses...........       $  38,394    $  46,486
 Accrued interest payable........................           5,312            -
 Current portion of long-term debt...............          10,639        9,172
 Income taxes payable............................           1,596        2,153
 Other current liabilities.......................             580            -
                                                    ----------------------------
Total current liabilities........................          56,521       57,811

 Due to parent...................................           3,006       27,613
 Long-term debt and capital lease obligations....         253,640        1,960
 Dividends payable...............................           2,084            -
 Other non-current liabilities...................             242          500
 Liabilities subject to compromise...............               -      168,932
 Redeemable preferred stock, $1 par value:
  authorized 50,000 shares,issued 
  and outstanding 15,000 shares..................               -       20,009
 Senior exchangeable preferred stock, $.1 par value: 
  authorized 4,950,000,issued and outstanding 
  500,000 shares (liquidation preference
  $50,000,000)...................................          48,176            -

Stockholders' deficit:

 Common stock, $1 par value:  
  authorized,  issued and outstanding 1,000 shares
  at September 26, 1998, 2,000 shares 
 (1,000 BIC, 1,000 CDC)at December 31, 1997......               1            2
 Additional paid-in capital......................         118,553      173,592
 Accumulated deficit.............................        (237,498)    (228,099)
 Equity adjustment from foreign currency 
  translation....................................            (670)      (2,303)
                                                    ----------------------------
Total stockholders' deficit......................        (119,614)     (56,808)
                                                    ----------------------------
Total liabilities and stockholders' deficit......       $ 244,055    $ 220,017
                                                    ============================


                            See accompanying notes.





                                     Page 2
<PAGE>

<TABLE>

                             Cluett American Corp.
          Condensed Consolidated Statements of Operations (Unaudited)
                      (In Thousands, except per share data)


<CAPTION>

                                                                            Thirteen weeks ended        Thirty-nine weeks ended
                                                                        September 26, September 27,   September 26,  September 27,
                                                                            1998           1997           1998           1997

<S>                                                                        <C>            <C>            <C>            <C>
Net sales...........................................................       $93,264        $97,085        $261,898       $259,091
Cost of goods sold..................................................        66,257         69,176         182,695        181,967
                                                                       -------------------------------------------------------------

Gross profit........................................................        27,007         27,909          79,203         77,124

Selling, general and administrative expenses........................        21,129         20,061          59,941         57,326
Facility closing and reengineering costs............................             -          1,620           1,022          1,903
                                                                       -------------------------------------------------------------
                                                                            21,129         21,681          60,963         59,229
Operating income....................................................         5,878          6,228          18,240         17,895
Interest expense, net...............................................         5,859          3,889          12,980         11,192
Other (income) expense, net.........................................           422         (1,219)            564         (2,455)
                                                                       -------------------------------------------------------------
Income before reorganization costs and income taxes.................          (403)         3,558           4,696          9,158
Bankruptcy reorganization costs.....................................            -             599          13,179          3,520
Income (loss) before provision for income taxes.....................          (403)         2,959          (8,483)         5,638

Provision for income taxes..........................................           312            272             916            770
                                                                       -------------------------------------------------------------
Net income (loss)...................................................       $  (715)       $ 2,687       $  (9,399)       $ 4,868
                                                                       =============================================================

<FN>
                             See accompanying notes.
</FN>

</TABLE>





                                     Page 3
<PAGE>


<TABLE>

                             Cluett American Corp.
     Condensed Consolidated Statements of Stockholders' Deficit (Unaudited)
                        (In Thousands, except per share data)
<CAPTION>

                                                                                                 Equity
                                                                                               Adjustment
                                                                                                 From
                                                               Additional                       Foreign
                                        Common Stock             Paid-in       Accumulated      Currency
                                      Shares      Amount         Capital         Deficit       Translation       Total
                                    ---------- ------------ --------------- --------------- --------------- ---------------
<S>                                   <C>             <C>       <C>           <C>               <C>            <C>
Balance at December 31, 1997           2,000          $2        $173,592      $(228,099)        $(2,303)       $(56,808)
Foreign currency translation
 adjustment                                                            -              -           1,633           1,633
Accretion of dividend
 on Redeemable                                                            
 preferred stock                                                  (2,077)             -               -          (2,077)
Distribution to CAIC                                             (87,522)             -               -         (87,522)
Contribution of intercompany
 debt due to CAIC                                                 27,609              -               -          27,609
Distribution to CAIC for debt
 purchase                                                        (13,000)             -               -         (13,000)
Contribution of preferred
 stock from CAIC                                                  22,086              -               -          22,086
Contribution of CDC to CAC
 from CAIC                            (1,000)         (1)              -              -               -              (1)
Accretion of dividend
 on Senior exchangeable                                               
 preferred stock                                                  (2,084)             -               -          (2,084)
Accretion of fees on
 Senior exchangeable
 preferred stock                                                     (51)             -               -             (51)
Net loss                                                                         (9,399)              -          (9,399)
                                    ---------- ------------ --------------- --------------- --------------- ---------------
Balance at September 26, 1998          1,000          $1        $118,553      $(237,498)          $(670)      $(119,614)
                                    ========== ============ =============== =============== =============== ===============

<FN>

                             See accompanying notes.
</FN>
</TABLE>



                                     Page 4
<PAGE>


<TABLE>

                             Cluett American Corp.
           Condensed Consolidated Statements of Cash Flows (Unaudited)
                                 (In Thousands)
<CAPTION>

                                                                               Thirty-nine weeks ended
                                                                            September 26,  September 27,
                                                                                 1998           1997
                                                                            ------------------------------
<S>                                                                            <C>            <C> 
Operating activities:
Net income (loss)..................................................            $ (9,399)      $ 4,868
Adjustment to reconcile net income to net cash and cash
   equivalents used in operating activities:
   Depreciation and amortization...................................               6,880         6,012
     Changes of liabilities subject to compromise..................             (22,442)       (1,577)
                                                                            ----------------------------
                                                                                (24,961)        9,303
Changes in operating assets and liabilities:
   Accounts receivable.............................................              (6,382)       (4,442)
   Inventories.....................................................             (14,661)      (14,463)
   Prepaid expenses and other current assets.......................             (12,099)          421
   Pension and other noncurrent assets.............................                (561)       (1,505)
   Accounts payable and accrued expenses...........................                 727         1,434
   Income taxes payable............................................                (557)         (390)
   Other liabilities...............................................               3,795           408
                                                                            ----------------------------
Net cash and cash equivalents used in operating activities.........             (54,699)       (9,234)

Investing activities:
Purchase of fixed assets...........................................              (7,640)       (6,837)
Proceeds on disposal of fixed assets...............................                  77             -
                                                                            ----------------------------
Net cash and cash equivalents used in investing activities.........              (7,563)       (6,837)

Financing activities:
Issuance of preferred stock........................................              48,125             -
Distribution to parent.............................................             (87,522)            -
Principal payments on pre-petition credit facility.................            (146,490)
Proceeds from long-term debt (Note 4)..............................             222,000             -
Net borrowings under line-of-credit agreement (Note 4).............              20,213        13,417
Principal payments on capital leases...............................              (2,396)         (894)
                                                                            ----------------------------
Net cash and cash equivalents provided by financing activities.....              53,930        12,523

Effect of foreign currency translation.............................                 (36)            -
                                                                            ----------------------------
Net change in cash and cash equivalents............................              (8,368)       (3,548)
Cash and cash equivalents at beginning of year.....................              10,019         5,784
                                                                            ----------------------------
Cash and cash equivalents at end of period.........................              $1,651       $ 2,236
                                                                            ============================





<FN>

                             See accompanying notes.

</FN>
</TABLE>




                                     Page 5
<PAGE>



                             Cluett American Corp.
        Notes to Condensed Consolidated Financial Statements (Unaudited)


1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Cluett
American  Corp.  (CAC),   formerly  known  as  Bidermann  Industries  Corp.  and
Affiliates,  (the  "Company")  have been prepared in accordance  with  generally
accepted  accounting  principles for interim financial  information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Operating results for the
thirteen  and  thirty-nine  week periods  ending  September  26,  1998,  are not
necessarily  indicative  of the results that may be expected for the year ending
December  31,  1998.  For  further  information,  refer to the annual  financial
statements and footnotes  thereto of Bidermann  Industries  Corp. and Affiliates
included in the Registration Statement on Form S-4 filed with the Securities and
Exchange Commission on October 23, 1998.

The consolidated  financial  statements include all subsidiary  companies of CAC
including  Consumer Direct Corp. (CDC).  Significant  intercompany  transactions
have been eliminated in consolidation. Certain consolidated foreign subsidiaries
have fiscal years ending November 30.


2. General

On March 31, 1998, the Company's and Cluett American  Investment Corp.'s (CAIC),
formerly  known  as  Bidermann  Industries  USA,  Inc.,  Third  Amended  Plan of
Reorganization  (the "Plan") was  confirmed by the Court.  On May 18, 1998,  the
Plan  was  consummated  completing  CAIC's  (and  its  subsidiaries)  bankruptcy
proceeding  which  began  on July  17,  1995.  In  connection  with the Plan and
pursuant to a  subscription  agreement  dated March 30, 1998 (the  "Subscription
Agreement"),  Vestar  Capital  Partners  III,  L.P.  or a  designated  affiliate
("Vestar"),  Alvarez  &  Marsal,  Inc.  or a  designated  affiliate  ("A&M"),  a
turnaround  management  firm  assisting  the  Company,  and  certain  members of
existing   management  made  a  $68  million  equity   investment  (the  "Equity
Investment") in CAIC. Vestar provided  approximately $61.3 million of the Equity
Investment in the form of a $24.8 million common equity  investment in CAIC (the
"Holdings  Common  Stock")  and a $36.5  million  investment  in  Class C Junior
Preferred Stock (the "Class C Junior Preferred Stock").  A&M and certain members
of management  provided  additional Equity  Investments of $4.9 million and $1.8
million in CAIC Common Stock, respectively. The balance of the CAIC Common Stock
is held by the shareholders that were shareholders prior to the bankruptcy ("Old
Equity").  Holdings Common Stock is held as follows:  Vestar - 70.8%, A&M - 14%,
Management - 5.1%, Old Equity - 10.1%.

The  Company  and CAIC  used  the  Equity  Investment  in  conjunction  with (i)
borrowings  under a new $160.0  million  senior  credit  facility,  (ii)  $112.0
million proceeds from the Company's  issuance of Senior  Subordinated  Notes Due
2008 and $48.125  million net proceeds from the issuance of Senior  Exchangeable
Preferred   Stock  Due  2010,   collectively   the   "Offerings,"  to  effect  a
recapitalization  (the  "Recapitalization")  under  which  all of  CAIC  and the
Company's  existing  pre-petition   obligations  and  all  borrowing  under  the
Company's debtor-in-possession facility, were paid in full.





                                     Page 6
<PAGE>



                             Cluett American Corp.
  Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)



2. General (continued)

The following  table sets forth the uses of funds for CAIC and the Company after
giving  effect  to the  Recapitalization  and the  application  of the  proceeds
therefrom:
                                                   The
                                                 Company    CAIC       Total
                                                 -------------------------------
                                                      (In Millions)

Uses of Funds:
   Payment of Allowed Claims.................... $168.9     $122.6    $291.5
   Payment of Estimated Post-Petition Interest..   12.4       24.3      36.7
   Refinancing of Existing Debt.................    7.0          -       7.0
   Estimated Fees and Expenses..................   13.5        5.4      18.9
                                                 -------------------------------
                                                 $201.8     $152.3    $354.1
                                                 ===============================


3. Inventories

Inventories consist of the following:

                                            September 26,    December 31,
                                                1998              1997
                                       ------------------ -------------------
                                                  (In Thousands)


Finished goods                                 $76,953            $65,558
Work in process                                  4,462              4,326
Raw materials and supplies                      10,818              8,352
                                       ------------------ -------------------
                                               $92,233            $78,236
                                       ================== ===================





                                     Page 7
<PAGE>



                             Cluett American Corp.
  Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)



4. Indebtedness and Financial Arrangements

On May 18, 1998 the Company  entered into a  $160,000,000  senior secured credit
facility.  The facility is comprised of three  different  loans.  A  $50,000,000
revolving credit facility, a $50,000,000 term loan ("Term A"), and a $60,000,000
term loan ("Term B"). The revolving  credit  facility and the Term A loan mature
in 2004. The Term B loan matures in 2005.  Interest  rates for borrowings  under
the  revolving  credit  facility  and the Term A loans are based on either LIBOR
plus  225  basis  points  or the  alternative  base  rate  (the  greater  of the
NationsBank prime rate or the Fed Funds rate) plus 125 basis points. Interest on
the Term B loan is based on LIBOR plus 250 basis points or the alternative  base
rate plus 150 basis points.


                                                      September 26, December 31,
                                                           1998        1997
                                                      ------------- ------------
                                                            (In Thousands)

Short-term Debt:
   Current portion of capital lease obligations         $     14      $     724
   Current portion of long-term debt                       2,600              -
   Canada operating loan                                   8,025          2,192
   CDG operating facility                                      -          6,256
                                                       ------------- -----------
                                                          10,639          9,172
Long-term Debt:
    Liabilities Subject to Compromise:
      Revolving credit facility                                -         52,638
      Term loan                                                -         70,459
      Accrued interest                                         -         22,532
      Trade accounts and expense payable                       -         18,238
      Lease rejection liabilities                             -           5,065
   Capital lease obligations                                 240          1,960
   Revolving credit facility                              21,000              -
   Senior credit facility                                107,400              -
   Senior subordinated 10 1/8% notes                     125,000              -
                                                       ------------- -----------
                                                         253,640        170,892
                                                       ------------- -----------
                                                        $264,279       $180,064
                                                       ============= ===========






                                     Page 8
<PAGE>



                             Cluett American Corp.
  Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)


5. Accounting Standards Recently Adopted

Statement  of  Financial  Accounting  Standards  No. 130 (SFAS 130),  "Reporting
Comprehensive  Income" establishes new rules for reporting  comprehensive income
and its  components.  SFAS 130 is  effective  for fiscal  year  beginning  after
December 15, 1997,  and was adopted by the Company for the fiscal year beginning
January 1, 1998. There was no impact on net income or shareholders' deficit from
the adoption of the statement.

For the periods  ending  September 26, 1998 and September 27, 1997,  accumulated
other  comprehensive  income as shown in the  consolidated  balance  sheets  was
comprised  of  foreign  currency  translation  adjustments,  which  prior to the
adoption was reported  separately in  shareholders'  deficit.  The components of
comprehensive income, net of tax, for these periods were as follows:





                                 Thirteen           Thirty-nine
                               Weeks Ended          Weeks Ended
                            9/26/98   9/27/97    9/26/98     9/27/97
                           --------- ---------- ----------- ---------
                                          (In Thousands)

Net income (loss)..........  $(715)     $2,687    $(9,399)    $4,868
Translation adjustment.....   (352)         62      1,633       (434)
                           --------- ---------- ----------- ---------
Comprehensive income.......$(1,067)     $2,749    $(7,766)    $4,434
                           ========= ========== =========== =========














                                     Page 9
<PAGE>



                             Cluett American Corp.


Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The table  below  sets forth net  sales,  gross  profit,  selling,  general  and
administrative, operating income, bankruptcy reorganization costs and net income
(loss) of the  Company  for the  thirteen  weeks  ended  September  26, 1998 and
September 27, 1997.
                                                       Thirteen weeks ended
                                                    September 26,  September 27,
                                                        1998           1997
                                                    -------------  -------------
                                                           (In Thousands)

Net sales......................................        $93,264        $97,085
Gross profit...................................         27,007         27,909
Selling, general and administrative expenses...         21,129         20,061
Operating income ..............................          5,878          6,228
Bankruptcy reorganization costs................              -            599
Net income(loss)...............................           (715)         2,687



The table  below sets  forth net sales and  operating  income for the  Company's
ongoing "Core" operations,  which include the Shirt Group and Sock Group for the
thirteen  weeks,  ended September 26, 1998 and September 27, 1997 separated from
the  "Non-Core"  operations  of the  Designer  Group and  facility  closing  and
reengineering  costs.  The Company has entered into  agreements to terminate the
product licenses of the Designer Group.

                                                      Thirteen weeks ended
                                                    September 26,  September 27,
                                                        1998           1997
                                                  --------------  --------------
                                                         (In Thousands)

Net sales
     Core....................................         $84,568        $81,064
     Non-core................................           8,696         16,021
                                                 -------------------------------
          Total..............................         $93,264        $97,085
                                                 ===============================

Operating income (loss)
     Core....................................          $9,729         $7,782
     Non-core................................          (3,851)            66
     Facility closing and 
       reengineering costs...................               -         (1,620)
                                                 -------------------------------
          Total..............................          $5,878         $6,228
                                                 ===============================


Results of Operations: Thirteen weeks ended September 26, 1998

Net Sales:  Total net sales for the  thirteen  weeks  ended  September  26, 1998
decreased  $3.8 million,  or 3.9%,  to $93.3 million  compared with net sales of
$97.1  million for the thirteen  weeks ended  September 27, 1997.  However,  net
sales for the thirteen  weeks ended  September 26, 1998 for the  Company's  core
businesses  increased 4.3% or $3.5 million,  to $84.6 million  compared with the
same period last year.  This sales increase is  attributable  to stronger market
performance  in the Company's  Core Gold Toe and Arrow brands.  This increase in
net sales is  attributable  to higher unit  volumes and average  selling  prices
accompanied with lower customer returns and allowances.

Gross  Profit:  Gross profit for the  thirteen  weeks ended  September  26, 1998
decreased $.9 million,  or 3.2%, to $27.0 million  compared with gross profit of
$27.9  million for the thirteen  weeks ended  September  27, 1997.  Gross profit
margins in the core businesses of the Sock Group and Shirt Group improved during
this period from 29.7% to 31.8% of net sales.  This  improvement in gross margin
resulted from improved  manufacturing  efficiencies  and higher average  selling
prices. However, this performance on a consolidated basis was offset by a margin
decline in the Designer Group.

Selling,   General   and   Administrative   Expenses:   Selling,   general   and
administrative  expenses  increased to $21.1 million (22.7% of net sales) in the
third  quarter  of 1998 from $20.1  million  for the same  period in 1997.  This
increase  is  primarily  a  result  of  increased  costs  associated  with a new
marketing  plan and  global  brand  strategy  for  Arrow.  The  Company  is also
developing a sales  infrastructure  to explore  future  business  opportunities.
Overall, these expenses are on target with the Company's Core business strategic
plans.



                                    Page 10
<PAGE>





                             Cluett American Corp.


Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)

Operating  Income:  The Company's  operating  income  declined  slightly to $5.9
million  from $6.2  million for the  thirteen  weeks ended  September  26, 1998.
However,  the Core businesses operating income increased 24.4% from $7.8 million
to  $9.7  million  because  of  higher  sales  volume  and the  above  mentioned
associated gross margin improvement.

Bankruptcy Reorganization Costs: The Company expects to have no future
expenditures of this nature.

Net Income (loss):  Net income for the thirteen  weeks ended  September 26, 1998
decreased $3.4 million to a loss of $0.7 million from income of $2.7 million for
the same period in 1997. This reduction was primarily related to the exit of the
Designer Group business and the related licenses.





                                    Page 11
<PAGE>



                              Cluett American Corp.


Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)

The table below sets forth net sales, gross profit,  operating income,  selling,
general  and  administrative,  bankruptcy  reorganization  costs and net  income
(loss) of the Company for the  thirty-nine  weeks ended  September  26, 1998 and
September 27, 1997.

                                                     Thirty-nine weeks ended
                                                   September 26,  September 27,
                                                         1998          1997
                                                   -----------------------------
                                                           (In Thousands)

Net sales..........................................   $261,898       $259,091
Gross profit.......................................     79,203         77,124
Selling, general and administrative expenses.......     59,941         57,326
Operating income ..................................     18,240         17,895
Bankruptcy reorganization costs....................     13,179          3,520
Net income(loss)...................................     (9,399)         4,868


The table  below sets  forth net sales and  operating  income for the  Company's
ongoing "Core" operations,  which include the Shirt Group and Sock Group for the
thirty-nine  weeks,  ended  September 26, 1998 and September 27, 1997  separated
from the "Non-Core"  operations of the Designer  Group and facility  closing and
reengineering costs.


                                                      Thirty-nine weeks ended
                                                    September 26, September 27,
                                                       1998           1997
                                                   -----------------------------
                                                          (In Thousands)

Net sales
     Core.......................................     $238,683       $225,088
     Non-core...................................       23,215         34,003
                                                   -----------------------------
          Total.................................     $261,898       $259,091
                                                   =============================

Operating income (loss)
     Core.......................................      $25,251        $21,087
     Non-core...................................       (5,989)        (1,289)
     Facility closing and 
       reengineering costs......................       (1,022)        (1,903)
                                                   -----------------------------
          Total.................................      $18,240        $17,895
                                                   =============================


Results of Operations: Thirty-nine weeks ended September 26, 1998

Net  Sales:  Net  sales for the  thirty-nine  weeks  ended  September  26,  1998
increased $2.8 million,  or 1.1%, to $261.9  million  compared with net sales of
$259.1 million for the thirty-nine weeks ended September 27, 1997. However,  net
sales for the thirty-nine  weeks ended September 26, 1998 for the Company's core
businesses  increased 6.0% or $13.6 million,  to $238.7 million  compared to the
thirty-nine weeks ended September 27,1997. The increase was due primarily to the
Company's  expanded product  offerings in Gold Toe and other Sock Group licensed
brands including Nautica and Jockey,  accompanied with increased market share in
the Shirt Group with the Arrow brand.

Gross Profit:  Gross profit for the  thirty-nine  weeks ended September 26, 1998
increased $2.1 million, or 2.7% to $79.2 million from $77.1 million for the same
period of 1997. The Core  businesses  gross margin improved from 30.3% to 31.7%.
This improvement was primarily the result of a more favorable  regular/off-price
mix of branded  products.  Led by Gold Toe and Arrow, the Core business has also
benefited from improved manufacturing efficiencies.

Selling,   General   and   Administrative   Expenses:   Selling,   general   and
administrative  expenses  for the  thirty-nine  weeks ended  September  26, 1998
increased  $2.6 million to $59.9  million  compared  with  selling,  general and
administrative  expenses  of  $57.3  million  for the  thirty-nine  weeks  ended
September 27, 1997.  This increase is primarily a result of increased  marketing
expenses and operational consolidation efforts. This spending is consistent with
the Company's  strategic plan and should result in significant  future operating
savings.





                                    Page 12
<PAGE>



                       Cluett American Corp.


Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)

Operating  Income:  The Company's  operating income of $18.2 million is slightly
higher than the prior year's $17.9 million. The Core businesses operating income
increased  by $4.2  million or 19.9% from  $21.1  million to $25.3  million as a
result of higher sales volume and associated gross margins.

Bankruptcy   Reorganization  Costs:  Bankruptcy  reorganization  costs  for  the
thirty-nine  weeks ended  September  26, 1998  increased  $9.7  million to $13.2
million  compared with bankruptcy  reorganization  costs of $3.5 million for the
thirty-nine  weeks  ended  September  27,  1997.  This  increase  in  bankruptcy
reorganization  costs  resulted  from the  recognition  of default  interest and
administrative  expenses  payable  in  accordance  with the terms of the Plan of
Reorganization.  The  Company  expects  to have no future  expenditures  of this
nature.

Net Income (loss): Net income for the thirty-nine weeks ended September 26, 1998
decreased  $14.3  million to a loss of $9.4  million from income of $4.9 million
for the same period in 1997. This reduction was primarily  related to bankruptcy
reorganization costs associated with the Plan of Reorganization.

Year 2000: The Company believes that its systems are capable of functioning from
and after the year 2000 without any material  additional  costs.  The ability of
third parties with which the Company  transacts  business to adequately  address
their  year 2000  issues is outside of the  Company's  control.  There can be no
assurance  that the failure of the Company or such third  parties to  adequately
address  their  respective  year 2000  issues  will not have a material  adverse
effect on the Company.

Seasonality:  The Company's  business is seasonal,  with higher sales and income
during the third and fourth quarters, which coincide with the Company's two peak
selling seasons: the first running from the start of the back-to-school and fall
selling seasons beginning in August and continuing  through  September,  and the
second being the Christmas  selling season beginning with the weekend  following
Thanksgiving.

Also  contributing  to the  strength of the third  quarter is the high volume of
fall shipments to wholesale  customers  which are generally more profitable than
spring  shipments.  The slower spring selling season at wholesale  combines with
retail seasonality to make the first quarter particularly weak.





                                    Page 13
<PAGE>



                             Cluett American Corp.


Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)

Liquidity and Capital Resources

The seasonal nature of the Company's business typically requires the use of cash
to fund a build-up in the  Company's  inventory  in the first half of each year.
During the third and fourth quarters,  the Company's higher level of sales tends
to reduce its inventory levels and generate accounts  receivable.  This increase
in accounts receivable generates operating cash to reduce debt during the fourth
and first quarters of each year.

The  Company's  principal  sources of liquidity are expected to be cash from its
operations and funds  available  under the $50 million Senior  Revolving  Credit
Facility.  The Company's  principal uses of cash for the next several years will
be  operating  expenses,  capital  expenditures  and debt  service  requirements
related to the Company's financing agreements.

Net cash used by  operations  in the first  thirty-nine  weeks of 1998 was $54.7
million  compared  with net cash used by operations of $9.2 million for the same
period in 1997.  This  increase  in cash used by  operations  is  related to the
payment  of  prepetition  liabilities  of  $167.0  million  resulting  from  the
bankruptcy. Additionally, the Company paid loan fees of $11.9 million related to
the new $160.0 million senior credit facility, issuance of $125.0 million senior
subordinated notes and the issuance of $50.0 million preferred stock.

Net capital  spending in the first  thirty-nine  weeks of 1998 was $7.6  million
compared to $6.8  million for the same period in 1997.  The Company  anticipates
overall  capital  spending  levels for the 1998 year to be  approximately  $10.0
million.

The Company has a credit  agreement,  which includes a revolving credit facility
under which the Company  may, at its  option,  borrow and repay  amounts  within
certain  limits.  The total amount  available to the Company under the revolving
credit  facility  is  $50.0  million,   subject  to  certain  customary  drawing
conditions. The Company believes that its borrowing capacity under this facility
is adequate for its 1998 peak seasonal needs.

The Company  expects a net  working  capital  reduction  of  approximately  $8.8
million  as a result of  exiting  the  Designer  Group  along  with the  related
Burberry and YSL license agreements.

The  Company  will  rely  on  internally  generated  funds  and,  to the  extent
necessary,  on  borrowings  under  the  revolving  credit  facility  to meet its
liquidity needs.

Cautionary Statement Regarding Forward-Looking Statements

The preceding  Management's  Discussion  and Analysis  contains  forward-looking
statements  regarding the Company's  performance,  liquidity and the adequacy of
its  capital  resources.  Those  statements  are based on  management's  current
assumptions and expectations and are subject to certain risks and  uncertainties
that could cause actual results to differ materially from those projected.  As a
result, the Company cautions that the  forward-looking  statements are qualified
by the  risks of  increased  competition,  shifting  consumer  demand,  changing
consumer credit markets and general  economic  conditions,  hiring and retaining
effective team members,  sourcing  merchandise  from domestic and  international
vendors,   preparing  for  the  impact  of  year  2000,   and  other  risks  and
uncertainties.  Therefore,  while management believes that there is a reasonable
basis for the forward-looking statements, undue reliance should not be placed on
those statements.





                                    Page 14
<PAGE>






Part II - Other Information

Item 6.  Exhibits and Reports on Form 8-K

(a)  The following exhibits are included herein:

     2.1  Third Amended Plan of Reorganization of Cluett American Corp. and
          Cluett American Investment Corp. (incorporated by reference to Exhibit
          2.1 to the Company's Registration Statement on Form S-4 (Reg. No.
          333-58059) filed on June 30, 1998).

     2.2  Subscription Agreement dated as of March 30, 1998 among Bidermann
          Industries U.S.A., Inc., Vestar Capital Partners III, L.P. and Alvarez
          & Marsal, Inc. (incorporated by reference to Exhibit 2.2 to the
          Company's Registration Statement on Form S-4 (Reg. No. 333-58059)
          filed on June 30, 1998).

     2.3  Stockholders' Agreement dated as of May 18, 1998 among Cluett American
          Investment Corp., Vestar Capital Partners III, L.P., A&M Investment
          Associates #7, LLC, the Co-Investors named therein, the Original
          Equity Holders named therein and the Management Investors named
          therein (incorporated by reference to Exhibit 2.3 to the Company's
          Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
          30, 1998).

     2.4  Joinder Agreement dated as of June 30, 1998 among Cluett American
          Investment Corp., Vestar Capital Partners III, L.P. and each other
          signatory thereto (an "Additional Stockholder") (incorporated by
          reference to Exhibit 2.4 to the Company's Registration Statement on
          Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

     3.1  Restated Certificate of Incorporation of Cluett American Corp.
          (incorporated by reference to Exhibit 3.1 to the Company's
          Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
          30, 1998). 

     3.2  Bylaws of Cluett American Corp. (incorporated by reference to Exhibit
          3.2 to the Company's Registration Statement on Form S-4 (Reg. No.
          333-58059) filed on June 30, 1998).

     4.1  Indenture between Cluett American Corp. and The Bank of New York, as
          Trustee (incorporated by reference to Exhibit 4.1 to the Company's
          Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
          30, 1998).

     4.2  Exchange Debenture Indenture between Cluett American Corp. and The
          Bank of New York, as Trustee (incorporated by reference to Exhibit 4.2
          to the Company's Registration Statement on Form S-4 (Reg. No.
          333-58059) filed on June 30, 1998).

     4.3  Certificate of Designations of the 12 1/2% Senior Exchangeable
          Preferred Stock Due 2010 (incorporated by reference to Exhibit 4.3 to
          the Company's Registration Statement on Form S-4 (Reg. No. 333-58059)
          filed on June 30, 1998).

     4.4  Form of 10 1/8% Senior Subordinated Notes Due 2008 (incorporated by
          reference to Exhibit 4.4 to the Company's Registration Statement on
          Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

     4.5  Form of 10 1/8% Series B Senior Subordinated Notes Due 2008
          (incorporated by reference to Exhibit 4.5 to the Company's
          Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
          30, 1998).

     4.6  Form of 12 1/2% Senior Exchangeable Preferred Stock Due 2010
          (incorporated by reference to Exhibit 4.6 to the Company's
          Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
          30, 1998).

     4.7  Form of 12 1/2% Series B Senior Exchangeable Preferred Stock Due 2010
          (incorporated by reference to Exhibit 4.7 to the Company's
          Registration Statement on Form S-4 (Reg. No. 333-58059) filed on June
          30, 1998).

     4.8  Note Registration Rights Agreement dated May 18, 1998 among Cluett
          American Corp., NationsBanc Montgomery Securities LLC and NatWest
          Capital Markets Limited (incorporated by reference to Exhibit 4.8 to
          the Company's Registration Statement on Form S-4 (Reg. No. 333-58059)
          filed on June 30, 1998).

                                    Page 15
<PAGE>

     4.9  Preferred Stock Registration Rights Agreement dated May 18, 1998 among
          Cluett American Corp., NationsBanc Montgomery Securities LLC and
          NatWest Capital Markets Limited (incorporated by reference to Exhibit
          4.9 to the Company's Registration Statement on Form S-4 (Reg. No.
          333-58059) filed on June 30, 1998).

      10.1 $160,000,000 Credit Agreement dated as of May 18, 1998 among Cluett
          American Corp., as the Borrower, NationsBank, N.A., as Administrative
          Agent and Collateral Agent, NationsBanc Montgomery Securities LLC, as
          Arranger and Syndication Agent, and lenders (incorporated by reference
          to Exhibit 10.1 to the Company's Registration Statement on Form S-4
          (Reg. No. 333-58059) filed on June 30, 1998).

     10.2 First Amendment to the Credit Agreement and Assignment dated May 27,
          1998 by and among Cluett American Corp., Cluett American Investment
          Corp., Cluett American Group, Inc. and certain subsidiaries, the
          Existing Lenders, New Lenders, and agents (incorporated by reference
          to Exhibit 10.2 to the Company's Registration Statement on Form S-4
          (Reg. No. 333-58059) filed on June 30, 1998).

     10.3 Security Agreement dated as of May 18, 1998 made by Cluett American
          Corp., Cluett American Investment Corp., Cluett American Group, Inc.
          and certain Subsidiaries of Cluett American Investment Corp. in favor
          of NationsBank, N.A. as agent (incorporated by reference to Exhibit
          10.3 to the Company's Registration Statement on Form S-4 (Reg. No.
          333-58059) filed on June 30, 1998).

     10.4 Pledge Agreement dated as of May 18, 1998 made by Cluett American
          Corp., Cluett American Investment Corp., Cluett American Group, Inc.
          and certain Subsidiaries of Cluett American Investment Corp. in favor
          of NationsBank, N.A., as agent (incorporated by reference to Exhibit
          10.4 to the Company's Registration Statement on Form S-4 (Reg. No.
          333-58059) filed on June 30, 1998).

     10.5 Joinder Agreement dated as of May 18, 1998 by and between Bidermann
          Tailored Clothing, Inc., and NationsBank, N.A., in its capacity as
          Agent under that certain Credit Agreement dated as of May 18, 1998
          (incorporated by reference to Exhibit 10.5 to the Company's
          Registration Statement on Form S-4/A (Reg. No. 333-58059) filed on
          September 3, 1998).

     10.6 CDN $15,000,000 Loan Agreement dated as of August 8, 1997 between
          Cluett, Peabody Canada Inc., as the Borrower, and Congress Financial
          Corporation (Canada), as Lender (incorporated by reference to Exhibit
          10.6 to the Company's Registration Statement on Form S-4 (Reg. No.
          333-58059) filed on June 30, 1998).

     10.7 Employment Agreement dated March 7, 1997 by and between Great American
          Knitting Mills, Inc. and James A. Williams (incorporated by reference
          to Exhibit 10.7 to the Company's Registration Statement on Form S-4/A
          (Reg. No. 333-58059) filed on September 3, 1998).

     10.8 Severance Agreement dated as of August 8, 1997 by and between Cluett,
          Peabody & Co., Inc. and Phil Molinari (incorporated by reference to
          Exhibit 10.8 to the Company's Registration Statement on Form S-4/A
          (Reg. No. 333-58059) filed on September 3, 1998).

     10.9 Severance Agreement dated as of May 5, 1997 by and between Great
          American Knitting Mills, Inc. and William Sheely (incorporated by
          reference to Exhibit 10.9 to the Company's Registration Statement on
          Form S-4/A (Reg. No. 333-58059) filed on September 3, 1998).

     10.10 Severance Agreement dated as of May 5, 1997 by and between Great
          American Knitting Mills, Inc. and Kathy Wilson (incorporated by
          reference to Exhibit 10.10 to the Company's Registration Statement on
          Form S-4/A (Reg. No. 333-58059) filed on September 3, 1998).

     10.11 Advisory Agreement dated May 18, 1998 among Cluett American
          Investment Corp., Cluett American Corp. and Vestar Capital Partners
          (incorporated by reference to Exhibit 10.11 to the Company's
          Registration Statement on Form S-4/A (Reg. No. 333-58059) filed on
          September 3, 1998).

     10.12 Secured Promissory Note dated May 18, 1998 made by A&M Investment
          Associates #7, LLC in favor of Cluett American Investment Corp.
          (incorporated by reference to Exhibit 10.12 to the Company's
          Registration Statement on Form S-4/A (Reg. No. 333-58059) filed on
          September 3, 1998).

     10.13 Form of Secured Promissory Note made by the Management Investors in
          favor of Cluett American Investment Corp. (incorporated by reference
          to Exhibit 10.13 to the Company's Registration Statement on Form S-4/A
          (Reg. No. 333-58059) filed on September 3, 1998).

     10.14 Severance Agreement dated as of August 8, 1997 by and between Cluett,
          Peabody & Co., Inc. and Robert Riesbeck (incorporated by reference to
          Exhibit 10.14 to the Company's Registration Statement on Form S-4/A
          (Reg. No. 333-58059) filed on October 15, 1998).

                                    Page 16
<PAGE>

     10.15 Severance Agreement dated as of January 16, 1996 by and between
          Bidermann Industries Corp. and Steven J. Kaufman (incorporated by
          reference to Exhibit 10.15 to the Company's Registration Statement on
          Form S-4/A (Reg. No. 333-58059) filed on October 15, 1998).

     24   Powers of Attorney (included on pages II-5--II-11) (incorporated by
          reference to Exhibit 24 to the Company's Registration Statement on
          Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

     25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
          Indenture Act of 1939 of The Bank of New York, as Trustee for the 10
          1/8% Senior Subordinated Notes Due 2008 (incorporated by reference to
          Exhibit 25.1 to the Company's Registration Statement on Form S-4 (Reg.
          No. 333-58059) filed on June 30, 1998).

     25.2 Form T-1 Statement of Eligibility and Qualification under the Trust
          Indenture Act of 1939 of The Bank of New York, as Trustee for the 12
          1/2% Subordinated Exchange Debentures Due 2010 (incorporated by
          reference to Exhibit 25.2 to the Company's Registration Statement on
          Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

     27   Financial Data Schedule 

     99.1 Form of Note Letter of Transmittal (incorporated by reference to
          Exhibit 99.1 to the Company's Registration Statement on Form S-4 (Reg.
          No. 333-58059) filed on June 30, 1998).

     99.2 Form of Preferred Stock Letter of Transmittal (incorporated by
          reference to Exhibit 99.2 to the Company's Registration Statement on
          Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

     99.3 Form of Note Notice of Guaranteed Delivery (incorporated by reference
          to Exhibit 99.3 to the Company's Registration Statement on Form S-4
          (Reg. No. 333-58059) filed on June 30, 1998).

     99.4 Form of Preferred Stock Notice of Guaranteed Delivery (incorporated by
          reference to Exhibit 99.4 to the Company's Registration Statement on
          Form S-4 (Reg. No. 333-58059) filed on June 30, 1998).

(b) No reports  have been filed on form 8-K during the  quarter  covered by this
report.




                                    Page 17
<PAGE>



                                   SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned  thereunto
duly authorized.





                                             CLUETT AMERICAN CORP.
                                             Registrant


November 24, 1998                        /s/ Robert J. Riesbeck
                                             Robert J. Riesbeck, Chief Financial
                                             and Accounting Officer

                                    Page 18
<PAGE>