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As reported, Jones gave up the Lauren by Ralph Lauren license Tuesday and filed a breach of contract lawsuit against Polo and Jackwyn Nemerov, former president of Jones, seeking $550 million in lost profits and punitive damages. Polo shot back with its own lawsuit.
According to sources close to the negotiations, Polo was caught by surprise since it was in a meeting Tuesday morning negotiating a deal with Jones whereby it would pay in excess of $300 million to get back the Polo Jeans business, as well as the Lauren and Ralph licenses. It was during that meeting that Peter Boneparth, Jones’ chief executive officer, informed Polo president and chief operating officer Roger Farah and his team that a lawsuit had been filed.
Despite what is believed will be some initial start-up problems at Polo, observers are convinced there’s huge brand loyalty to the Lauren name that holds a lot of sway with consumers. In addition, there’s the clout that Ralph Lauren, the designer, has with department stores.
Allan Ellinger, managing director of Marketing Management Group, a management consulting firm here, said, “It’s too early to tell [about the Lauren space]. I don’t know how premediated it was. It all comes down to execution at this point. The Lauren organization has very extensive resources.” He said it will depend on fabric availability.
“Will there be enough new fabric to sample and weave and bring to market in time? The logistics are overwhelming at this point. The Lauren organization has extensive resources that they can pull together. The question is whether or not, from a design perspective, they can produce new woven and knit fabrics.”
“Both [Boneparth and Lauren] are very smart guys. This isn’t about transferring a license. It’s transferring a very large business. If they could find a way of cooperating in transferring the license, they’ll minimize the financial exposure to both companies,” said Ellinger.