Hurdle for Jones: Polo Seeks New Terms for Lauren, Ralph

Polo Ralph Lauren Corp. and Jones Apparel Group are in dispute over the terms of their licensing agreement for the Ralph and Lauren lines.

Robert Drbul, analyst at Lehman Brothers, wrote in a research note: "At this point, it is still not clear when the dispute between the two companies will be resolved. While it is a fluid situation that could change at any point, Jones felt the two companies were far enough apart in the negotiations that it was important to update the financial community."

According to Drbul, the $37 million in revenues from the Ralph license were "well below the minimum contracted amount of $100 million. The Ralph license was not profitable for Jones in 2002, as we believe the brand is positioned in an awkward segment of the market, too expensive for juniors and too junior for missy customers. The terms of the licensing agreement restrict Jones’ ability to effectively target either the missy or junior customer."

Industry sources told WWD that there’s been unhappiness between the parties for some time. Executives at Polo deny any dissatisfaction with the working arrangement, while Boneparth during a conference call expressed a desire to continue the relationship. Yet, one bone of contention, financial and apparel sources said, is whether the Lauren line is indeed a mature business.

Boneparth said in previous quarterly earnings conference calls — and a point he reiterated in Tuesday’s call — that Jones doesn’t see Lauren as a "double-digit" growth driver going forward.

Sources close to Polo told WWD that executives at the designer’s company believe otherwise. That has led some in the industry to believe that Polo might be looking to take the license back and handle the production internally. Such a move probably would insert Jones into the sweepstakes to gain the Calvin Klein women’s wear license from Phillips-Van Heusen Corp., once its acquisition of Calvin Klein Inc. is completed.

According to Jennifer Black, analyst at Wells Fargo Securities: "My sense is that Polo wants to have the ability to control their destiny. When Ralph Lauren hears that Lauren is a mature business, I think that that isn’t what he’s thinking. The potential for Lauren is much larger than that. Controlling the brand’s destiny will enable Polo to have a cohesive look applied to all aspects of their business."
Page:  « Previous Next »
load comments


Sign in using your Facebook or Twitter account, or simply type your comment below as a guest by entering your email and name. Your email address will not be shared. Please note that WWD reserves the right to remove profane, distasteful or otherwise inappropriate language.
News from WWD

Sign upSign up for WWD and FN newsletters to receive daily headlines, breaking news alerts and weekly industry wrap-ups.

getIsArchiveOnly= hasAccess=false hasArchiveAccess=false