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Tommy Talks Escalate, With Jones and VF Said To Be Suitors

While Tommy Hilfiger hasn’t hung out a “For Sale” sign, sources say vigorous discussions might be going on with Jones Apparel Group and VF...

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It is also believed that Jones, whose volume last year was $4.34 billion, would be eager to take on the Hilfiger business if it lost its Ralph Lauren licenses, which appears inevitable.

"I think there a conversations going on with Jones and VF," said Elaine Hughes, president and chief executive officer of E.A. Hughes Associates, an executive search firm. "The Tommy Hilfiger brand would be great for the VF portfolio, in terms of price points since it goes after a better-price point. It rounds out Mackey’s [McDonald, VF chairman] product portfolio. Jones would also benefit. Jones has put a lot of money behind jeans production with Polo Jeans and Gloria Vanderbilt. An investment in a jeans and bottoms business would bring a good sourcing synergy. If they have a synergy at the back end of these businesses, it affects the bottom line."

One problem facing Peter Boneparth, ceo of Jones, is that he can’t complete a deal until he resolves the issue with its Ralph Lauren licenses. "He can’t buy anything until he gets it done. His hands are tied enormously," said one source.

Apparently, Polo is getting itself prepared to take back the Lauren licenses. Sources said Jackwyn Nemerov, former president of the Jones Apparel Group, has been contacted about running the businesses for Polo. Her non-compete clause with Jones Apparel Group expires in June 2004, and it could take that long for Polo to get the licenses in place. Otherwise, Polo would have to buy Nemerov out of her contract. "Polo needs her and they’ll have to pay," said one source.

Should the licenses revert to Polo, the spring 2004 line would likely be part of the so-called transitional period and coincide with the expiration of Nemerov’s noncompete agreement. Nemerov, who’s considered an excellent merchant, was instrumental in the development of the Lauren brand at Polo. In addition, Polo already has begun lining up potential designers for the lines from among its existing team.

As reported Wednesday, each of the Lauren businesses at Polo — which account for about $1 billion in sales — had a tough quarter. The Lauren line had difficulties early in the quarter, the Ralph business experienced some hits and misses, and Polo Jeans ran into problems in the back half of last year that continued into the first quarter.
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