Most Recent Articles In Business
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CYBER SETTLEMENT: The bill for a 3-year-old computer break-in at The TJX Cos. got $9.8 million steeper last week, when the company revealed a settlement with the attorneys general of 41 states. The agreement puts an end to the states’ investigations into the retailer’s culpability in the massive security breach, through which hackers stole information on 45.7 million credit and debit cards from the company’s computer systems during 2005 and 2006, TJX said. Under the terms of the arrangement, the Marshalls and T.J. Maxx parent will pay a $5.5 million settlement, $2.5 million to establish a data security fund and $1.8 million to cover the states’ investigation costs. The attorneys general will decide how to allocate the money in their respective states, but a company spokeswoman said provisions in the agreement called for funds to go toward consumer protection measures. The deal further calls for the off-price operator to certify its computer systems to meet states’ requirements and encourage new technologies that fight electronic card fraud. The company said last week it believes it did not violate any consumer protection or data security laws, but decided to resolve the matter to avoid further distraction. It said it would pay for the settlement through an after-tax reserve fund of $107 million it established in 2007 to deal with costs related to the breach. TJX has been navigating the fallout from the security compromise since it went public with the news in January 2007. Last August, the Department of Justice indicted 11 people for their roles in the thefts, which then-U.S. Attorney General Michael Mukasey called “the single largest and most complex identity theft case ever charged in this country.” — MATTHEW LYNCH
INTERNATIONAL EXPANSION: Although many footwear companies have pulled back on international growth, Jones Apparel Group Inc. has upped its presence in Asia. On June 24, Jones acquired an additional 15 percent interest in GRI Group Ltd., the exclusive licensee of several of its brands in Asia and Europe. The $15 million purchase brings Jones’ total interest in GRI to 25 percent. Wesley Card, Jones’ president and CEO, called Asia a high-growth region in a statement, adding that the “Asian consumer continues to respond positively to our footwear and accessory brands.” He conceded that “Asia has been impacted by the worldwide recessionary environment,” but said Jones’ additional investment in GRI underscores the company’s continued belief that there is “rapid consumption growth in China,” thanks to increasing incomes and economic expansion. GRI, a Hong Kong-based brand management and retail-distribution group, licenses several Jones brands in Asia, including Nine West, Anne Klein New York and Easy Spirit, and operates 600 points of sale in 12 Asian countries. It also distributes brands including Steve Madden, Francesco Biasia and Lucky Brand Jeans. Jones first acquired a minority interest in GRI for $20.2 million in June 2008. — JESSICA PALLAY
ACTIVE ACQUISITION: A deal is expected to close this week that will enable Active Ride Shop to stay in business, albeit under new ownership. The Chino, Calif.-based skate chain was acquired in a bankruptcy auction at the U.S. Bankruptcy Court in Riverside, Calif., earlier this month by Active Sports Lifestyle USA LLC for $5.2 million in cash and assumption of secured debt. Issa Ladha, manager of Active Sports Lifestyle, will become the owner of as many as 20 of the retailer’s locations, including Active Ride Shop’s headquarters and warehouse, depending upon lease negotiations. Ladha also owns several other real estate and hotel properties. In court filings, Ladha said he plans to manage the new Active company with Esmail Mawjee, a former colleague of Ladha’s with “in-depth hands-on experience in all aspects of fashion retailing and the latest consumer trends.” Active Lifestyle’s winning bid fended off other potential buyers that attended the auction, including action-sports retailers Zumiez Inc., Nine Star Corp. and Surf Associates Inc. (which operates BC Surf & Sport), and investment banking firm Meleen & Co. — J.P.