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Tiffany & Co. may be breaking up with Elsa Peretti, its long-time jewelry partner.
This story first appeared in the May 24, 2012 issue of WWD. Subscribe Today.
The New York-based retailer’s relationship with the Italian designer began in 1974. Since 2009, Peretti-designed jewelry has accounted for 10 percent of Tiffany’s net sales, the company said. In 2011, Tiffany reported revenues of $3.64 billion.
The 72-year-old Peretti, who receives a royalty for Tiffany’s use of her intellectual property, has expressed interest in “retiring” from her relationship with the luxe jeweler, according to a regulatory filing with the Securities and Exchange Commission Wednesday.
“Tiffany has made a firm offer to Ms. Peretti in an amount that is based upon the value of the Peretti intellectual property to Tiffany,” the company said, adding that and acquisition of Peretti’s IP would “likely improve cash flows and operating results in subsequent years.”
Tiffany was unable to provide additional detail on the news, and declined to comment on the amount it offered Peretti.
But advisers to Peretti told Tiffany that she is considering exercising her right to terminate their licensing agreement. If the deal were terminated, Tiffany would retain all rights under the agreement for six months, including the right to make Peretti-designed baubles. Following the six-month period, Tiffany would have an additional year to sell any Peretti-designed products on hand or on order. Thereafter, Tiffany would be allowed to sell any Peretti-designed products on hand, subject to the designer’s right to purchase these remaining goods. Tiffany would also be relieved of royalty obligations.
If the deal is severed, Tiffany said its financial results might be “adversely affected,” but that it believes that the aforementioned provisions built into its agreement would “substantially” mitigate any potential losses in net sales.