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Polo to Buy Its Footwear License

Polo Ralph Lauren Corp. is buying its footwear license from Reebok International Ltd. for $110 million in cash.

NEW YORK — Polo Ralph Lauren Corp. is buying its footwear license from Reebok International Ltd. for $110 million in cash.

Ralph Lauren, chairman and chief executive officer, said the acquisition moves the company closer to its goal of developing a global luxury accessories business.

“We are assembling the right businesses and people to build our accessories into an important part of our future,” he said in a statement.

Roger Farah, Polo’s president and chief operating officer, said acquiring the subsidiary was also part of the company’s strategy to take more direct control of its brands.

The deal is expected to close by the end of the second quarter, and Polo said it will be “marginally dilutive” to earnings for 2006.

Reebok has had the global footwear license for men, women and children since 1996. It has made footwear under various Ralph Lauren labels, including Ralph Lauren Collection, Lauren and Polo Sport. This business operates as a separate subsidiary called Ralph Lauren Footwear Co. Inc. There are about 70 people employed in the division and all are expected to stay with the company, said a Polo Ralph Lauren spokeswoman.

While Reebok doesn’t break out sales of Lauren footwear, revenues of a group it calls “other brands” — which includes the Greg Norman Collection and Ralph Lauren footwear — were $209.8 million in 2004. Greg Norman is owned by Reebok.

“The completion of this transaction enables us to focus on the continued growth and development of our core businesses,” Paul Fireman, Reebok’s chairman and ceo, said in a statement.

Polo has said recently that it is looking to build up its accessories business, although the bulk of its accessories products are made under license. The company last year took back its Lauren apparel license from Jones Apparel Group amid a lengthy legal battle. The two companies are still in litigation.

This story first appeared in the May 24, 2005 issue of WWD.  Subscribe Today.