NEW YORK — G-III Apparel Group Ltd. and Christian Casey LLC, parent company of Sean “Diddy” Combs’ 10-year-old Sean John brand, have terminated their license agreement for the production of Sean John junior women’s sportswear. The production and distribution will now be taken in-house.

Company executives said they will continue to ship product to retailers as scheduled.

As Sean John’s longtime outerwear licensee, G-III, will continue to produce women’s and men’s outerwear under the Sean John label. G-III and Sean John have extended the women’s outerwear license to Dec. 31, 2010.

Executives at Sean John and G-III could not be reached for comment Wednesday, but Morris Goldfarb, chairman and chief executive officer of G-III, said in a statement, “We continue to believe that the Sean John brand will support a sizable junior sportswear assortment. Despite the opportunity, we have reached a mutual decision that the line requires specific operational and financial commitments that would best be made by the Sean John organization.”

Combs, founder and chairman of Sean John, said in a statement, “I would like to thank G-III and their incredible team for all of their work thus far in helping Sean John establish a presence in the women’s junior sportswear market and for the continuing excellence of their outerwear effort. But at this time, I have decided on another course for its future. I look forward to announcing our plans for this collection very soon.”

The termination of the deal represents yet another hiccup for Combs in the women’s category. The holiday introduction of the Sean John junior line was his second official attempt at launching a women’s collection. His contemporary line, Sean by Sean Combs, closed in March 2006 after being offered at retail for less than a year. That collection, produced in-house, only brought in $3.5 million in wholesale volume during its first six months on the selling floor. While that isn’t considered bad for a new contemporary designer collection, it isn’t the high volume Combs is used to seeing: At the time, he did $450 million at retail with Sean John men’s, which he claims now generates $500 million in retail volume.

At the time of the junior line’s launch, Combs said he was up for the challenge of entering a market where few women’s urban brands have made it big, with the exception of Baby Phat and Rocawear. Sean John junior sportswear is sold at department and specialty stores including Macy’s, and at D.e.m.o., which is owned by Pacific Sunwear and just announced it will close all of its existing stores.

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