NEW YORK — Investors pumped up Jones Apparel Group’s stock and pushed down Polo Ralph Lauren Corp.’s on Monday, as Wall Street surveyed the possibility of a big payout from Polo in the breach-of-contract suit between the two companies.
Analysts also said that Jones’ core Jones New York businesses appear to be picking up, while Polo’s growth tear might slow some.
Shares of Jones advanced $1.32, or 4.2 percent, to $33.08, while Polo’s stock declined $1.26, or 3.2 percent, to $38.77. Both issues trade on the Big Board.
Last week, in a decision that lawyers said strengthened Jones’ case, a New York State appeals court unanimously upheld a lower court’s summary judgment on the suit in Jones’ favor.
“In other words, the court said that Jones had been wronged, and a trial will begin shortly to determine monetary damages,” wrote Prudential Equity Group analyst Lizabeth Dunn in a research note.
Jones asked for damages of $550 million in the suit.
In addition to possibly taking a tidy sum from Polo’s coffers and adding it to Jones’, the suit marks the continuation of one of fashion’s juiciest spats — one that pitted the fashion icon Ralph Lauren against Jones’ chief executive officer Peter Boneparth, who had been at the helm for just over a year when the suit was filed in June 2003.
The initial dispute centered around the license for the much smaller Ralph by Ralph Lauren line, which had failed to meet its targets. Polo said the Ralph license and much larger Lauren by Ralph Lauren license were linked in such a way that it could also take back the Lauren business. The Lauren license produced annual sales of $548 million.
Jones eventually returned control of the contested Lauren license to Polo, filed the breach-of-contract suit and launched a new better line, Jones New York Signature. Polo could appeal the case again, wait until after a trial and appeal that decision or allow the judgment to stand.
Dunn downgraded her rating on Polo to “neutral weight” from “overweight,” noting the company’s growth spurt over the last year might be waning as retail has become trickier with consolidation.
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