NEW YORK — Peter Boneparth, chief executive officer and president of Jones Apparel Group, said Thursday he doesn’t know when the firm’s licensing disagreement with Polo Ralph Lauren Corp. will be resolved.
The Ralph Lauren-Jones relationship became strained when the termination date of the Lauren by Ralph Lauren license, which Jones holds, came into question last month, when Jones failed to meet minimum royalty payments required in its Ralph by Ralph Lauren agreement. The Lauren line is a better-priced sportswear offering, while Ralph is aimed at the junior market.
“What we’ve said to other people is there are three possible outcomes,” Boneparth said at the Bear Stearns Retail, Restaurants & Apparel conference. “One is we will enter into a longer-term license with Polo Corp. and we have offered a substantially higher royalty to do so. The second is the ugly scenario where we will fight to maintain our rights on the contract. The third scenario is the other scenario where in fact we do not go to court, but we both work on a practical and orderly transition from a timing perspective.
Boneparth said due to timing and logistics, “it’s quite apparent to us that it’s unrealistic for the Polo Corp. to be in the Lauren business for the year 2004. What I call scenario three-and-a-half is a combination of one. What may come out of all this is a much deeper relationship with the Polo Corp., where opportunities they currently have licensed out, whether that be accessories and footwear notwithstanding.
“It would be an expression of desire [to say], where we have more core competencies than we did when we first entered into the Lauren agreement to ultimately have a bigger relationship in those products as well. That’s where we are, if there’s other scenarios we haven’t thought of them.”
The $4.3 billion Jones projects sales to reach $4.75 billion for 2003. According to Jones, sales of Lauren were $548 million and sales of Ralph were $37 million for the year ended Dec. 31, 2002.