LOS ANGELES — Mossimo Inc. has appealed a June 17 arbitration award and judgment entered in Cherokee Inc.’s favor.
The Los Angeles Superior Court confirmed the award plus finder’s fees, interest and attorney costs due to Van Nuys, Calif.-based brand licensor Cherokee. The court also validated the original finder’s fee agreement between Target and Mossimo.
As reported, since July 2002, the two firms have been in dispute over $2.7 million in finder’s fees related to the Target-Mossimo license brokered by Cherokee in 2000. In a filing with the Securities and Exchange Commission, Cherokee said it registered, as of the end of the year, outstanding accounts receivable for Mossimo of $3.2 million, including $108,000 in interest and $410,000 in legal fees awarded through arbitration.
In step with the appeal, Mossimo posted a cash deposit in lieu of a bond equal to 1 1/2 times the value of the judgment.
Meanwhile, Cherokee has said it is exploring alternatives, like selling or insuring Mossimo.
With a stable of new brands, Cherokee has enjoyed rising sales. For the first quarter ended May 3, 2003, sales grew 5.2 percent to $12.1 million compared with $11.5 million in the year-ago period. Earnings increased 3.8 percent to $5.3 million, or 63 cents a diluted share, from $5.1 million or 61 cents a diluted share compared with last year. Worldwide sales of Cherokee-branded products by licensees, including the Sideout brand, exceeded $2.3 billion last year.
Also in pursuit of an appeal is The Dress Barn, which said Tuesday that it will appeal a jury verdict of $30 million in compensatory damages and $2 million in expenses in connection to a lawsuit brought against it by Alan Glazer. One bit of good news for the retailer is that the trial court also denied Glazer’s motion for punitive damages or prejudgment interest. The Dress Barn said it expects to record a pretax charge for the judgment in its financial results for the fourth quarter and fiscal year ending July 26.
As reported, Glazer filed the lawsuit in a Connecticut state court accusing The Dress Barn of “unfair trade practices” regarding negotiations to acquire the Bedford Fair catalog business before it filed for Chapter 11 several years ago, according to a securities regulatory filing. Bedford Fair was later acquired by Fingerhut Cos.Should The Dress Barn lose its appeal, the final judgment of $32 million, which includes expenses, represents only the minimum owed to Glazer. The amount could creep higher with post-judgment interest.
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