California Apparel News

Tarrant Apparel Group has filed a $100 million breach of contract lawsuit against Jessica Simpson, just two weeks after saying it hoped to resolve its business differences with the entertainer outside of court.

Simpson, the lawsuit alleges, crippled the company’s licensing efforts by failing to promote or give design approval to the moderately priced apparel and jeans lines that bore her name. Beverly Hills–based Camuto Consulting Group, which assumed the master license from JS Brand Management in July, also is named in the suit.

Tarrant is seeking a determination that the license remains in full force and that there has been no breach of its sub-license.

(At press time, neither Simpson nor Camuto had been served with the lawsuit.)

Duet saga

In late 2004, Tarrant inked a multi-year sub-license that gave it the right to manufacture, distribute and sell juniors apparel under the JS by Jessica Simpson and Princy labels. The licensing contract stated that Simpson “shall be actively involved in promoting the sub-licensed productshellip;and shall publicly wear/display or use the sublicensed products.”

According to the suit filed April 6 in New York Supreme Court, Simpson refused to make promotional appearances or be photographed wearing the line, which had a detrimental effect on business.

Retail chain Charming Shoppes dropped the JS by Jessica Simpson brand late last year after carrying the line for about five months. In May, Charming Shoppes cancelled $4 million worth of orders—nearly half of its reported $9 million order. In its lawsuit, Tarrant blames the loss of business on Simpson’s disconnect with the brand.

“Celebrity-branded apparel, by its nature, requires the support of the celebrity,” said Tarrant’s attorney, Jack A. Gordon of New York law firm Kent, Beatty & Gordon.

Simpson similarly snubbed Princy, a line of low-priced denim, Tarrant alleges. The company cited an incident last year in which, during an interview, Simpson tapped premium brand True Religion as her favorite brand of jeans instead of her own line. Simpson—who has leant her celebrity endorsement to various products, including Chicken of the Sea tuna, Pizza Hut and Proactive Solution skin care, as well as Dessert Beauty, her line of candy-flavored cosmetics—also reportedly failed to provide promotional images or support for Princy.

According to Gordon, the $100 million suit represents $25 million worth of out-ofpocket losses through April 6, including marketing, manufacturing and guarantees for advertising and minimum royalties since the inception of the brands; and $75 million for the amount of damages through the remainder of the license, ending December 2007.

License disputes

According to the lawsuit, Camuto also hasn’t lived up to its commitments. Tarrant alleges that the master licensor engaged in business dealings that compromised its sub-license.

According to the company, a new agreement with Camuto in July 2005 granted Tarrant rights to an expanded product range and a total of four Simpson branded lines, including Princy, Jessica Simpson, JS by Jessica Simpson and Sweet Kisses. But Tarrant said its attempts to “grow the Jessica Simpson brand name under its sub-license have been repeatedly thwarted.”

A line of Jessica Simpson shoes manufactured by Vincent Camuto, chief executive officer of the master licensor and co-founder of shoe manufacturer Nine West Group Inc., is a point of contention for Tarrant.

“That is an inherent conflict which he has not addressed very well,” Gordon said.

The manufacturer also claims that Camuto, in bad faith, diverted funds and marketing efforts (particularly efforts by Simpson) away from Tarrant for the benefit of Camuto’s line of shoes.

In March, Camuto told Tarrant that it no longer had further rights to either the JS by Jessica Simpson label or the Princy label. Court documents show that Camuto argued Tarrant had abandoned the licenses. Tarrant, which said it paid $2.2 million in fees and is willing to pay another $6 million, denies having terminated its license agreement and is asking the court to find that the license remains in full force and has not been breached.

Celebrity fallout

This is the latest in celebrity brand fallout at Tarrant. In March, the blue jeans maker announced the dissolution of its licensing agreement with singer Beyonceacute; Knowles and her line, House of Dereacute;on. Gerard Guez, Tarrant’s founder and chairman, painted the Knowles split as amicable, even though Tarrant lost $1.2 million in the form of fees on the line.

“We are parting ways nicely with House of Dereacute;on,” he said.

The apparel maker, one of the largest in Los Angeles, had pinned high hopes on its celebrity-licensed apparel.

In 2005, Tarrant realized a net income of $1 million on annual sales of $214.6 million. The company hadn’t seen a profit since 1999, and, in 2004, the publicly traded company had a net loss of $104.7 million on $155.5 million in revenues. When it announced its House of Dereacute;on license, Tarrant executives said they hoped to use its celebrity ventures to turn around the company’s private-brands business.

“Each of these brands, continuing great product, and the association with widely recognized and highly regarded celebrities is expected to play an important role in rapidly increasing sales and profitability of our private brands division,” said Barry Aved, thenpresident of Tarrant Apparel.

Now, the company is looking to break up or make up.

“We’re hoping for one of two things,” Gordon said. “One, they can pay the damages. Or, two, they can do what the license agreement says in the first place.”