- Jul 18, 2003
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A fashion designer at odds
They are like an unhappy married couple in the throes of a messy separation. Every word is measured, yet there is obvious emotion behind their every shrug, beneath every hesitation. When Robert J. Wichser, the president of JA Apparel, is asked to point out Joseph Abboud's door just down the hall, he demurs. "It's very awkward," he says.
Awkward, indeed. Mr. Abboud, the men's clothing designer, is suing JA Apparel and its parent companies, including the Italian conglomerate GFT, accusing them of fraud and breach of contract. Last Wednesday, JA Apparel filed counterclaims, accusing Mr. Abboud of lack of performance on his five-year contract. The documents further claim that Mr. Abboud, by filing his suit, is trying to devalue JA Apparel so he can buy it back at a reduced price.
Beware, Calvin Klein.
The counterclaims were filed the day after Calvin Klein announced he would sell the company that bears his name to Phillips-Van Heusen, the largest shirt maker in the country, for more than $400 million. To Mr. Abboud, who feels that he has been cut out of the company he helped found - after selling his name and trademarks for $65 million - the news sounded oddly familiar. "Calvin said he was selling because he didn't want to be involved in operational issues; that's exactly where I was," Mr. Abboud, 52, said on Thursday. "He wants to be freed up from signing leases and payrolls, and I completely understand. I thought selling was going to let me spend all my time on the creative side."
The Abboud lawsuit goes to the heart of the $750 billion clothing business, and more specifically to companies that even now are referred to in the business by the designers' first names: Calvin, Ralph, Donna, Tommy and Joseph. Ralph Lauren and Tommy Hilfiger chose to take their companies public. Donna Karan was sold to LVMH, the high-style fashion and Champagne conglomerate, after going public. In 2000, Mr. Abboud sold his name and trademarks to GFT, which is owned by Holding di Partecipazioni Industriali, or HdP. HdP sold the Valentino fashion house this year and divested itself of licenses from Calvin Klein and Giorgio Armani. Trade publications have reported that HdP is trying to sell all of its fashion holdings.
Joseph Abboud is less of a household name than Calvin Klein, but JA Apparel boasts of enviable sales growth. This year, JA Apparel, with its Joseph Abboud labels, is expected to bring in $125 to $130 million in wholesale sales; in 2000, when the agreement at issue was signed, revenue was around $90 million, Mr. Wichser said.
"While most men's wear companies are flat, we expect 20 to 25 percent sales increases," he added. JA Apparel's top-of-the-line suits, called Black Label, sell for $895 to $1,200 but account for only 2 percent of the business. The majority of sales come in the so-called bridge prices: Diamond Label suits priced from $650 to $795, shirts from $70 to $85 plus sports clothes and a nascent home furnishings line.
When Mr. Abboud was chief designer, he offered clothes that were known for their browns and olives. Mr. Wichser says the clothes - designed by a team - are now more colorful, with a more shaped silhouette.
Mr. Abboud's lawsuit, filed on Nov. 5 in the Supreme Court of New York County, is particularly wrenching, both men say, because they had a personal relationship. GFT and Mr. Abboud jointly hired Mr. Wichser in 1993, when Mr. Abboud said he was still a 40 percent partner with GFT - and had complete design control.
No trial date has been set, but one thing is clear: the dispute - in which both sides are now claiming millions of dollars in damages - boils down to one meeting just before Mr. Abboud signed the contract that gave him $65 million for his name and trademarks.
Mr. Abboud contends that Roberto Jorio Fili, the chairman of JA Apparel and chairman and chief executive of GFT U.S.A., gave him design authority during a private one-on-one meeting before the signing, and then went into the next room, full of lawyers and executives, and repeated his promise to give him the title of creative director, in charge of a design team. Mr. Wichser, who was present at the main meeting, says he heard only that Mr. Abboud was to be given the title - and not any more responsibility than was spelled out in the contract.
The contract, signed on June 16, 2000, says Mr. Abboud agreed to serve as chairman emeritus and to provide "stylistic guidelines" for his Black Label collection, to provide "stylistic ideas and proposals" for all other collections, to help with promotion, to advise with new business opportunities and licenses and to make personal appearances at showings.
(New York Times)