Macy's v. J.C. Penney (Update!)

As we enter the third day of the battle of the department stores, things are getting heated. Yesterday, Macy's executive, Leonard Marcus, president of Macy's Merchandising Group who helped negotiate the terms if the 2006 deal with Martha Stewart testified that he was hesitant to enter a deal in which he would not own the brand but only to build them up and risk losing them, which is exactly what happened here.

Marcus is one of many executives expected to testify at the hearing. Macy's chairman, CEO and president Terry J. Lundgren, JCP's CEO Ron Johnson, and Martha Stewart are all expected to testify.

Rihanna ❤ Mac Cosmetics

Photo: Courtesy of Mac

Rihanna, pop music icon and fashion designer is now collaborating with Mac Cosmetics to create a collection of make-up to be debuted in 4 stages. Mac states that this collection is more than a "collaboration" but a creative partnership stating Rihanna's involvement was "a true organic collaboration based on mutual respect and admiration." Rihanna got free rein from Mac with respect to all aspects of the make up line.

The collection will consist of lipstick, blush, eyeshadow, false lashes, nail polish, make up bags, etc. The first color to launch will be RiRi Woo a lipstick color inspired by her favorite Mac lipstick Ruby Woo and will debut at her Diamond Tour on May 4th and 5th at the Barclays Center in Brooklyn and will be made available for purchase there. 

Tiffany Sues Costco Over Fake Engagement Rings

Photo: Tiffany & Co.

Tiffany & Co. filed a lawsuit against Costco yesterday (ironically) on Valentine's Day in Federal District Court in Manhattan over the sale of counterfeit engagement rings being sold under Tiffany's name. The suit claims Costco infringed on the jeweler's trademark, violated counterfeiting laws and asks for the profits Costco received from the sale of fake rings as well as punitive damages if $2 million per infringement. The suit also seeks to find out exactly how many customers were defrauded by purchasing the fake rings.

Tiffany discovered that Costco was selling fakes after a customer in Huntington Beach, CA complained to Tiffany November of last year that she was disappointed Tiffany allowed their rings to be sold at Costco. Tiffany then bought one of the rings and determined it was counterfeit since it didn't contain a microscopic laser inscription they put in all their diamonds. Further, the band did not contain the Tiffany & Co. engraving.

Nemo Who? The (Fashion) Show Must Go On!

Photo by John Minchillo

New York City fashionistas braved the historic storm Nemo which brought rain, sleet, snow and wind to the Eastern seaboard in order to attend Fashion Week.  Luckily most were smart and dressed appropriately wearing boots and warm winter gear over the usual high stilettos.

However, a lot of international show-goers were missing as planes were unable to land in NYC on time as well as missing designer samples which were to be flown in all over.  

Lacoste which held its show Saturday morning at 10 am was still half empty as it waited for show-goers to make their way to Lincoln Center.  By 10:30 am, most attendees arrived and the show began.  However, not every designer is was lucky.  Marc Jacobs, one of fashion week's biggest headliners, postponed his Monday show to Thursday at 8 p.m. due delay in delivery of bags, garments and two fabrics.  The change to Thursday night creates a slight scheduling conflict with London fashion week which is starting the next day.  Designer Tory Burch, who is finishing her collection in time for her Tuesday morning show, told The Daily Beast that she's having staffers who live outside the city stay overnight so they don't get stuck.

All other designers are scheduled to show on-time and ofcourse, the show must go on!

Fifth & Pacific Rumored to be Selling Juicy, Lucky Brand

Photo: Juicy Couture and Lucky Brand Ads

Rumor has it that Juicy Couture and Lucky Brand which are owned by Fifth & Pacific Cos Inc. (f/k/a Liz Claiborne Inc.) is on the market.  Juicy Couture which popularized velour track suits about ten years ago has since been in a decline from its peak.  Lucky Brand, known for their jeans and leather products with a bohemian feel, has also been in a slump.  

The company has been quietly shopping the labels to prospective buyers, including some located in Asia, to better determine the level of interest in Juicy.  Meanwhile, private equity firms Sycamore Partners and TSG Consumer Partners have expressed interest in Lucky Brand as both firms specialize in consumer and retail investments.  It's good news for Fifth & Pacific that this is likely turning out to be an active sales process.

Macy's v. J.C. Penney to go to Trial over Martha Stewart Deal

Photo: Eric Thayer/Reuters

Macy's, Inc.'s lawsuit against J.C. Penney is set to go to trial in New York State Supreme Court on February 19th over J.C. Penney's deal with Martha Stewart Living Omnimedia, Inc ("MSLO").  Back in December 2011, JCP announced that is was buying a 16.6 percent stake in MSLO and that the companies entered into a partnership featuring Martha Stewart products and know-how.  Sounds familiar? That's because Macy's also has a deal with MSLO since 2006 until 2018 if renewal options are exercised.  

As expected, Macy's quickly sought to enjoin MSLO from going forward with the partnership.  In July 2012, the court granted Macy's preliminary injunction against MSLO with respect to certain product lines such as soft furnishings, dinnerware and cookware that it has an exclusive right to sell.  MSLO appealed and that decision is still pending.

Galliano is "Winning" Lawsuit Against Dior So Far

Photo: DiMITRIOS KAMBOURIS/GETTY IMAGES

John Galliano, who was fired as creative director at Christian Dior and artistic director at his eponymous label in early 2011 after making anti-semetic rants at a cafe in Paris, sued his former employers for an unspecified sum in damages.  Dior which has a 91 percent interest in Galliano (the label) are both defendants in this case.  Yesterday, Galliano appeared at the conseil de prud'hommes, a court that handles labor disputes, which ruled that the court was in fact qualified to hear the case.  

Jean Néret, lawyer for Dior and Galliano (the label) argued that the case should be heard by a commercial court due to the complex nature of the contracts with the two fashion houses.  Furthermore, Néret stated the labor court was not qualified to hear the case because Galliano was more an independent contractor than an employee.   Nonetheless, the court did not agree and Dior now has 15 days to appeal the decision, and if it does, the case will be transferred to the Paris court of appeal within nine months.

C. Wonder Sells 10% Stake to Fidelity, Valuing Company at $350 Million

Photo: New York Times

Fidelity, the investment firm, took a 10 percent stake in C. Wonder, a company started by Chris Burch. Chris Burch is the ex-husband of Tory Burch with whom were involved in a nasty lawsuit which has since been settled.  Fidelity paid $35 million for its 10 percent stake which gives the company a valuation of $350 million with only 10 retail locations.  However, C. Wonder has aggressive expansion plans with its sight on 50-100 more stores by end of next year. It looks like we will be seeing a lot more of C. Wonder's colorful preppy apparel and home collection in the future.

Also, apparently Fidelity which is known for being one of the largest mutual fund operators has a fashion investment unit which makes investments in companies such C. Wonder and has made investments in Lululemon and Michael Kors in the past.  Perhaps Fidelity is on to something as Michael Kors is now worth nearly $11 billion and Lululemon almost $10 billion.

Read More:
WWD (subscription red'q): Christopher Burch Sells C. Wonder Stake to Fidelity
Business Insider: Tory Burch's Ex Is Quickly Gaining Momentum With His Rival Brand

Oscar de la Renta Collaborates With the OutNet!

Photo: WWD - Preview of de la Renta for the OutNet

Oscar de la Renta is launching an exclusive collection with theoutnet.com, a discounted online fashion retailer.  The 24-piece collection will debut on February 24th with prices from $325 to $1,295.  The collection uses fabrics and designs that already exist so there was less investment in creating this new collection.

De la Renta's CEO, Alex Bolen explained to WWD, "[w]e have things around here that are underutilized — [such as] 40 years of patterns,    fabrics and artwork that a lot of people spent time on. We thought, perhaps we can put something together in a way that is new, that doesn’t require as much development time and in an exclusive way."

Is Kate Spade Taking its Fragrance Business In-House?

Photo: Kate Spade's ad for in-house fragrance Live Colorfully

The answer isn't clear.  If Kate Spade is taking its fragrance business in-house, it would be following the footsteps of other top fashion houses.  Oscar de la Renta took his fragrance license back in 2009 from L'oreal after a lawsuit and settlement.  Burberry also terminated its license with Interparfums SA, a French company last year but having to pay almost $300 million as an exit payment to take back its license by this April. The companies signed a transition agreement where Interparfums SA will continue operating the fragrance and beauty business for Burberry until March 31, 2013, at which time the business will be turned over.

Bangladesh Factory Owners Arrested After Fire

Source: KABC Photo

The factory fire at Smart Export Garment Ltd. on January 26th is the second fire of this kind in two months in Dhaka, Bangladesh.  The fire killed seven women workers and injuring many others, many of whom were only teenagers.  The fire last November at Tazreen Fashion Ltd. killed 112 workers and was one of the worst in recent memory.  Since November, Bangladesh has had 18 other non-fatal fires.  Bangladesh is also the second-largest exporter of clothing after China. 

Smart Export makes garments for Inditex SA, one of the world's largest fashion distributors and also the owner of Zara, as well as many other European brands.  The owners of Smart Export, Zahir Ahmed, chairman and Mohammed Sharif Ahmed, managing director were arrested a few days ago over failure to comply with safety regulations.  Fire officials said company did not have fire safety procedures or certification.  Furthermore, the exit gate may have been locked causing a stampede and asphyxiation.

Dolce & Gabbana's Italy Tax Evasion Case Goes Back to Court

Source: Vittorio Zunino Celotto/Getty Images Europe

Domenico Dolce and Stefano Gabbana, the Italian design duo behind the sexy fashion house Dolce & Gabbana, were charged with tax evasion in their native Italy in 2009 which was then dismissed by a lower court in 2011.  The Italian supreme court overturned it now the case is going to back to court.  The case involves a 2004 sale of the designer's eponymous label and lower priced line D&G to their Luxembourg-based holding company, Gado Srl.  Luxumbourg's corporate tax rate is 4% while Italy's is 45% which on its face seems incriminating enough.  

The  Italian tax police believes Gado was operating and managed in Italy and cites emails from around the time of the sale which shows that the designer's motives for the sale were for the explicit purpose of tax evasion.  Italy claims the label owes close to $500 million to the government.  Also, the designers would be looking at 5-year prison sentence if found guilty.