Still a future for WPS and Lauren duo
March 1, 2004,
Working its way through Chapter 11, WestPoint Stevens has decided to keep the still-lucrative Ralph Lauren license going, said "Chip" Fontenot, the mill's CEO. Though perhaps not what it once was, the Ralph Lauren license is still a big bread-winner at WestPoint Stevens.
Especially after the collapse of rival Pillowtex, and the disappearance of its top-tier Charisma brand, "We've seen some growth there."
During the Chapter 11 process, two partners in such a licensing pact have the right to walk away from each other, much as retailers reject bad leases as part of their restructuring.
But in this case, both WestPoint Stevens and Ralph Lauren are sticking together. "It's been a 20-year relationship, and we've both got a lot of reasons to keep it going," said Fontenot.
The current licensing agreement, he added, expires at the end of 2005, "and we'll probably start negotiating a new agreement by the end of the year."
While WestPoint won't specify what it pays to the Ralph Lauren organization in terms of royalties, the royalty rates on some products are reported to be in the range of 18 percent. If, as Fontenot said, the business isn't what it used to be, will WestPoint seek a reduction in the royalty rate?
"It's not just a matter of royalty rates," said Fontenot. "There are a lot of things you have to look at. It's sales guarantees, it's the rate of growth in the business. There's just a whole lot of things that will be taken into consideration. We want to do what's right for the business as it exists today."