The Men’s Wearhouse Inc. will pay $42.6 million to a former licensee after an arbitrator concluded the retailer’s JA Apparel Corp. unit had violated terms of the agreement between the two companies.
Men’s Wearhouse, which acquired JA Apparel from affiliates of J.W. Childs Associates for $97.5 million in July 2013, disclosed the penalty in a filing with the Securities and Exchange Commission Friday. It didn’t identify the licensee or the specific basis of the complaint but said the action was initiated by the former licensee, which had earlier terminated the license. In a filing last month, the retailer said it didn’t believe a loss based on the arbitration, should one be incurred, would have a “material adverse effect” on its financial position.
Several market sources indicated the former licensee was The Siskind Group. Marty Staff, who’d headed JA Apparel following its acquisition by J.W. Childs and served a brief tenure as chief business development officer of American Apparel Inc. in 2011, joined Siskind in October as president of its branded division.
Staff wasn’t with Siskind when the dispute with Men’s Wearhouse began, sources told WWD.
In the SEC filing, Men’s Wearhouse said it “does not believe that the former licensee’s claim had merit.”
“The company is surprised and disappointed at the outcome but has agreed to pay such award to resolve the dispute,” the SEC filing said. In December, Men’s Wearhouse said it believed the licensee had wrongfully terminated its agreements with JA Apparel.
Siskind declined to comment and officials at Men’s Wearhouse couldn’t be reached to elaborate on the matter.