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Sterling Sues Alex and Ani over Supply Deal

Signet division alleges 2015 agreement left it with an inventory backlog worth millions of dollars, court documents show.
Jan 11, 2018 4:00 AM   By Rapaport News
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RAPAPORT... Sterling Jewelers has sued Alex and Ani for more than $2 million over a supply deal that resulted in a dispute over inventory returns, court filings show.

The two companies entered into an agreement in August 2015 under which Sterling would buy merchandise from Alex and Ani to sell in some of Sterling’s Jared stores, according to the lawsuit filed in Ohio last month. That deal stipulated that Sterling could not offer the products at certain discounted prices.

However, Sterling — a division of Signet Jewelers — struggled to sell the goods, and found itself with inventory of Alex and Ani products that, at one point, came to $6 million, it said. The terms of the agreement, as well as Alex and Ani’s concerns about effects on its brand, prevented the company from selling the backlog to third parties or reducing prices for consumers, the jeweler explained.

In April 2016, the companies agreed Alex and Ani would buy Sterling’s entire backlog of the goods, Sterling claimed. They subsequently revised this arrangement such that Alex and Ani would only re-purchase $3 million-worth of those products.

In August 2016, Sterling returned $896,630 of inventory to Alex and Ani, which did not send payment for the goods, the lawsuit alleged. Sterling then terminated the 2015 agreement, and started selling the goods off at certain discounts to minimize its damages, it said. Alex and Ani sent cease-and-desist letters, accusing Sterling of violating the original agreement — a claim Sterling considered to be incorrect.

At the time of the filing, Sterling held about $1.7 million of Alex and Ani inventories, the lawsuit stated. Sterling is entitled to more than $2.55 million plus interest and attorney’s fees, it argued.

“We are already in discussions to have this dismissed, as it [is] unfortunate that Sterling didn’t understand the whole picture before filing, and expect this matter to be resolved quickly,” Mark Geragos, Alex and Ani’s lawyer, said in a statement to Rapaport News Wednesday.
Tags: alex and ani, Jared, Jewelry, lawsuit, Rapaport News, Signet, Signet Jewelers, sterling, Sterling Jewelers, supply
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