Sterling Suing Alex and Ani for Breach of Contract

Alex and Ani’s sales terms, Sterling was allowed to sell its bangles at particular brick-and-mortar Jared the Galleria of Jewelry stores but was barred from employing “certain discounting strategies,” which included both marking down the bangles and selling them at any of the company’s outlet stores.

The merchandise didn’t move for Sterling, with the retailer stating in its lawsuit that, “because of the Alex and Ani sales terms, Sterling encountered difficulty selling the products and sales of the products soon began underperforming and continued to underperform into 2016.”

Sterling also stated in the suit that Alex and Ani’s “ongoing concerns about possible negative effect on its brand” prevented it from selling its backlog of inventory to a third-party seller.

Between this and the restrictions on discounting, the retailer was sitting on as much as $6 million of Alex and Ani inventory at one point.

In July 2016, about a year after the initial agreement was reached, Sterling and the bangle brand reached an agreement whereby Alex and Ani would buy back $3 million in merchandise.

The following month, Sterling returned the first shipment of jewelry, worth nearly $900,000. Alex and Ani accepted the shipment, and a company representative told Sterling it would get its money as soon as the shipment was processed.

More than a year later, Sterling still has not received its money for the first shipment, court papers state, nor has Alex and Ani repurchased the rest of the $3 million in merchandise in the agreement.

At the end of August 2016, Sterling terminated its agreement with Alex and Ani, then attempted to “mitigate its damages” by discounting the Alex and Ani jewelry so the retailer could move it, but was hit with multiple cease-and-desist letters by Alex and Ani, which were “wrongfully claiming” Sterling was violating their agreement.

Sterling is seeking about $2.6 million in damages plus interest and attorneys’ fees, as set forth in the 2015 agreement.

Alex and Ani’s attorney, Mark J. Geragos, of Los Angeles law firm Geragos & Geragos, said Wednesday that his client and Sterling Jewelers already have engaged in “very cordial and informal” talks, and he expects the lawsuit will end up getting dismissed quickly.

Sterling Jewelers Inc. originally filed suit against Alex and Ani LLC in the Court of Common Pleas for Summit County, Ohio, the county where Signet is headquartered, in November.

The case was moved to federal court in December at Alex and Ani’s request.