American Rag Founder Sues Tarrant, Guez
There appears to be dissension in the union between American Rag Cie LLC founder Mark Werts and Gerard Guez, chairman of the board and interim chief executive officer of Tarrant Apparel and a 45 percent owner of the American Rag apparel line. In December, Werts quietly filed a lawsuit in Los Angeles Superior Court against Guez and Tarrant for assault and intentional infliction of emotional distress. A jury trial is set for Oct. 1.
The suit alleges Guez attacked and verbally threatened Werts in November during a meeting of American Rag’s managers. Now, Werts says he suffers from trouble sleeping and headaches and is having difficulty focusing on his business since the assault. He is also unwilling to attend American Rag board meetings without a bodyguard for fear of another attack by Guez. Werts is asking for unspecified monetary damages, punitive damages, money to cover legal fees incurred by the suit and any further relief deemed appropriate by the court.
Werts could not be reached for comment. Guez said they are in negotiations to settle the case, but Werts’ lawyer, Eric R. Maier, said his orders are to continue with the lawsuit.
The American Rag apparel line is a joint venture between Werts and Tarrant. American Rag–branded young contemporary sportswear is sold exclusively in approximately 600 Macy’s stores nationwide. Net sales of American Rag–branded apparel totaled $7.8 million in the first quarter of 2007, up from $5.3 million in the same quarter of 2006. In 2003 Guez and Tarrant paid $1.4 million for an equity interest in the American Rag brand.
Meanwhile, Tarrant has other worries. Earlier this year Tarrant, which makes private- label apparel, abandoned a bid to purchase Buffalo, a Canadian maker of contemporary apparel. The deal had been valued at $120 million and prompted the Securities and Exchange Commission to commence a review of Tarrant’s SEC filings. The SEC investigation forced Tarrant to postpone its 2007 annual shareholders meeting, which had been set for June 27. Tarrant will hold its meeting after the SEC audit, which could last up to 40 days.
Tarrant, which was founded in 1985, has had a few rough financial years lately. In fiscal 2006, it lost $22.2 million on $232.4 million in sales. In fiscal 2005, it had net earnings of $1 million on $214 million in sales. But the company had a net loss in fiscal 2004 of $104.7 million on sales of $155 million. It also lost $35.9 million in fiscal 2003.—Erin Barajas
