Retailer Kitson may be out at LAX after fight with Hudson Group
When Los Angeles boutique chain Kitson first landed at Los Angeles International Airport, it seemed like an ideal match: The glossy retailer would gain access to millions of travelers every year, while lending the airport some of its Hollywood cachet.
But now Kitson may be on the way out.
A spat with Hudson Group, the New Jersey company that operates the two Kitson stores, has snowballed into an ugly public battle. Each side has accused the other of bad conduct, breaches of contract and efforts to manipulate L.A. Mayor Eric Garcetti’s office.
Hudson, which operates many LAX retail outlets, now says the Kitson stores in Terminal 7 and the Tom Bradley International Terminal will close March 31.
“This is like a dysfunctional marriage that has been going on for a long time,” said Brian Timmons, a lawyer for Hudson. “Kitson has made it clear from the beginning they don’t want to be in the relationship any longer.”
Timmons said the two sides didn’t sign a formal termination agreement, but representatives agreed orally in December to part ways.
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FOR THE RECORD
Feb. 24, 10:50 a.m.: An earlier version of this article stated that Hudson Group operates all retail outlets at LAX. It operates many of the airport’s retail outlets.
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Kitson spokeswoman Courtney Saavedra said an LAX departure isn’t certain.
“There is no mutual agreement to terminate,” she said. “Our contract does not end in March.”
The stalemate comes as airports around the nation are revamping their retail offerings to take advantage of passengers unable to leave after going through security screenings. The market for better shops and eateries got a huge boost after the Sept. 11, 2001, terror attacks, which dramatically increased the time that most travelers spend at airports.
In keeping with the tenor of the dispute, the two sides can’t agree on why a once-promising partnership faltered.
Kitson claims that Hudson has sold expired candy at several airport stores (although not at Kitson) and won’t let the boutique offer low-priced bottled water.
A few weeks ago, Kitson wanted to start stocking 1-liter bottles of SmartWater at the two airport stores priced at $2.55 a pop, Saavedra said. Hudson has veto power over merchandise selection at the LAX Kitson shops, and it refused to put water on the shelves, she said.
Kitson promptly accused Hudson of trying to maintain its water “monopoly” — and high prices. Hudson sells water at competing airport retailers for around $4 or $5 per bottle.
Efforts to get Garcetti or airport officials involved have been unsuccessful, Saavedra said, despite provocative signs on Kitson’s Melrose Avenue and Robertson Boulevard shops saying: “Eric Garcetti, mayor of Los Angeles, condones corruption, collusion, discrimination and fraud at LAX.”
Hudson lawyer Timmons contends that Kitson seized on water as a public relations stunt.
“They have tried different publicity stunts and mudslinging,” he said. “Water was the one they stumbled upon” most recently.
Timmons said the water fixation is Kitson’s attempt to distract from the real issue: Kitson founder Fraser Ross.
Since the first Kitson store opened in LAX in 2012, Ross has berated workers using derogatory and obscene language that “crossed the line,” Timmons said.
“It’s one thing to correct performance or provide criticism to employees,” he said. “You know the difference when you go over the line, when you use inappropriate adjectives.”
In 2013, Hudson inserted “the Fraser clause” into the contract, giving it power to veto any Kitson employee coming to the LAX stores, Timmons said.
Kitson abided by the agreement until last spring, when Ross began showing up without warning and behaving “inappropriately” toward employees, Timmons said. Hudson asked Ross to stop coming, he said.
“That’s when he became furious,” Timmons said. “He started saying, ‘You are running the brand into the ground. There is too much dust on the shelves.’ Lots of nitpicky things.”
On Tuesday, Hudson filed a lawsuit accusing Kitson of several breaches of contract, including violations of the Fraser clause. Hudson asked Kitson to pay a $280,000 penalty for violating the clause, and another $750,000 as compensation for lost profits and the costs of re-branding the two stores after the partnership is terminated.
In response, Saavedra said Hudson “will stop at nothing,” including defaming the boutique and its founder, to “continue charging travelers an exorbitant price for water.”
She said those claims are Hudson’s attempt to “distract from running the business correctly.”
“As far as berating employees, as far as the language they are stating that’s used, that’s simply not true,” she said. “Our founder is very passionate about our brand and being represented correctly. That is never going to change.”
Ross declined an interview request.
In the months since the dispute became public, Kitson has escalated the battle by publicly accusing Garcetti and airport officials of being too close to Hudson.
The company donated $7,500 last year to El Centro Del Pueblo, a family service agency in Echo Park, and $10,000 in 2013 to the Getty House Foundation, which maintains the mayor’s official residence, according to records. Both donations were requested by Garcetti.
“They appear to take care of one another, whether it’s fundraising or sponsorships or awards given back and forth,” Saavedra said. “I say there are too many ties to be ignored.”
Neither LAX nor the mayor’s office are taking sides.
Garcetti spokesman Jeff Millman said the mayor’s office met with Kitson “on numerous occasions.”
“Kitson has a contractual dispute with Hudson,” he wrote in an email. “The mayor’s office has brought both sides together and hopes the parties can resolve the differences.”
Nancy Castles, public relations director at LAX, said the airport is looking into Kitson’s allegations and “will take action if needed.”
Experts in airport retail say the fight appears to be a minor business dispute that went public.
Patrick Gleason, owner of Airport Concession Consulting Services, said it’s not uncommon for large concessionaires like Hudson to butt heads with partners, often over financial terms. If it turns toxic, the concessionaire will usually end the partnership.
“If you have a troubled partner or spouse or anyone else,” he said, “you want to get rid of them.”
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