The two companies are putting an end to 17 years of collaboration whereby Sanita of Denmark has been supplying a special type of stapled flexible clogs, made in its own factories in Poland and the Ukraine, to Dansko of the USA for sale under the American company’s brand name. Like in some other long marriages, the separation is not going to be painless as both companies are accusing each other of breach of contract.
The contract represented almost one-half of Sanita’s total production, but it was based on a patent, held by the Danish company, that expired in 2002. The contract forced Dansko to source shoes based on this technology from Sanita, but prevented the Danish company from selling similar models in North America. Nevertheless Sanita set up a sales office and a distribution center near San Diego in Southern California in 2001 to sell other styles in that territory.
The contract was going to expire at the end of 2007 unless it was renewed by last June 30. As this didn’t happen, Sanita confirmed that it would honor the terms of the contract only until the end of this year. It began to accept pre-orders directly from North American clients for the same styles of stapled clogs supplied through Dansko, to be delivered from January 2008 onwards, but on Aug. 9 it changed its mind. It discontinued its shipments to Dansko and said that it would be able to start shipping certain types of flexible stapled clogs to North American clients directly from Sept. 1 and others from Nov. 1.
Sanita executives justify the move with evidence that Dansko had already started to develop and source similar products, claiming that this constituted a breach of contract that entitled it to accelerate its effective termination. Dansko has reacted by filing an injunction for breach of contract in a Danish court. A hearing on the issue is expected to be held later this month.
Indicating that any supply issues should be resolved by next Spring, Dansko says in a statement that the planned change of supply will guarantee more consistent product with the same fit and feel and more reliable deliveries. It will also lead to the development of new and innovative products.