gieves and hawkes

What to Watch: Who Will Buy Shandong Ruyi’s Brands SMCP and Gieves & Hawkes?

What to Watch: Who Will Buy Shandong Ruyi’s Brands SMCP and Gieves & Hawkes?

LONDON — Having once aspired to be China’s very own LVMH Moët Hennessy Louis Vuitton, the debt-laden Shandong Ruyi is fighting for survival, with some of its prized assets likely to change hands in 2022 — some of them more quickly than others.With billions in debt, Ruyi has been looking to offload Savile Row tailor Gieves & Hawkes, the Italian men’s wear brand Cerruti, and the French contemporary fashion group SMCP, owner of the Sandro, Maje, Claudie Pierlot, and De Fursac brands. SMCP, in particular, is proving to be problematic.
On Monday, Trinity Limited, Ruyi’s men’s wear unit that includes Gieves & Hawkes, Kent & Curwen and Cerutti, has been put into liquidation, according to the company’s filings with the Hong Kong Stock Exchange.

The company said liquidators FTI Consulting and R&H Services have been appointed to assess the financial position of the group and to consider the opportunity of a possible restructuring.

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While these brands may face permanent closure, a rescue deal could still be struck for Gieves & Hawkes’ brand name, while the tailor’s archive collection could be sold off at auction to collectors of historic artifacts.
It’s understood that Marks & Spencer, which bought Jaeger out of insolvency last year and has been adding third-party brands to its growing online platform, is still exploring how it could incorporate Gieves & Hawkes into its business.

Exterior of Gieves & Hawkes’ bespoke men’s tailor and men’s wear shop at No. 1 Savile Row in London.
Tim Jenkins/Courtesy

M&S has a strong tailored clothing offer, and has long worked with Savile Row tailor Richard James to design one of its in-house men’s clothing collections.
The other potential buyer is entrepreneur Touker Suleyman, owner of high street tailoring brand Hawes & Curtis, women’s wear label Ghost, and several clothing factories in Turkey, Bulgaria and Georgia, in the former Soviet Union, according to market reports.
It remains unclear what will happen next to Cerruti, which Ruyi acquired when it took a majority stake in Trinity Group in 2017. Since the departure of its chief creative officer Jason Basmajian in 2019, the brand has gone off the radar, and is understood to have rebuffed a series of offers from interested parties.
Ruyi’s financial woes have also caused companies in its portfolio, like Israeli men’s wear brand Bagir and Japanese apparel firm Renown, to file for bankruptcy protection in 2020. British trenchcoat-maker Aquascutum, another of its brands, has ceased trading in the U.K. after closing its Regent Street flagship during the pandemic.
With an ambition to become a fashion leader, Shandong Ruyi embarked on a global shopping spree in 2015. In 2016, it bought SMCP from private equity firm KKR, and Trinity Group from Li & Fung. It also purchased Aquascutum that same year.
At the time, Ruyi’s president Yafu Qiu called the acquisition of SMCP a “significant step” in its ambition to become a “leader in the fully integrated textiles and fashion business both in China and globally.”
He said he would help SMCP achieve its “long-term objective of becoming a global leader in accessible luxury.”
In 2018, the Chinese group also made a pledge to acquire Bally from JAB but Ruyi never completed the $600 million transaction, and Bally remains part of JAB.

Faced with mounting debts, Ruyi has seen its credit rating downgraded several times by Moody’s.
In June 2020, the struggling group also lost its key backer. The state-owned Jining City Urban Construction Investment Co. Ltd., which promised Ruyi Group a 3.5 billion renminbi, or $495 million, investment, walked away. The investment was supposed to provide a much-needed cash injection and an endorsement from the local government.
Ruyi also suffered from China’s crackdown on overborrowing to fund overseas expansion. Since 2017, Beijing has been curbing Chinese companies’ overseas shopping sprees to a new seven-year low in 2021.

Sandro RTW Fall 2021
Courtesy of Sandro

While it may well find buyers for Gieves & Hawkes and Cerruti, Ruyi might take longer to sell the publicly quoted SMCP due to an ongoing battle with the company’s institutional shareholders.
In October, Ruyi’s Luxembourg-based European TopSoho defaulted on 250 million euros worth of bonds, igniting the ire of shareholders like Blackrock and Carlyle, which have united under the name of Glas. It owns a 29 percent stake in SMCP and 25 percent of its voting rights following the default.
Glas has accused Ruyi of shady dealings in shares, and has demanded that SMCP hold a board meeting in January and remove all board members linked to Ruyi, including the founding Qiu family.
Ruyi, meanwhile, denies any illegal share dealings and has accused Glas of “malicious attacks” on the company, illegally profiting from SMCP, violating professional ethics and operating in secret.
The legal battle between the two is expected to continue into 2022 and beyond. But if a deal is reached and Glas takes control, it is very likely that Glas will sell its collective stake to a potential buyer.

Gieves & Hawkes Faces Permanent Closure Over Shandong Ruyi Debt Crisis

Gieves & Hawkes Faces Permanent Closure Over Shandong Ruyi Debt Crisis

LONDON — Storied Savile Row tailor Gieves & Hawkes may be shut permanently over its Chinese parent company’s debt if a buyer fails to show up, alongside its sister brand Kent & Curwen.The two brands, along with men’s wear brand Cerruti, are all owned by Trinity Ltd., a Chinese company sold by the Hong Kong-based sourcing giant Fung Group in 2017 to the $4 billion debt-laden Chinese fashion manufacturing giant Shandong Ruyi Technology Group, which is also the owner of SMCP, Aquascutum and Lycra.
The Times first reported that a restructuring firm has been called in as liquidators seek a buyer, citing a source that “there had been a fruitless attempt to find another Chinese business with links to Shandong Ruyi that could take over the tailoring companies.”

The winding-up order follows a failed attempt by Trinity to appeal against creditors. There will be a vote in Hong Kong on Nov. 4 to determine the fate of the brands.

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If no buyer is found, the British tailor is in danger of closing after 250 years of trading. The brand, loved by British royalty, has had a store at 1 Savile Row since 1913 and 58 shops in 25 cities worldwide.
Meanwhile, the other British brand under the Shandong Ruyi umbrella, Aquascutum, has pulled out of Britain after being denied further funding from Ruyi.

Exterior of Gieves & Hawkes bespoke men’s tailor and men’s wear shop at No. 1 Savile Row in London.
Tim Jenkins

Across the English Channel, Shandong Ruyi last month failed to redeem bonds in the company, issued in September 2018, worth 250 million euros, causing concerns that SMCP, the owner of Sandro, Maje, Claudie Pierlot and De Fursac, could fall into the hands of creditors. Owners of the bonds include asset manager BlackRock and private equity firm Carlyle. They can stake a claim to a 37 percent share in SMCP.
On Oct. 7, European TopSoho, a unit of Shandong Ruyi, which has a 53 percent stake in SMCP, launched legal proceedings against bondholders it alleged were seeking to take control of SMCP at a low price.
Shandong Ruyi also failed to seal its planned acquisition of Bally and cut back at Cerruti and other international brands, and has already defaulted on several investments, causing Israeli men’s wear brand Bagir and Japanese apparel firm Renown to file for bankruptcy protection last year.
Faced with mounting debts, Moody’s has downgraded Ruyi’s credit rating several times since late 2019. The struggling group lost its key backer in June 2020. The state-owned Jining City Urban Construction Investment Co. Ltd., which promised Ruyi Group a 3.5 billion renminbi, or $495 million, investment last year, walked away in the end. The investment was supposed to provide a much needed cash injection and an endorsement from the local government.
In an interview with the local press around that time, Yafu Qiu, chairman of the company, said Ruyi no longer wants to be China’s LVMH Moët Hennessy Louis Vuitton and that the group will focus on restructuring its portfolio, high-tech fabrics, automated production and fashion brand management to improve its profitability, instead of global acquisitions.
Related:
SMCP’s Controlling Shareholder Defaults on Bond
Ruyi Group $495M State-owned Investment Falls Through

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