Garment firm buys out British brand
Garment maker YGM Trading is confident it can recapture the glory days of the 161-year-old British fashion label Aquascutum, which once dressed English royalty and won the Queen's Award for Exports four times.
'Now the entire business is under our ownership, which removes the uncertainty over the fate of the brand in Europe,' YGM managing director William Fu Sing-yam said.
'We bought a brand we have known for years,' he added, saying the fortunes of the once famous brand could be turned around.
Fu was commenting in the wake of mopping up Aquascutum's remaining assets, including 24 retail outlets in Britain, global trademarks and intellectual property rights for GBP15 million (HK$183 million) last week. It will receive royalty income from a licensee in Italy, which will continue to operate a yet-to-be-disclosed number of Aquascutum outlets in Europe, the Middle East and other regions besides Asia and Britain.
In 2009, YGM bought the rights to the Aquascutum brand in 42 Asian countries, including China, Japan, South Korea and India.
The stores in Britain will be consolidated into the existing 171 Aquascutum stores operated by YGM on the mainland and in Hong Kong, Macau, and Taiwan, and into the group's larger network of 300 outlets in Asia.
The Aquascutum label has been a prize addition to YGM's brand portfolio, which includes labels such as Guy Laroche and Michel Rene. But the 2009 acquisition hurried the demise of Aquascutum's business in Europe, because the British firm's Asian operations had been its cash cow, Fu said.
Aquascutum's European business recorded an after-tax loss of GBP4.47 million in the year to February 29. The latest available figure for its net liabilities stood at GBP13.45 million in February, 2010.
Fu said the losses stemmed largely from a factory in Britain, which was shut down last month and was excluded from the deal.
For the coming fashion season, Fu said the group would align its catalogue of products worldwide, as a lack of investment in the European operations in the last two years had left 'limited' choices of apparel at the 24 outlets in Britain. New products like children's wear and sportswear would be put on the shelves in Britain, he said.
The design and creative centre for the label will remain in London.
YGM is among a growing number of garment manufacturers competing for the spending power of mainland shoppers, who favour quality international brands with an illustrious heritage.
Core Pacific-Yamaichi International analyst Eugene Mak said the Aquascutum deal would give YGM the freedom to shape the brand's future direction and protect its image and value. However, its loss-making operations would drag YGM's profitability down in the short- to medium-term, he said.
'Turning the European business around will be a great challenge.'
YGM shares fell 6 cents to close at HK$18 on Friday.