YGM in talks to take over British label Aquascutum
YGM Trading's desire to tighten its grip on Aquascutum, a 160-year-old trench-coat brand that once dressed Winston Churchill and the Queen Mother, shows the growing appetite of mainland shoppers for high-end fashion with heritage.
The garment maker said on Wednesday it was in exclusive talks with the administrators of Aquascutum in Britain until next Wednesday over the purchase of the British icon's business and assets, excluding its factory in Northamptonshire.
Aquascutum's European business went into administration last month after co-owners Harold Tillman and Belinda Earl could no longer afford the group's heavy losses.
The century-old factory has since been shut down, costing 115 jobs.
The assets at stake include the intellectual property rights of Aquascutum and about 37 stores outside Asia.
YGM bought the Asian operations in 2009 and there are about 300 stores across the region.
Some analysts said the deal added to a bevy of European brands coming under the control of Hong Kong investors, who are vying for a bigger slice of the mainland's robust consumer market.
Last month, fashion retailer Trinity, which is part of the Li & Fung group, paid up to GBP92.5 million (HK$1.16 billion) for the brand and business of Gieves & Hawkes, a British premium label for menswear since 1771.
'These deals signal the rising appetite of mainland shoppers for established British brands,' Kingsway analyst Steve Chow said yesterday. 'They favour luxury brands with heritage.'
A KPMG survey of mainland consumers found 'quality, exclusivity and heritage' were top of their list when they went shopping for luxuries. KPMG said the mainland was fast becoming the world's largest luxury market, with such products representing a higher social status and wealth level.
Some analysts said it was necessary for garment manufacturers in the Pearl River Delta including YGM to transform themselves to take advantage of the mainland's policy of upgrading the domestic market.
Aquascutum's businesses in Europe, North America and Latin America will be added to YGM's portfolio of such labels as Michel Rene, Ashworth, J. Lindeberg and Guy Laroche.
Chow said he expected the Aquascutum deal would be sealed before the May 9 deadline, which he said would be 'good news' to YGM as uncertainty about global ownership of the brand would be removed.
He said YGM, which has HK$600 million in cash, was financially sufficient to cover the deal.
He said Aquascutum would drive YGM's profit growth in the next few years.
YGM's managing director, William Fu Sing-yam, was not available for comment yesterday.
Fu said in October last year the design team at YGM's Hong Kong headquarters modified the designs from London. For example, consumers in northeastern China, which has cool weather and indoor heating, prefer their trench coats shorter, with thicker, knitted fabric, fur seams and single-breasted. A London-designed trench coat commonly has a longer body and is double-breasted but without fur.
YGM shares rose 40 HK cents, or 1.94 per cent, to close at HK$21 yesterday.
The net profit, in HK dollars, of YGM Trading in the six months to September last year