Richemont has sold Hong Kong-based dressmaker Shanghai Tang, showing that a Chinese name still doesn’t have the same ring to luxury shoppers as a French or Italian one.
Italian fashion entrepreneur Alessandro Bastagli and private equity fund Cassia Investments bought the brand, one of the first Chinese fashion labels to seek a global presence, according to a statement Monday. It’s the first sale of a luxury unit by Geneva-based Richemont since 2007, and follows a pledge by Chairman Johann Rupert in November to fix or sell underperforming businesses.
“The disposal of Shanghai Tang is a logical step,” Rene Weber, an analyst at Vontobel, said in a note. “The brand was neither material in terms of sales nor of profit.”
Shanghai Tang attracted stars such as Nicole Kidman and Kate Moss with its 1920s-inspired dresses -- some costing more than US$2,000 -- but struggled to gain a broader following in the west, while consumers in China have preferred western luxury brands. In a ranking by researcher Hurun of the top fashion brands for Chinese women, Shanghai Tang ranked 10th, behind nine European brands including Chanel, Dior and Gucci. It didn’t show up on the top 10 for men, which was led by Giorgio Armani.
Hong Kong Handover
Richemont acquired a controlling stake in Shanghai Tang in 1998, a year after sovereignty over Hong Kong was transferred from the UK to China. It bought the rest in 2008. The luxury company is revamping its portfolio, having merged its Net-a-Porter online unit with Yoox SpA in 2015 after disposing of Italian penmaker Montegrappa in 2007. It now owns 18 brands, including Cartier, Montblanc and IWC.
Richemont didn’t disclose the price for Shanghai Tang, one of four labels that Sanford C. Bernstein analyst Mario Ortelli said in 2013 he expected might be sold. The others were Dunhill, Chloe and Azzedine Alaia. Richemont said that year that it decided against any divestments, and has since reconsidered. Its shares were up 0.7 per cent at 3.04pm. in Zurich.
The company has restructured Dunhill and rejuvenated Chloe’s management with a new creative director. Other small Richemont brands include Purdey, a maker of luxury shotguns, and Lancel, a French pursemaker that the company considered selling in 2013.
Sir David Tang, who now writes a column in the Financial Times, started Shanghai Tang as a bespoke tailor shop in 1994, combining Chinese and western design influences and expanding into accessories and housewares. While the brand attracted buzz about China’s growing cultural and design influence around the turn of the millennium, when its form-fitting qipao dresses were worn in Wong Kar-Wai’s film In the Mood for Love, its Mandarin collars never caught on in a big way in Europe or the U.S.
The original Shanghai Tang location in Hong Kong closed in 2011 due to high rents, and the brand also shut a New York shop. The fashion maker has 32 stores currently. Rival Hermes International has provided competition with its Shang Xia brand since 2010.
Cassia, which focuses its investments on consumer companies, is based in Hong Kong. Bastagli is the chairman of Italian fashion producer and distributor A. Moda SpA, and of Lineapiu Italia, a maker of luxury yarn. A.Moda’s clients have included Versace, according to its website.