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Toh Han Shih

Hong Kong-listed casual apparel maker Tack Fat Group has paid US$3.33 million for a 6.94 per cent stake in one of the hippest teen clothing brands in the United States.

Tack Fat said it had also signed an exclusive manufacturing agreement with Mudd (USA), which will boost its revenues by US$200 million.

'We expect to buy more shares in Mudd in the near future,' Tack Fat executive director Norman Ho Yik-kin said yesterday, without giving details.

Launched in 1995, Mudd targets the teenage market with clothes - including jeans, skirts, tops,  trousers and accessories - inspired by celebrities such as Britney Spears and Christina Aguilera, and the music channel MTV.

Tack Fat acquired the  stake  through Sino Legend, a  British Virgin Islands investment holding company which held 72 per cent of Mudd.

According to a report in United States-based fashion bible Women's Wear Daily,  Chinese apparel firm Windsor Garment also recently acquired a stake in Mudd. However, it is not known how much of a stake Windsor Garment bought or how much it paid.

Windsor and Tack Fat were major shareholders in Mudd,  the publication said.

Tack Fat's  manufacturing agreement with Mudd will see the firm   producing   denim and cottonwear for the US brand.

Mr Ho said  the agreement would  add about US$200 million to Tack Fat's revenues.  For the year  to March 31, Tack Fat's revenue was HK$885 million.

Last year, Mudd posted a net profit of US$19.7 million, while  it recorded total revenue of about  $500 million.

'It is good for us, as it will enlarge our turnover and profit,' Mr Ho said.

Conrad Lung, who represents the new shareholders in Mudd, told  Women's Wear Daily that Tack Fat operated a chain of retail stores in the mainland, which would ease Mudd's entry into China.

Mudd had previously tried to enter the Asian market - at one stage opening a store in Causeway Bay - but with little success.

Mr Lung  said the arrangement would enable Mudd to source products from Tack Fat,  an important factor when global textile quotas are lifted on January 1 next year.

'In the near future, when quotas end, manufacturers need a competitive edge. One viable strategy would be to own or control a branded US distributor,' said Peter Shay, managing director of MMG Asia, an investment banking and consulting firm.



Tack Fat goes hip with stake in Mudd