Renown sells major stake to China's Shandon Ruyi

JAPAN: Renown sells major stake to China's Shandong Ruyi

By just-style.com | 24 May 2010

Struggling Japanese apparel maker Renown Inc is selling a controlling stake in its business to Chinese textile firm Shandong Ruyi Science & Technology Group Co.

The JPY4bn (US$44.2m) deal will make Ruyi Science the top shareholder in Renown with a stake worth just over 41%, exceeding fund Neoline Holdings which owns 24.9% of the firm.

The transaction is significant because it is the first major investment by a Chinese firm in the Japanese apparel market, and the two companies now say they intend to work together to turn around Renown's troubled business.

In particular, Renown will tap into Shandong Ruyi's sales network to expand its operations in the Chinese market, with around half of the cash injection used to open new Renown stores in China and Japan.

In return, Shandong Ruyi will add Renown brands such as D'urban and Henry Cotton's to its line-up and get access to Renown's quality and production expertise.

Earlier this year the Japanese firm posted its fourth consecutive annual loss of JPY11bn, while sales fell 17.3% to JPY129bn amid a slump at the department stores where it sells its clothing.

The company has been trying to restructure its business for years, with the most recent measures including a 30% cut in its workforce and eliminating 16 of its 62 brands.

Last year its sold its luxury fashion brand Aquascutum to entrepreneur Harold Tillman and Jaeger group CEO Belinda Earl for an undisclosed sum.

Shandong Ruyi Science & Technology Group is one of China's leading textile firms with a vertical operation that embraces fibres, spinning, knitting, printing and dyeing, and clothing including suits and jeans.

It also has interests in real estate and has set up industrial parks in the Jining Hi-tech Development Zone and the China Textile Base in the Wanzhou District of Chongqing which has a production capacity of 0.5m spindles and is one of the biggest spinners in China.

According to the company, it has total assets of CNY5.5bn and nearly 20,000 employees.

Sectors: Apparel, Manufacturing, Retail

Companies: Renown Inc, Jaeger