Etam to sell Chinese ready-to-wear business

For many years, business in China has been the Etam group’s Achilles heel. But the French lingerie group is now getting rid of this thorn in its side, having found a buyer for its Chinese ready-to-wear stores. The latter have significantly hindered the group’s revenue growth, and they are set to be sold to a Hong Kong investor, except for Etam’s lucrative local lingerie business, as the group announced last Friday.


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Once the sale will be finalised, Jinguo Zhou, founder and CEO of Jaoboo Fashion Group International (Jaoboo), described as a “Chinese distribution expert,” will take charge with immediate effect of Etam’s ready-to-wear business in the country, as the group stated in a press release.

Speaking to French news agency AFP, a spokesperson for Etam said that Jinguo Zhou himself initiated talks between the French group and a private Hong Kong investor, who wishes to remain anonymous.

The acquisition, which is expected to be finalised by the end of the month, involves the sale of three ready-to-wear labels distributed by Etam in China - Etam Weekend, ES and E&JOY - as well as a licence agreement for the exploitation of brands bearing the Etam name, “except for Etam Paris, the brand name of Etam Lingerie’s internationally,” said the group.

Etam is actually keen to expand its lingerie business in China by itself, deploying a strategy which is independent of ready-to-wear, and was first adopted in 2015 and then confirmed in 2017. Etam Paris, the group's revamped lingerie chain in China, has ambitious plans according to Laurent Milchior, Etam’s CEO, who told FashionNetwork.com last January: “We want to bounce back in this segment. We plan to open 15 stores in [China] in 2018, and to capitalise on the country’s e-tail boom: our online sales grew from a 10% share of the business in mid-2017 to a 25% one at the end of the same year.”

Before Etam delisted from the Paris stock exchange last August, it indicated that sales in the first half of the 2017 financial year had slumped, notably penalised by China. Etam’s revenue in the period reached €600 million, down 5.3%, but China suffered a 28.7% downturn in the second quarter, down to €48.4 million.

According to the press release, “the operation reflects the Etam group’s strategy of concentrating on its core activity, the expansion of the lingerie business worldwide.” The decision of parting with the ready-to-wear business in China alone must not in fact give the impression that the French group is going to invest less on the export market, for which it instead harbours ambitious plans: last year, Etam took direct control of its Russian distribution in order to expand further (it currently operates some forty stores in the country) and, according to our sources, it is actively seeking to enter the US market by means of a solid partner.

“Thanks to Jinguo Zhou’s experience, Etam’s ready-to-wear labels will continue to grow and win over new customers throughout China,” where Jaoboo has 1,600 stores in more than 300 cities, said Laurent Milchior, cited in the press release. Although in the last year and a half, Jaoboo’s retail network actually downsized, closing down several hundred stores.

Etam’s shareholders are the Milchior family, which acquired a majority stake in 2009 via its Finora holding company, and the Tarica and Lindemann families. Under Laurent Milchior’s leadership, Etam has refocused on lingerie, specifically the Etam Lingerie, Undiz and Livy labels, a segment which is driving the group's growth.

In 2016, the Etam group, also the owner of the 1.2.3 ready-to-wear brand, recorded a revenue if nearly €1.3 billion. Etam was founded in 1916, and it currently operates more than 3,000 stores in 64 countries.

FashionNetwork.com with AFP

Translated by Nicola Mira

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