LONDON — Shares in Compagnie Financière Richemont were broadly flat at 79.05 Swiss francs on Monday morning after the company announced the disposal of one of its smallest and most niche brands, Shanghai Tang.
Richemont said it sold Shanghai Tang to an entity controlled by Alessandro Bastagli, an Italian entrepreneur. It said the transaction would have no material impact on Richemont’s balance sheet, cash flow or results for the year ending March 31, 2018.
Shanghai Tang was established in 1994 in Hong Kong by Sir David Tang. It was China’s first contemporary luxury brand, albeit with a western twist and brand aesthetic. It sold men’s and women’s clothing, accessories and items for the home. It operates 32 stores worldwide.
Richemont took a controlling stake in Shanghai Tang in 1998 and acquired 100 percent ownership in 2008. The terms of the deal were not disclosed.
Bastagli is president of Finalba SpA holding and is also president and chief executive officer of the textile company Lineapiù Italia Spa and of A. Moda SpA, which produces and distributes the activewear collections of Everlast, Dimensione Danza, Virtus and Empire under license.
He made the Shanghai Tang purchase with backing from the private equity fund Cassia Investments and a British investment fund. The entrepreneur said Monday he is already working to build a new creative and management team for Shanghai Tang.
Last November, its ceo Raphael le Masne de Chermont told WWD that the brand had been trying to reduce its reliance on the qipao dress and other traditional Chinese silhouettes.
Joanne Ooi, who served as the creative director of Shanghai Tang from 2001 to 2008, said the brand failed to evolve with a fast-maturing and picky Chinese shopper.
“The brand was a pastiche of [Asian] culture, which disrespected the refinement of mainland and other Chinese consumers, who since the time it was founded had grown up considerably and were looking for a much higher level of creativity and originality,” Ooi said. “That [evolution] unfortunately didn’t continue to happen.
“You want to know why it ultimately totally flatlined?” she continued. “It wasn’t creative. It was only on a scale of one to 10, maybe six and seven on its best season in the last several years. This is the truth. I believe that mainland [Chinese] consumers are among, and maybe the most, refined, sophisticated and jaded consumers of all these days.”
In 2013, the brand inked a 12-year exclusive global licensing deal with Inter Parfums Inc. to create, produce and distribute fragrances and beauty products bearing the Shanghai Tang name. Inter Parfums USA Hong Kong Ltd. is managing the beauty products of the Chinese luxury products company.
In its quarterly results, Richemont principals rarely, if ever, talked about the brand, which was grouped in the “other” brand category, along with Chloé, Azzedine Alaïa and Lancel.
In fiscal 2016-17, Richemont witnessed a 45.6 percent fall in profits to 1.21 billion euros dented partly by a non-recurring one-off gain from the merger of Net-a-porter Group with Yoox.
Stripping out those effects, profit would have decreased 24 percent as the company chose to buy back excess watch stock due to ongoing challenges at wholesale. Sales in the period were down 3.9 percent to 10.65 billion euros.
Although, Richemont didn’t break out fourth-quarter sales, analysts pointed out that growth slowed to 4 percent from the previous quarter’s 5 percent, suggesting that recovery in the watch division remains weak.