LONDON — Ted Baker, the U.K.-based lifestyle company, revealed on Wednesday that it has partnered with Shanghai LongShang Trading Company to form a joint venture in Mainland China, Hong Kong and Macau.
As part of the deal, LongShang will assign its rights under the JV to a newly incorporated Hong Kong investment vehicle to be wholly owned by LongGoal Holdings and Infra-Apparel Group.
Before the JV, Ted Baker operated eight full-price stores, five concessions and one outlet store in the region via its wholly owned subsidiary Ted Baker Hong Kong. Under the new agreement, it will issue shares in the share capital of its Hong Kong subsidiary to the JV Partner for a total subscription price of 50 million renminbi, or $7.4 million.
Ted Baker’s net cash contribution to the JV is anticipated to be 30 million renminbi, or $4.5 million. As part of the deal, the company will also transfer its operations in China and Hong Kong into the new joint venture with anticipated transaction-related costs at $8.63m.
The company said that it expects the JV to break even in the 2021-2022 financial year, while the new deal is also expected to contribute to a marginal increase in the group’s profits before tax in the current financial year.
The company anticipates receiving regulatory approvals from the Chinese government before Aug. 31.
“Over recent years we have invested in introducing the Ted Baker brand to Chinese customers, and we are confident that the creation of this JV will build on this platform and deliver meaningful long-term growth,” said Lindsay Page, acting chief executive officer at Ted Baker.
The company said the JV will be responsible for operating Ted Baker retail, concessions and online channels exclusively and drive the long-term expansion of the brand in the market.
“LongGoal and Infra-Apparel bring local market expertise to our brand and already well-established design, buying and merchandising skillset. We firmly believe that China has the long-term potential to become one of the largest single global territories for the Ted Baker brand,” Page said.
Xiaoling Chen, chairwoman of LongGoal added: “Ted Baker’s global lifestyle appeal has resonated well in China, and we are confident in our ability to amplify the brand’s growth. In over 20 years, LongGoal has amassed an infrastructure and presence in more than 65 cities, which presents a strong, compelling and proven platform that Ted Baker can leverage.”
Ted Baker, whose collections range across men’s, women’s wear, accessories, beauty and stationery, is currently distributed across five continents with 560 stores and concessions worldwide.