Menswear supplier Bagir has set its sights on growing its high-end customer base, as Chinese textile manufacturer Shandong Ruyi prepares to buy a controlling stake in the business for $16.5m (£12.4m).
Bagir chief executive Eran Itzthak told Drapers that “significant commercial opportunities” could arise from Shandong Ruyi’s proposed acquisition.
Among these is the potential to begin supplying some of Shandong’s stable of brands, which includes a majority stake in Aquascutum and, if approved in coming weeks, a controlling stake in Hong Kong menswear group Trinity.
Itzthak said: “We have not had these conversations yet, but I imagine we can add many advantages to these [brands].”
Bagir expects to accelerate plans to double its revenue on the back of the deal, although Itzthak did not disclose a targeted timeframe for this.
Its latest revenue figures stood at $28.1m (£21.1m) for the six months ending 30 June, down 16% during the same period in 2016.
The business plans to manufacture around 3,000 suit trousers per day by mid-2018, as well as develop platforms to support made-to-measure and personalised garments.
It also intends to invest in making its Ethiopian site “more attractive” for visiting clients, with scope to develop its showrooming capabilities.
The Chinese textile manufacturer approached Bagir in June with conversations initially centred around the latter’s Ethiopian operations before widening to the whole business.
Shandong Ruyi is expected to make substantial cost savings from the deal. Itzthak said the numbers spoke for themselves: “In China the cost make per suit is $18, which is not duty-free – when it comes to the US, there’s an added 28% on top of costs. But the cost per suit in Ethiopia is between $3-$5, and it’s duty-free to the US and Europe.”
The deal is estimated to complete in around 50 to 60 days, subject to shareholder approval.
Shandong Ruyi: Facts and figures
Headquarters: Jining, a city in the Shandong province
Chaired by: Yafu Qiu
Recent acquisitions: Hong Kong menswear group Trinity (November 2017); US Lycra producer Invista (October 2017); UK heritage brand Aquascutum (March 2017); French fashion retailer SCMP (2016)
Points of sale: 4,000
Domestic industrial parks: 13
Subsidiaries: More than 20, including three listed entities in China, Japan and France
Operations for raw materials include: Cotton fields; a sheep farm