Hang Po Lee Sells Sisley Business To Raise Capital Flows

Yue Xinyu, chairman of Heng Bao Li International Holdings Limited (03989, HK), once said, "particularly optimistic about the prospects for the development of affordable luxury goods in the mainland", which was in April this year.

The recent economic situation may have changed his expectations.

Heng Baoli recently announced that it will sell a 83.33% stake in the mainland's clothing and accessories distribution and retail business.

The price is 100 million yuan, although the sale plan will make hang Po Lee lose 50 million yuan, but the proceeds from trading will help improve liquidity.

To divestiture Sisley distribution business, it is reported that the pfer includes Sisley brand products retail stores, store inventory, assets, including land and property located in Yangzhou.

Statistics show that Heng Bao Li mainly provides supply chain management services for more than 10 internationally renowned clothing brands such as Sisley and Moschino, as well as apparel products distribution and retail business in Greater China.

In the retail business, hang Po Lee set up joint ventures with Stonefly, Lotto and Sisley in 2002, and set up high-end clothing and footwear retail outlets in the mainland's first and two tier cities.

In addition, Heng Bao Li also bought the exclusive distribution rights in mainland China at the cost of 10 million yuan MoschinoS.p.A.10.

Before the sale, Heng Bao Li has been ambitious about developing the European and American brand channels in the mainland.

Last year, Yue Xinyu completed the acquisition of Italy brand SergioTacchini with 27 million euros, and won more than 3000 retail outlets of the brand in the world.

According to media evaluation, this is the first Chinese European and American high-end brand.

In addition, Heng Bao Li said on various occasions that it would focus on expanding distribution and retail business, hoping to increase the number of stores through acquisitions and increase the share of retail business to 50% within 3 years.

According to industry insiders, the Sisley retail business that Heng Bao Li "reluctantly" has sold gross profit margin up to 60% has, to a certain extent, indicated that under the financial crisis, the retail format of clothing is relatively low.

Giordano has frozen its business outside the mainland. In addition to hang Pao Lee's desire to recover cash flows by selling part of its retail business, Giordano (00709, HK) also announced in mid last month that it had announced the withdrawal of 6 sales outlets in Hongkong and 11 in Taiwan, and suspended all new stores except the mainland.

Earlier, Hongkong garment production and retailer international Wei international liquidation and closed down the mainland retail business because of debt problems.

Liu Guoquan, chairman of Giordano International Ltd, said that sales of Hongkong and Taiwan in October saw double-digit declines year-on-year as the global financial crisis intensified and consumer confidence declined rapidly.

Giordano said it will continue to put resources into the mainland business and expand its distribution network outside the first tier cities along the coast, while strictly controlling costs and inventories.

There are various indications that under the condition of low consumption, poorly managed retail businesses seem to be the "chicken ribs" of garment enterprises.

Statistics show that in October, the consumer confidence index was only 92.4, which was 1 lower than that in September.

According to a survey data, in addition to a few department stores such as Parkson, Hefei department store and Wuhan Zhong Bai, the growth of most department stores has dropped to single digits, while some stores (such as SOGO in Hongkong and Tongluowan, some department stores in Shanghai) have even experienced negative growth.

Yang Jing: editor in charge