Bagir sales up in tough market, Shandong Ruyi deal delayed again but still on
London-listed tailoring specialist Bagir on Wednesday reported higher sales for the first five months of the year and also updated the markets on its delayed deal with Shandong Ruyi, which is still expected to go ahead.
The company, which makes suits for H&M and Brooks Brothers, said that trading conditions have remained challenging, but it had a strong start to 2019 with the sales from January to May rising to US$27 million from $21.8 million a year earlier. And it has an order backlog of $26.2m, with another three months during which it can secure orders for completion in the current year.
It added that its Ethiopian manufacturing site is “stabilised" and producing 3,000 trousers per day, also being on track to increase this by an extra 1,000 by the end of year.
And Shandong Ruyi? The deal, under which the Chinese firm would invest $16.5 million to acquire a 53.7% shareholding in Bagir, was first announced as far back as November 2017. But various delays have got in the way and on May 31, the company said Shandong Ruyi had requested an extension of the unconditional completion date to June 18 in order to discuss some changes to the agreed terms.
Well, June 18 has come and gone and on Wednesday Bagir said that it has agreed to a further extension of the unconditional completion date to March 31 2020, almost two-and-a-half years after the deal was first struck.
So will it ever actually happen? Bagir says yes. “Following discussions over the last few days in Beijing with senior management from both companies, the board has been persuaded of Shandong Ruyi's intention to complete the transaction and commitment to provide valuable operational support to the company on the run up to the extended completion date and as previously agreed,” it explained.
Earlier this year, Shandong Ruyi had also committed to provide suit jacket manufacturing equipment, with an estimated market value of $1.3 million, for exclusive and indefinite use in Bagir's Ethiopian manufacturing facility, “free of landed costs, for nil consideration.” And the company said that this commitment has been reconfirmed with equipment due to be delivered by the end of September.
CEO Eran Itzhak, said: “Following face-to-face conversations, we have been convinced of Ruyi's intentions which, together with the valuable operational support being provided, a further and final extension was agreed. The business is performing reasonably well in a tough market and while we have a good pipeline of new and backlog orders to focus the operating team on, there is no doubt this is a challenging period for major retailers and manufacturers.”
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