Youngor not only wants to replicate the FILA myth but also wants to try operating an international luxury brand
Domestic buyers have started acquiring fashion brands again.
According to French media La Lettre, the domestic menswear group Youngor may plan to acquire the French high-end children’s fashion brand Bonpoint. The parent company EPI Group and Youngor are in the late stages of negotiations, with the transaction led by EPI Group’s Executive Director Valérie Hermann. The transaction amount is estimated to be around 200 million euros, attracting widespread market attention.
Although EPI has never disclosed Bonpoint’s annual revenue, the market estimates its annual revenue to be around 100 million to 150 million euros. Industry insiders believe that the global macroeconomic and fashion market downturn is causing fashion brands to be generally undervalued, sparking interest from new buyers in low-priced assets.
Bonpoint was founded in 1975 on the Left Bank of Paris, France, and will celebrate its 50th anniversary next year. The brand’s founder, former Dior stylist Marie-France Cohen, introduced the concept of haute couture into children’s clothing, becoming the world’s first haute couture house dedicated to children and the only children’s ready-to-wear brand with a haute couture workshop. Before 2020, Bonpoint held fashion shows during the Paris Haute Couture Fashion Week schedule.
The brand is known for its two-cherry logo, with a design style that embodies typical French poetic whimsy, and has gained favor among many royals and celebrities worldwide. Since Bonpoint launched children’s fragrances in 1986, the brand has gradually expanded its skincare series, which focuses on natural and hypoallergenic products. It is reported that the beauty series currently contributes about 30% of the brand’s annual revenue.
30% of Bonpoint’s revenue is contributed by the beauty series
In 2007, Bonpoint was acquired by the French luxury group EPI, which also owns the footwear brand J.M. Weston, the fashion brand Fiagaret, the champagne brands Piper-Heidsieck and Charles Heidsieck, as well as the wineries Biondi-Sani and Château la Verrerie.
After being acquired by the EPI Group, Bonpoint accelerated its expansion in markets such as China, Japan, and the United States. By the end of last year, the brand had 130 stores worldwide, about one-third of which were located in China. China is also the best-selling market for Bonpoint’s beauty series, with the brand opening skincare and fragrance concept stores and beloved SPAs in Shanghai and Shenzhen.
Previously, there was Biemlfdlkk acquiring CERRUTI 1881, ICICLE acquiring Carven, and Fosun acquiring Lanvin. French high-end fashion brands have almost met all the needs of Chinese buyers: long history, strong aesthetics, low valuation, and room for channel expansion.
If Youngor successfully acquires Bonpoint, this will become the second case this year of a Chinese company acquiring a French children’s fashion brand, following the acquisition of the Smallable brand by Hong Kong company AA Investment.
According to an earlier report by Fashion Business News, another French fashion brand, Sézane, may have caught the eye of Alibaba founder Jack Ma.
New York private equity firm General Atlantic plans to sell part of its 35% stake in the French fashion brand Sézane, and Jack Ma may ultimately acquire a 10% stake in Sézane through Blue Pool, a holding company he co-owns with Joe Tsai.
According to data disclosed by Sézane, its 2022 revenue was approximately 250 million euros, and the market estimates its revenue this year is expected to reach 500 million euros. This investment will push Sézane’s valuation to about 1 billion euros.
After a round of global luxury brand acquisitions by Chinese capital such as Fosun and Shandong Ruyi, apparel giants like Youngor and Biem.L.Fdlkk are starting a second wave of brand acquisitions from the industry side.
In the most challenging year of 2024 for fashion retail, most clothing giants are returning to their core business, de-emphasizing business expansion and brand marketing. After three years of brand upgrading, HLA is returning to its expertise in channel business this year, starting to help JD.com and Adidas open stores to clear inventory.
With its high-end golf apparel and transportation hub scenarios, Bosideng recorded a decline in revenue for the first time in the third quarter of this year, breaking the myth of continuous growth against the trend. Other women’s clothing brands such as Peacebird, Dazzle, Erdos, and MO&Co. are all focusing their efforts on maintaining business.
Against this backdrop, Youngor frequently reached out to the outside world.
In August this year, the group invested in the domestic skincare brand Lin Qingxuan, acquiring about 4.5% of its shares and becoming its second-largest shareholder. In the same month, Youngor also collaborated with Tianmuli to open the commercial project HAI550 on Huaihai Middle Road in Shanghai, which is the first commercial complex in China dedicated to showcasing a sustainable lifestyle. The project sparked much discussion in the industry upon its opening.
Youngor and Tianmuli collaborate to open HAI550
Yagor’s ample ammunition comes from the early accumulation of the domestic apparel golden age, and more from the profits of other business sectors, such as real estate and investment.
Youngor was once called the “Buffett of the clothing industry.”
From 2002 to 2022, Youngor began to extensively develop real estate projects and purchase commercial properties, with the group’s revenue growing from 2.5 billion yuan to 14.8 billion yuan, and the real estate business increasing from 530 million yuan to 8.55 billion yuan, becoming the core business of the group. It is precisely because of the early acquisition of a large number of properties that Youngor is still able to maintain a relatively large scale, allowing founder Li Rucheng to consistently rank among the top in the apparel industry rich list.
In the first three quarters of this year, Youngor’s operating income increased by 12.63% to 8.4 billion yuan, while the net profit attributable to shareholders of the listed company decreased by 6.73% to 2.512 billion yuan.
In fact, for many years, Youngor has been difficult to strictly call a men’s clothing giant, as its business spans clothing, real estate, investment, textiles, and trade. However, at the end of 2023, Youngor announced its renaming to Youngor Fashion, further focusing on the fashion industry, which surprised the industry.
From clothing and real estate to investment, Youngor, which has caught up with every round of market dividends, is now returning to the fashion industry. What kind of structural opportunities in the fashion industry have they identified, undoubtedly arousing market curiosity. Perhaps they have gained confidence from Anta Group’s international expansion, or they are eager to try based on Fosun’s operational cases.
More likely, with the cooling of real estate, weakness in the main business, and increased uncertainty in investment activities, Youngor has no choice but to return to its fashion business, where it has a home advantage.
Menswear is notoriously difficult to produce, and even after several rounds of upgrades by brands like Septwolves and Joeone, it is hard to reverse the inertia of traditional menswear brands aging. Young men are drawn to trendy sports brands, while mature male consumers have started buying Arc’teryx, replacing the once ubiquitous jacket with a softshell.
Even male consumers with a “formal wear demand” are starting to look for something new in non-formal brands like Biyin Lefen and Lululemon, or continue to upgrade to luxury brands, while neglecting the Youngor brands they wore twenty years ago, no matter how well these brands make core items like jackets and trousers.
From the subsequent actions of Youngor, it seems that in response to changes in the male consumer market, Youngor hopes to transform from the perspective of customer segmentation.
In 2021, Youngor acquired a 40% stake in the American trendy brand UNDEFEATED and established a joint venture company in the Greater China region. In the same year, Youngor also invested in the Norwegian outdoor brand Helly Hansen, taking charge of Helly Hansen’s operations and production in the Greater China region.
UNDEFEATED Shanghai Xintiandi Taikoo Hui Store
The former targets young consumers who love trendy sports brands, while the latter aims to win back many mature consumers lost by Youngor. In addition, in September 2022, Youngor and Tang Binsen’s Challenger Capital, the founder of Genki Forest, jointly invested in the American high-end designer fashion brand Alexander Wang. One is to build a high-end business upward, and the other is to supplement the women’s clothing business landscape.
Three years have passed, and Youngor has been honing its skills with the aforementioned three brands. UNDEFEATED has opened stores in several core high-end business districts such as Shanghai Xintiandi Taikoo Hui, with stable business development, launching the UNDEFEATED SPORTS series. Helly Hansen’s social media visibility has also increased amid the outdoor craze, and Alexander Wang has made adjustments in terms of channels.
When communicating with investors, the company’s management stated that UNDEFEATED and Helly Hansen experienced rapid growth in the first three quarters. Both brands have strong brand power, which can help the company access high-end shopping centers. Operating these two brands can accumulate experience for future mergers and acquisitions of new brands.
Helly Hansen is operated and produced by Youngor in the Chinese market
Overall, in terms of trading strategy, Youngor has not yet shown a distinctive style, basically following the traditional path, relying on years of industry reputation to negotiate with high-end malls to open physical stores, expanding online business through third-party e-commerce platforms, marketing around celebrities and fashion media, and developing new product lines for revenue generation.
However, given the current complexity of the market, these strategies seem far from sufficient. For the three brands mentioned above, the cooling of the trend and affordable luxury fashion market, and the intense competition among outdoor brands this year, all pose significant challenges for Youngor.
More importantly, each brand is in a completely different niche, which greatly tests the brand’s deep understanding of the niche.
Especially in the technology-driven outdoor market, although Youngor does not need to be responsible for the R&D segment of Helly Hansen, it faces competitors who can keenly convey the demands of the Chinese market to the R&D segment and have the synergy of sports brands, such as The North Face backed by VF Corporation, and Arc’teryx and Salomon backed by Amer Sports and Anta Group.
If Youngor acquires Bonpoint, Youngor will also enter the luxury and children’s clothing markets.
The children’s clothing sector differs from traditional ready-to-wear, with very stringent requirements for product quality and safety, backed by strict control and differentiated operations in the brand supply chain. Cases such as the domestic high-end children’s clothing brand Yeehoo, acquired by HLA, failing product inspections last year, and the French children’s clothing brand PETIT BATEAU failing inspections in 2021, serve as a warning.
Whether in terms of brand awareness or development potential, Bonpoint is undoubtedly a rare asset not to be missed. In the overall sluggish market for mass children’s clothing, the segmented children’s clothing sector is showing strong growth momentum, with sports brand children’s lines and luxury brand children’s clothing generally increasing. Bonpoint’s advantage in the beauty market also gives it a more profitable cash cow category, breaking the ceiling of the children’s clothing business.
Despite going through several practice rounds, Youngor is still facing a new challenge.
Of course, after numerous market cases of Chinese capital operating international fashion brands, Youngor has been able to draw some experience from previous examples. Whether it was Shandong Ruyi, which once held a controlling stake in the parent company of the affordable luxury women’s brand Maje, SMCP Group, or the higher-priced Lanvin and Carven, a common problem is the complex organizational structure design.
For an international brand with headquarters and creative departments in Paris, and a parent company that may be based in China in the future, an acquisition will inevitably lead to a restructuring of power dynamics. Designing reporting lines and balancing different departments and cultures to stabilize relationships as quickly as possible is the most urgent and practical task in the short term.
In addition, there is the upgrade process of the main brand. At the beginning of this year, Youngor’s fashion experience center opened in Ganzhou, Jiangxi, with a total investment of 70 million yuan, showcasing the four major brands: Youngor, MAYOR, HART MARX, and HANP. According to the plan, Youngor will open at least 30 new fashion experience centers in the core business districts of cities nationwide over the next three years.
In 2022, Youngor purchased two stores in Guiyang and Wuhan from the struggling Metersbonwe for 130 million and 190 million respectively. He spent more than 600 million to take over prime stores from Metersbonwe, spending a total of 3 billion over three years on buying store locations.
Unlike Anta’s outdoor brand taking over FILA’s rhythm, Youngor seems to have set too many challenges for itself at the same time.
The two things Youngor currently wants to do are, first, to try to recreate a FILA in the field of trendy or outdoor brands, and second, to attempt the operation and management of an international luxury brand. Both tasks are extremely challenging and beyond its past experience.
73-year-old Li Rucheng has not yet handed over the reins. After buying buildings, opening stores, and acquiring brands, the domestic clothing giant needs a new knowledge structure to drive it.