SEOUL, South Korea — South Korea’s E-Land Group said it will sell clothing label Teenie Weenie to Chinese fashion house V-Grass Fashion Co. in a 1 trillion won deal ($895 million) that reflects Chinese consumers’ shifting preference for more premium products.
Privately held E-Land will split off the Teenie Weenie business in China into its own unit before the sale, the company said in a e-mailed statement Friday. V-Grass was not immediately available for comment.
The acquisition, at a price which could outstrip V-Grass’ market capitalisation of about $685 million, comes as Chinese middle-class shoppers shift to higher-priced premium purchases. Meanwhile, in Korea, E-Land and other retailers are struggling to attract consumers to stores and malls as more shoppers there spend record amounts making purchases on their mobile devices.
V-Grass shares, which were suspended from trading in Shanghai Monday, have dropped 8.4 percent this year. The stock gained 0.6 percent to 30.90 yuan Monday.
V-Grass is a high-end women’s clothing label with its own-branded boutiques across China’s biggest cities. Teenie Weenie is aimed at younger consumers and sells T-shirts emblazoned with its bear logo priced at about 300 yuan ($45).
Price is no longer the top concern for Chinese shoppers, according to a June survey by OC&C Strategy Consultants. Consumers in the country spend around 6 to 7 percent of their disposable income on clothes monthly, according to the survey. They also prefer foreign labels, including J. Crew and Forever 21, and are willing to pay a 20 percent premium for international brands.
In China’s $1.7 billion apparel market, local retailer Heilan Home Co. and Fast Retailing Co.’s Uniqlo Co. are market leaders, with 1.2 percent and 1 percent of the market respectively in 2015, according to data from Euromonitor International.
A total of 25 apparel companies held IPOs in China and Hong Kong during the past three years, raising a combined $2.2 billion, according to data compiled by Bloomberg.
E-Land group companies saw their credit ratings downgraded in December by Korea Investors Service, as an economic slump contributed to a drop in profitability of its units in the country. The group is selling its hypermarket business, Kim’s Club stores.
By Rachel Chang and Shinhye Kang; editors: K. Oanh Ha, Peter Pae and Sam Nagarajan.