It Is Necessary To Sell The Most Valuable Children'S Clothing Business If We Want To Win The "Chao Tong Economy".

Global Brands Group Holding Ltd. 0787.HK Limited announced the sale of the most valuable North American franchise business to focus on other immature businesses with strong growth potential.

The deal resulted in a net loss of more than 11 times that of the May profit forecast of $75 million - up to $903 million.

Before the issuance of annual reports and trade announcements, 0787.HK fell 6.15% on Wednesday to HK $0.305, expanding its cumulative decline since 2018 to 55.8%, and its market value is now HK $2 billion 780 million.

GBG USA Inc., a wholly owned subsidiary of the brand, will sell us all to North American brand management company Differential Brands Group Inc. NASDAQ:DFBG (NASDAQ:DFBG) for us $1 billion 380 million.

And accessories business, and most of the west coast and Canada fashion business, covering Calvin Klein, Tommy Hilfiger, Under Armour, Michael Kors, BCBG, Joe "s", "Frye", "universal", "Coman" and "Disney" and other brands.

As the paction took place, the market value of Differential Brands Group Inc. was only $12 million, so the above paction was suspected to be the United States backdoor brand, while evading the increasing risk of trade war.

Trading pushed Differential Brands Group Inc. on Wednesday, and its share price jumped more than 5 times, closing at 5.45 U.S. dollars, or 505.56%, an increase of 588.89% in intraday trading.

According to the statement of the US company, the existing management, shareholders and creditors of Li Biao brand have participated in the subscription to the company. Private equity funds Ares Capital Management LLC, HPS Investment Partners LLC and GSO Capital Partners are the main investors, providing debt financing for the paction.

The above paction is reported to have been approved by the voting shareholder of Fung Holdings (1937) Limited, Feng Chi Holdings Limited (1937).

Feng's holding is the main shareholder of Feng's group. Its core businesses include trade, logistics, distribution and retail. Apart from the brand name, the group also owns supply chain giant 0494.HK, 00891.HK, and OK supermarket, and Leah retail Co., Ltd., 0831.HK.

Feng's family's core business has been handed over to the fourth generation of Feng Yujun as chief executive. His uncle, William Fung Feng Guoguan, is the chairman, and his father Victor Fung Feng Guo Jing is the honorary chairman of Li Feng.

However, in the rapidly changing digital era of retail industry, the pformation of Li Feng has been criticized by the outside world. The company has not only been excluded from the Hang Seng blue chip, but it has become extraordinarily difficult for retailers to cut costs and use more direct production. After the three year plan of the company failed to work, the latest three year plan began to aim at innovation, speed and digitalization.

Another important business, Li Bang Mens, lost control in April 18th of this year. The Shandong Ruyi group from mainland China took over the company. The former non-executive director, Mr Fung Kwok hung, resigned as chairman of the board and replaced by the non-executive director, Shandong Ruyi Group Chairman Qiu Yafu.

The reorganization of Li Feng Group's business in recent years reflects the serious impact of the traditional business of the Hongkong tycoon in the thrived trading industry, and the fortunes of the major companies of "Li" preface further reflect the ups and downs. Sometimes, although Li Feng still enjoys global fame and great reputation, it is also a consensus that the company is going from bad to worse.

In March this year, Li Biao brand has taken the lead in handling the non core household products licensing business.

In the context of the structural pformation of the global retail industry and the downturn in US retail entities, by divestiing wholesale licensing business, the brand can significantly reduce the number of its physical stores, thereby concentrating resources on the remaining fast-growing businesses, while strategically investing and expanding directly into the consumer business.

The net asset value of the target was $1 billion 277 million as of March 31st, and sales in the 2018 fiscal year amounted to $2 billion 200 million, which accounted for 55% of the group's total revenue. However, pre tax profits fell by 96.3%, from 37 million Hong Kong dollars to 987 million Hong Kong dollars in the 2017 fiscal year.

The total sales of all footwear business, New York fashion business, all European and Asian businesses, and global brand management business are $1 billion 800 million.

The group points out that the paction helps adjust product and brand portfolio, improve operational efficiency and reduce working capital requirements, and reduce debt to stabilize the balance sheet.

After the delivery, the brand will use the net proceeds of 1/4 (up to 356 million US dollars, HK $2 billion 780 million) to distribute the special dividend of HK $0.325 per share to shareholders, 1/4 will repay the debt and the rest will be used as working capital.

As of the end of March, in the 2018 fiscal year, the profit brand achieved a turnover of US $4 billion 23 million, an increase of 3.4% compared with the same period last year, and the gross margin increased by 270 basis points to 31.2%.

Core profit EBITDA remained stable, from $380 million in fiscal year 2017 to $379 million, while EBITDA profit margins dropped 40 basis points to 9.4%.

However, operating expenses rose by 37.3% to 1 billion 254 million dollars a year, and the impairment of goodwill was recorded at 1 billion 50 million US dollars. The net loss was 903 million US dollars a year, while in the 2017 fiscal year there was a net profit of 90 million US dollars.

Last month, the net loss of surplus police forecast was $7000-7500, mainly due to the cancellation of a loan derived receivables and the loss of several intangible assets, resulting in a loss of more than US $100 million. Moreover, the main customer Coach shoe company's Tapestry shoes (Inc. NYSE) was relocated to its parent company in the financial year.

The children's clothing authorization business is the biggest source of income for the brand. The annual turnover is reduced by 5.5% to 1 billion 514 million dollars a year due to the fact that the movie company customers are not selling big movies and the competition in the European market is fierce.

Thanks to the addition of new brands, the second businesses increased by 39.4% to 1 billion 143 million US dollars compared to the same period last year.

The loss of the Coach brand has reduced the revenue of footwear and accessories business by 14.5% to 1 billion 96 million dollars.

These three businesses are involved in today's pactions and record operating losses.

Brand management business revenues increased by 43.9% to $270 million, and business profits also expanded to $20 million.

The Americas, Europe / Middle East and Asia accounted for 78%, 17% and 5% of the group's turnover respectively.

Le Yumin, vice chairman and chief executive officer of Bruce Rockowit, said in the earnings report that it will continue to invest in its brands, especially the long-term licensed brands. Although the short-term operating expenses increase due to direct investment in consumer channels, management still believes that the fast growing fashion business will create more substantial profits for the group in the long run.

Robert Graham store, one of the three brands of Differential Brands.

Differential Brands Group Inc. (NASDAQ:DFBG), which has won a number of large brand licensing businesses, surged more than 7.25 times on Wednesday, rising from Tuesday's closing price of $0.85 to $6.49, a nearly two year high.

As of Tuesday's close, the stock had fallen 51.9% in the past year, and the company's market capitalization was only $12 million.

Differential Brands Group Inc. said in a notice that the paction is expected to increase to more than $2 billion 300 million a year after the three quarter (August 31st).

Prior to that, the group had only three brands, including Hudson, Robert Graham, SWIMS and SWIMS, with a net sales of US $164 million 100 thousand last year and adjusted EBITDA to US $10 million 823 thousand.

Differential Brands Group Inc. board chairman and the group's largest shareholder, Tengram Capital Partners LP management partner William Sweedler, is pleased to be able to reach a deal with the Feng family to buy a leading North American brand consumer soft commodity company and to introduce a world-class management team headed by Jason Rabin (the president of the North American brand).