Lafuma has agreed to take a 49 percent stake in a new joint venture with its big South Korean partner, LG Fashion, to develop its presence in mainland China. Lafuma has also formed its own subsidiary in Poland.
Under its new deal with LG Fashion, LG Fashion has agreed to pay €1.5 million in cash to the French company as part of the transaction, which sees the joint venture take over about one-third of the 18 Lafuma stores currently operating in China. It will also take over some of the personnel of Lafuma in Hong Kong, where it had a joint venture for all of China. Lafuma has bought out all the shares in the former Hong Kong operation. It will use the rest of the personnel and some of the other stores to launch the Eider brand in China. The others will be shut down.
LG Fashion has already done an excellent job with the Lafuma brand in its home market, reaching annual sales of more than US$40 million after five years of intense work as its licensee, adapting the collection to local tastes and marketing it mostly through its own single-brand and multi-brand stores. LG Fashion, a spin-off of the large LG conglomerate that also got the Intersport license for Korea one year ago, ended up buying the rights to the Lafuma brand for the country a few months later.
Though the business plan for mainland China is scheduled to be finalized with LG Fashion in October, Philippe Joffard, president of the French group, said he was hoping that the Lafuma brand would generate annual sales of between €30 and €40 million in four to five years’ time in China, considering that the other major brands in the market are achieving sales of between €20 million and €100 million a year there at this time (more in The Outdoor Industry Compass).
