Cerruti 1881 undergoing drastic streamlining under Chinese owner Shandong Ruyi
today Nov 5, 2019
Menswear label Cerruti 1881 will not be showing at the Paris Fashion Week in January 2020, having already skipped last June’s edition. The luxury men’s ready-to-wear label is in the midst of an in-depth reorganisation, following its ownership change two years ago. The same applies to Kent & Curwen and Gieves & Hawkes, the other menswear labels owned by Hong Kongese group Trinity, in which Chinese textile and apparel giant Shandong Ruyi bought a 51% stake in 2017.
Last July, Cerruti 1881 announced the departure of its creative director Jason Basmajian. Since then, the collections have been designed by Cerruti 1881’s Parisian studio while waiting for a new creative director, as FashionNetwork.com learned from the label, founded in 1967 in Paris by Nino Cerruti. “Like an increasing number of fashion labels, we are evaluating new ways of promoting our creations. We will not stage a catwalk show next January, and we will take a decision once a new creative director will have been appointed,” said Cerruti 1881.
“Boosted by Shandong Ruyi, the Trinity group has started an ambitious restructuring plan. The new senior management team is rationalising the entire value chain, from production to sales, and is optimising our store network, closing down unprofitable stores. This strategy has enabled [the group] to become profitable again,” said Claire Landrau, recently appointed global vice-president marketing and communication of Cerruti 1881, speaking to FashionNetwork.com.
In the first six months of the year, the Trinity group generated a revenue of HKD1.029 billion, equivalent to €117.7 million, up 15.6% compared to the same period last year. Net income was HKD76.6 million, equivalent to €8.7 million, compared to the loss of HKD196.8 million (€22.5 million) recorded between January and June 2018.
As Paul David Haouzi, president and CEO of Trinity Group, explained last August speaking at the publication of the group's H1 results, a drastic therapy was needed in order to rescue the company from the emergency situation it was facing, following a protracted slump. Between June 2018 and June 2019, the group’s total number of employees was reduced from 2,117 to 1,667, as 450 jobs were axed and three of its Chinese regional offices (in Guangzhou, Chengdu and Beijing) were closed down. Nearly 35 stores were deemed to be unprofitable and were closed down, and the group now operates 232 stores. Also, the majority of the group’s service functions are now outsourced.
Trinity deployed a new strategy, featuring a drastic reduction of discounts and promotions and a product range diversification, with a more casual style and the planned introduction of women’s ready-to-wear. The group also wants to focus on bespoke tailoring and product customisation.
Suit supplier to major Chinese corporations
Finally, the distribution organisation has been entirely overhauled, and now prioritises the wholesale and e-tail channels. “We have tried to penetrate new distribution channels. Luxury fashion, with the exception of a few major labels, can no longer base its distribution model 100% on retail, it doesn’t work,” said Haouzi.
While the group's retail sales fell by 16.1% in H1 2019, the wholesale channel and licensed products multiplied their revenue by a factor of nearly four, growing by 286% and accounting now for half of total revenue.
According to Haouzi, this is a “very promising” development. “We want to restart from a solid foundation. In the wholesale channel in particular, Trinity has extended the scope of its corporate business, supplying suits and uniforms to major Chinese corporations through its new majority shareholder Shandong Ruyi, one of the leaders of this segment in China. It is a business that is very well suited to Cerruti 1881, creating an interesting opportunity for the label,” said Haouzi.
Cerruti 1881, which did not disclose its financial results, has a two-pronged strategy. On the one hand, it is working to “adapt to new consumer expectations, with a creative line which is being rejuvenated by its Parisian design studio, while maintaining a luxury positioning. On the other, it aims to increase the global reach of its digital and multi-channel presence,” concluded Landrau.
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