South Korean retail conglomerate Lotte doubled down on its push into fashion by combining its fashion units into a single entity in hopes to stand tougher against its retail rivals Shinsegae and Hyundai on the fashion front.
According to industry sources on Wednesday, Lotte Shopping Co. agreed last month to transfer its global fashion unit and brand rights to NCF in June, effectively unifying Lotte’s fashion businesses.
NCF was acquired by Lotte for 19 billion won ($17.9 million) in 2010 and is the owner of women’s apparel brands such as Niceclaup and Thyren. The global fashion unit under Lotte Shopping was launched in 2005 and holds 15 brands under its wing, including foreign labels like Kenzo, Hula and Tasse Tasse, as well as Lotte’s private-label male apparel brand Herrbon.
But Lotte’s fashion unit has been considered the weakest among the top three retailers. Shinsegae International, the fashion arm of another retail giant Shinsegae Group, raked in 1.1 trillion won in sales last year and owns a number of luxury foreign designer names such as Armani Exchange and Alexander Wang.
Hyundai’s fashion unit Handsome generated 1.23 trillion won in sales last year and further beefed up its business by acquiring SK Network’s fashion operations.
Combined sales of NCF and Lotte Shopping’s global fashion unit stand a little over 200 billion won.
Market observers predict NCF will continue nurturing its own brands while building up its portfolio by acquiring globally renowned labels. It is also expected to benefit from the strong distribution network of Lotte Department Store.
NCF plans to issue new shares worth 52.4 billion won to use 27.3 billion won in acquiring Lotte Shopping’s global fashion unit and the remaining 25.1 billion won in funding operations. NCF said it aims to boost its revenue to 1 trillion won by launching new brands and acquiring global fashion labels.