The key word 1881.com investments refers to the potential investment opportunities with historical luxury fashion brands that were acquired in 1881. Recently, Chinese textile giant Ruyi Group acquired the Trinity Group in 2018 which owns historic high-end menswear brands Cerruti 1881 and Kent & Curwen. However, Ruyi Group later fell into debt issues which affected its subsidiary Trinity Group. In 2022, Trinity Group declared bankruptcy with $150 million unpaid loans. Its two menswear brands were sold at discounted prices to Chinese golf apparel company Biyinfulefen for $713 million in total. This case demonstrates both the opportunities and risks of investments into historical luxury brands. Such investments require thorough analysis on the brand value, company financials, industry trends, and downside risks. With proper research and value investing principles, 1881.com investments could generate substantial returns for patient long-term investors.
Cerruti 1881 and Kent & Curwen are two premium menswear brands with long history and high brand value
Cerruti 1881 was founded by Italian fashion designer Nino Cerruti in 1881 in Italy. It is well known for its high-end men’s suits and sport lines. Kent & Curwen is another menswear brand founded in 1926 in London, UK. It was the first to create cricket sweaters in 1932. Both brands have almost 100 years of history with strong brand recognition globally especially in Europe and Asia. Although the parent group Trinity fell into financial issues recently, the brand value and industry competitiveness of these two menswear brands remain strong. This makes them good targets for investments and turnaround by capable companies.
Investments into the two brands were made at discounted prices during a bankruptcy sale
According to public records, the acquirer Biyinfulefen obtained full global ownership of Cerruti and Kent & Curwen trademarks through its subsidiary. For Cerruti 1881, it paid €57 million to purchase two companies that hold over 1,000 Cerruti trademarks globally. For Kent & Curwen, it paid €38 million for the company owning over 300 trademarks worldwide. Combined, the total transaction value is €95 million euros (about $713 million). These purchase prices were offered during Trinity Group’s bankruptcy liquidation and represented over 55% discount from the speculated brand value. For investor groups with turnaround capabilities, such low prices provide a significant margin of safety.
However, risks exist with restructuring historically loss-making luxury brands
While the brands were acquired cheaply, making them profitable would require major restructuring efforts. According to financial reports, Trinity Group recorded losses for years leading to its bankruptcy. Turning around established brands with negative profitability history remains an enormous challenge. Investors would need capable management, sufficient capital, excellent brand building capabilities in addition to a feasible business strategy. If the restructuring fails, the brand value could deteriorate further rendering the original investments worthless. Prospective investors should evaluate these risks carefully before commitment.
Proper value investing principles must be followed for 1881.com investments
The acquisition of Cerruti and Kent & Curwen marks only the first step for realizing investment returns. What follows would be a lengthy process of restructuring towards profitability. Investors should adopt value investing principles such as margin of safety, long-term orientation, risk minimization, and continuous research. Patience would be key as turnarounds often take years especially for luxury brands. Reasonable investment criteria should be set based on conservative brand value and cashflow projections. Investment amounts and holding duration should both accommodate potentially lengthy ramp-up periods. Following these principles would lead to prudent 1881.com investments.
The 1881.com investments case demonstrates the opportunities and risks associated with distressed luxury brand acquisitions. While Cerruti and Kent & Curwen were purchased at steep discounts, making them profitable remains challenging due to restructuring difficulties and execution risks. Investors need to thoroughly evaluate the business plans and apply value investing principles with enough margin of safety. If executed properly, these investments could generate outsized returns over long durations.