E-Land Group sells clothing brand to China

1 min readUpdated Sep 8, 2016Sep 8, 20167:00 AM

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To raise funds to cut debt, South Korean apparel retailer E-Land Group is selling a youth clothing brand to China’s V-Grass Fashion Co for nearly US$900 million.

South Korea’s largest apparel retailer, E-Land Group says it expects to close the sale of its Teenie Weenie business for around 1 trillion won by year-end. It says the sale will help cut its debt-to-capital ratio by about a third.

Led by the success of cosmetics firms, demand in China is surging for Korean products, as well as Korean TV dramas and K-pop music.

E-Land Group sells clothing brand to China

Teenie Weenie has the strength of both being a Korean firm with a Chinese partner, says VP Lee Gyu-Jin. Launched in China in 2004, it already has a strong profile for its casual clothing. It has 1400 department store and other outlets in China with annual revenue of 420 billion won.

V-Grass is a Shanghai-listed women’s apparel company with a market value of about $685
million and is little known outside China. Earlier this year it said it planned to raise up to 1.35 billion yuan ($202 million) in a private share placement “to fund projects”.

Earlier, E-Land Group dropped a plan to sell its Kim’s Club hypermarket chain to US private equity fund KKR, citing differences over price.

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What this means

E-Land's divestment of Teenie Weenie to V-Grass is a pragmatic move to address its debt burden, using the brand's established 1400-store network and 420 billion won annual revenue in China. This mirrors the growing trend of Chinese firms acquiring foreign brands or establishing strong local partnerships to tap into surging demand for Korean products, similar to Alo Yoga's Tmall entry. While V-Grass is less known outside China and its market value is lower than the acquisition price, its recent 1.35 billion yuan share placement suggests a strategic expansion play. The risk lies in V-Grass integrating a major foreign brand, but Teenie Weenie’s existing strength and market alignment should aid success. Watch for E-Land’s next financial filings to see the actual debt-to-capital ratio reduction.

Aiko Tanaka · Retail News Asia newsroom

Questions & Answers

Why is E-Land Group selling its Teenie Weenie brand?

E-Land Group is selling the Teenie Weenie brand to raise funds. This sale is intended to help the South Korean apparel retailer cut its debt-to-capital ratio by approximately a third.

What is the expected value and timeline for the Teenie Weenie sale?

The sale of the Teenie Weenie business is expected to be for nearly US$900 million, or around 1 trillion won. E-Land Group anticipates closing the sale by the end of the year.

What is known about the buyer, V-Grass Fashion Co.?

V-Grass Fashion Co. Is a Shanghai-listed women’s apparel company, with a market value of about $685 million. The company is not widely known outside China.

What is the current presence and performance of Teenie Weenie in China?

Teenie Weenie, launched in China in 2004, has a strong profile for its casual clothing. It operates 1400 department store and other outlets, generating annual revenue of 420 billion won.

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