[THE INVESTOR] Fashion company Handsome said March 1 that it has inked the final deal to acquire the fashion division of SK Networks on Tuesday, allowing it to begin operating the twelve brands previously held by the SK company.
Handsome, which is owned by the Hyundai Department Store Group, acquired SK Networks' fashion division for 300 billion won (US$265.5 million). As part of the acquisition process, Handsome also renewed import contracts with foreign brands that were distributed by SK here including Tommy Hilfiger, DKNY, CK, Club Monaco, Canali and American Eagle.
A promotional image for O’2nd (Handsome)
“We signed long-term contracts (with the foreign brands) and improved conditions for royalty payments, establishing both business stability and profitability,” Handsome said through a statement.
SK Networks’ former Korean fashion brands include Obzee, O’2nd, 2nd Floor and Steve J & Yoni P.
Handsome plans to begin strengthening the brands it has newly acquired, investing over 200 billion won over the next five years in merchandising competitiveness and infrastructure.
Although Handsome said it hopes these efforts will create synergy between its existing brands and SK Networks’ brands, industry analysts remain cautious about short-term improvements in sales through the acquisition.
The combined annual sales from Handsome and SK Networks’ fashion division are expected to top 1 trillion won, making Handsome competitive in size against more established fashion giants such as Samsung C&T’s fashion division and LF, but SK Networks’ brands still need more work.
“Handsome’s branding ability and advantageous store locations through affiliated distributors may contribute to improving brand power, but in the short term (the acquisition) is more likely to be a risk than a benefit,” wrote analyst Lee Hwa-young for Hana Financial Investment.
By Won Ho-jung/The Korea Herald (firstname.lastname@example.org)