(Yicai Global) Oct. 22 -- Facing mounting losses and a debt crisis, China's well-known women's garment company Shanghai La Chapelle Fashion rented out some buildings in its Shanghai headquarters, CCTV Finance reported yesterday.
The complex has been in use for less than two years.
Many of the label's stores have hung clearance notices offering large discounts. These sales ran from Sept. 26 to Oct. 20 with markdowns on clothes made in the last two years, a clerk said, adding they have put no new season's clothing on the shelves or received any notice to do so.
The company's menswear unit Jack Walk Shanghai Fashion planned to apply for bankruptcy liquidation on Oct. 17 after being unable to continue operating due to steady losses.
La Chapelle had 9,066 outlets when it went public in 2017. Its domestic retail outlets numbered 6,799 as of June 30, a decrease of 2,470 or 27 percent.
The firm raked in CNY10.4 billion (USD1.5 billion) in revenue when it listed. It had the highest revenue among public Chinese women's clothing companies with the most revenue. It lost CNY565 million in the first half, however.
The book value of La Chapelle's inventory was as high as CNY2.2 billion as of June 30, and this greatly added to the company's cash flow pressure, according to its semi-annual report. Moreover, the garment maker had lavished huge sums on infrastructure projects such as its headquarters park.
La Chapelle cannot afford the huge park investment as an asset-heavy company and the firm is cutting its operational burden by closing stores and ceasing promotions, but this may take a long time, said Yu Jian, chief textile and apparel analyst at the research institute of Hangzhou-based securities brokerage, investment banking, asset management, investment advisory, securities dealing and fund consignment services firm Zheshang Securities.
La Chapelle shares [HKG:6116] opened percent down at HKD1.90 (USD0.24) today. Its price has plunged 70 percent in the past year. Its Shanghai-listed stock [SHA:603157] opened up 0.85 percent at CNY4.72 (USD0.67), having fallen 50 percent in the past year.
Editor: Ben Armour