Bagir Group, a tailoring specialist based in London, is taking legal action against Shandong Ruyi for breach of contract. The investment deal between the two companies, which was announced in November 2017, has not yet been completed due to a stumbling block in the final stage. Shandong Ruyi was supposed to make a remaining cash payment of $13.2 million and deliver suit jacket manufacturing equipment to Bagir’s Ethiopian facility by March 31, 2020. However, the equipment has not been provided, leading Bagir to claim that this constitutes a material breach of the contract.
Shandong Ruyi, known for controlling brands such as SMCP, Bally, and Aquascutum, has not commented on the matter, leaving the outcome of the legal action uncertain. While awaiting resolution, Bagir has provided a trading update, reporting a 9% sales growth for the 12 months ending December 2019, amounting to $59.4 million. The company expects to return to positive adjusted EBITDA after experiencing a loss of $1 million in 2018, thanks to operational cost cuts in the second half of 2019.
In addition to the legal action, Bagir also revealed its plans for the future. The company intends to establish a new production line in Ethiopia specifically for manufacturing suit jackets. This project requires an additional investment of about $0.5 million and will have a production capacity of 250 suit jackets per day. Bagir has already secured a trial order for a major UK retail client, which will be completed and delivered in March. Additionally, the company has received a suit order worth $0.85 million for this year from the same customer. Bagir is optimistic about winning more orders from new customers in the current year.
Despite the legal challenges, Bagir’s board has expressed confidence in the company’s ability to continue its operations and seek growth through commercial contracts and additional funding. CEO Micha Ronen expressed disappointment in the need to take legal action against Shandong Ruyi but emphasized that the focus now is on Bagir and creating innovative design-led tailored garments for leading retailers.