Introducing the Bally Spring Summer 2018 Campaign

When Chinese textile company Shandong Ruyi Group inked a deal in February 2018 to purchase a controlling stake in Swiss luxury shoes and leather company Bally from Luxembourg-based JAB Holding, all indications was that Bally was on the path of profitability but there was some nagging concerns on whether the increasing number of Chinese luxury producers buying up famous European brands at a frantic rate would come with the requisite management and distribution skills to cement the brand positions of their new acquisitions with consumers. Yesterday, Bally Chief Executive Officer Frédéric de Narp told Reuters that Bally made its biggest underlying profit in a decade in end 2017, supported largely by growing US and Japanese markets.

Business of Luxury: Bally CEO Frédéric de Narp Proven Right as Profits Rise on US and Japanese Growth

“This is an important milestone for Shandong Ruyi Group to become a global leader in the fashion apparel sector,” Qiu Yafu, chairman of Shandong Ruyi Group, to sohu.com.

Beginning late 2016 to early 2017, Bally CEO Frédéric de Narp began streamlining the Swiss label to create “speed and agility” in the business, and thus more reactive to market trends. Consolidating operations in Milan and Caslano, Switzerland, it moved creative and communications teams out of London and centralised them  in-house within a collective of designers while creating a strategy which put customers front and centre at everything they produced. Whether this was precipitated by the departure of Bally’s design director Pablo Coppola was uncertain, what is certain was that de Narp retained Coppola’s design team while crediting Coppola’s creative work as instrumental. However, de Narp quickly realised that merchandising, creative, press and marketing operations based in London far from production in Milan and Caslano, created a situation far from ideal.

Pablo Coppola’s work as Bally’s Head Designer was instrumental in reviving the ailing brand

Notably, Bally only moved to London after previous owners, Luxemborg-based JAB operated out of 10 Howick Place. According to de Narp, it was during this time that the Swiss brand would start dealing with days lost as samples travelled inter-Europe between Bally’s historic home is in Caslano and London. Furthermore, prompted by fast-moving, often unpredictable market conditions (affected mainly by the uptick in European terror attacks), currency fluctuations and customs regulations, Bally was in essence, fighting with an arm tied behind its back.

At the time, though de Narp declined to discuss Bally’s 2016 profit figures, he let on that Bally’s revenue advanced 4% in fiscal 2016, with earnings before interest, taxes, depreciation and amortization doubling.

Bally Chief Executive Officer Frédéric de Narp is largely credited with reviving the Swiss brand

JAB purchased Bally from Texas Pacific Group in 2008 for an estimated CHF 600 million to 700 million (US$558 million to $650 million) and Bally CEO Frédéric de Narp declared a revenue target of $1 billion by 2021. How? By tripling Bally’s US business, beginning with a 4,320 square feet Madison Avenue flagship while developing China and consolidating China’s 58 stores to just 45.

“Sales at the privately-held company have grown over the past two years and the company booked its biggest core profit (earnings before interest, tax, depreciation and amortization) in ten years in 2017.” – CEO Frédéric de Narp to Reuters

Bally of Switzerland 2017-2018 Fall Autumn Winter

Bally’s Growth Picks Up Pace, 2017 and on..

De Narp, joined Bally in 2011, from high jeweller Harry Winston, and is largely credited for reviving the once ailing Swiss brand after years of less than appealing collections which lead to stagnant sales. High turnover of designers and management also failed to produced any coherent direction for the brand. Six years on, the company moved to a bigger 15,120 square feet facility in Tuscany, Italy in March 2017, catering to the new CEO’s lofty vision. In a recent 18 April 2018 interview with Reuters, CEO Frédéric de Narp announced that “Sales at the privately-held company have grown over the past two years and the company booked its biggest core profit (earnings before interest, tax, depreciation and amortization) in ten years in 2017.”

He added that the United States is Bally’s fastest-growing market, buoyed by collaborations with rappers like U.S. hip hop recording artist Swizz Beatz (who previously worked with Audemars Piguet) and street artists like Ricardo Cavolo. The resulting capsule collections featuring hip hop culturally relevant accessories and garments have encouraged sales in the U.S. by more than 20% in 2018, bigger than the 14% growth in 2017.

Bally of Switzerland 2017-2018 Fall Autumn Winter

Chinese Shandong Ruyi Group bought Swiss Bally from Luxemborg JAB in February 2018. The Chinese textile maker had growing its network of luxury clothing and accessories; acquiring 41% of Japanese apparel maker Renown for about US$36.8 million in 2010, later, they took over French fashion company SMCP in 2016.A year after, Ruyi bought a controlling stake in Hong Kong-based menswear group Trinity for US$284.62 million. Bally is the Group’s latest addition to a stable already consisting of British suit maker Gieves & Hawkes, and menswear designer and fragrance house Cerruti 1881.

China is Bally’s strongest market, a position which can be attributed to the brand’s early entry into the territory in the 1980s when the country opened up to foreign investment. That said, the critical element is that as more and more Chinese firms buy famous brands in overseas markets to improve their own local luxury catchet, industry insiders are concerned about whether the new owners can properly maintain the value of the brands they have bought.

Bally of Switzerland 2017-2018 Fall Autumn Winter

Chinese-made luxury goods do not carry the best reputations compared to Swiss counterparts and when Shandong Ruyi made a play for Bally, there were misgivings on whether Bally might be devalued after being acquired, undoing de Narp’s hard work. Under terms of the acquisition agreement, de Narp and his team are contractually committed to stay at Bally for more than five years.

According to a February 2018 report released by McKinsey & Co: Chinese consumers spent 166 billion yuan ($26 billion) on luxury goods in the domestic market in 2016. Thus, it is predicting that following current trends, spending will continue to rise to 441 billion yuan by 2025. Furthermore, the same report postulates that consumption of luxury products by Chinese consumers will account for 44 percent of the total consumption in the sector across the world by the same year.

Bally will open its first Chinese flagship store in Beijing’s luxury shopping destination – China World shopping mall later this year with popular local actress Tiffany Tang helping with the brand’s promotional campaigns in the market.

Bally of Switzerland 2017-2018 Fall Autumn Winter