RTW Retailwinds, owner of 400 New York & Co stores in 32 US states, filed for bankruptcy recently and will likely close all its stores. This is expected to affect the revenues of Vietnam’s Song Hong Garment JSC, whose largest partner is the US-based firm. Song Hong Garment shareholders and investors have voiced concerns over its earnings prospects this year.
RTW Retailwinds reported revenue in 2019 dropped 7 per cent year on year to $827 million and recorded a net loss of $61.6 million. In 2018, it reported a profit of $4.2 million.
All liabilities in 2019 RTW Retailwinds owed to Song Hong Garment are reportedly already settled..
The liabilities so far in 2020 are worth 220 billion VND ($9.5 million) and if RTW Retailwinds’ bankruptcy proposal is approved, Song Hong Garment will lose that income, according to Vietnamese media reports. In the first-quarter financial report, Song Hong Garment said liabilities owed by New York & Co were worth 166 billion VND.
“The company is working to join the bankruptcy proceedings to claim its liabilities owed by New York & Co,” Song Hong Garment said in a filing to the Ho Chi Minh Stock Exchange on July 17.
According to Song Hong Garment JSC, the company’s operation will not be affected by the bankruptcy, but in the short term, earnings will be dampened as revenue from RTW Retailwinds often accounts for a large proportion of its total.
“Revenue from New York & Co accounted for 13 per cent of Song Hong Garment’s total revenue in 2019,” the company said in the filing.
The local garment firm expects total revenue in 2020 would drop 27 per cent year on year to 3.2 trillion VND and pre-tax profit would dive 54 per cent year on year to 250 billion VND.
Fibre2Fashion News Desk (DS)