Ralph & Russo Struggles With COVID-19, and a Minority Investor
LONDON — Like many British fashion brands, Ralph & Russo has been suffering from the severe impact of COVID-19 on the business, and now it has another challenge on its hands: a lawsuit from one of its minority investors.
The London-based Ralph & Russo, which has dressed a host of Middle Eastern princesses, high-net-worth individuals, and celebrities including Angelina Jolie, Beyoncé, Fan Bingbing, and Meghan Markle, is being sued by Candy Ventures, an investment company belonging to the luxury real estate mogul Nick Candy.
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The suit, filed in the High Court earlier this year, involves the disputed terms of a 17-million-pound loan. Candy had loaned the money to the company, and in doing so, became a minority investor.
The tussle is about the conditions attached to the loan, and Candy’s role as an investor.
Ralph & Russo declined to comment. A source close to the company said that ongoing conversations are taking place with Candy, and there is “hope and the expectation” that the issue will be resolved in the near future.
The suit comes at a challenging time for Ralph & Russo, which has seen orders dry up in the wake of the lockdown, with weddings and red carpet events canceled. The business has effectively been mothballed, with the London workshop shut and staff, including highly skilled artisans and dressmakers, on furlough.
The company also partly deferred its February payments to staff, but it is understood that those payments are being made imminently.
As reported in January, the brand sat out the spring 2021 couture season. It didn’t make a collection, nor did it show as part of the Paris couture schedule, which it usually does.
At the time, Ralph and Russo said they were hoping to return to the couture calendar in July. The brand is understood to be looking to revise its membership status with the Chambre Syndicale de la Mode et de la Couture, having shown as a guest of the organization for the past six years.
Ralph & Russo, which was founded in London in 2010, became the first British guest member of the French organization in more than a century.
With a $50 million investment from La Perla Fashion Investment BV in 2019, the label has been diversifying its offer beyond couture, ready-to-wear and accessories. It has launched loungewear, come out with a new sneaker dubbed 4.0, and created lingerie and eyewear in collaboration with La Perla and Linda Farrow, respectively.
It has also been dipping its toes into technology, joining forces with the smart-glasses company Photon Lens to showcase its spring 2021 rtw collection using bespoke AR headsets.
The brand has stand-alone stores in London, Paris, Dubai, Doha, Monte Carlo and the U.S. It also has a shop-in-shop at Harrods.
Last fall the brand hired its first outside chief executive officer, Stefano Biondo. He filled the role previously held by Russo.
Biondo was most recently CEO of Marni, where he worked from May 2018 until December 2019. Before Marni he served as chief brand officer at Italian eyewear company Safilo.
It is understood that Biondo was hired to help Ralph & Russo pursue its long-term plan of achieving sustainable, profitable growth.
A source close to the company said Ralph & Russo plans to get back on a path to growth as soon as lockdown lifts here in the U.K. The source said the company is not looking for new investment.
In the 12 months ended March 31, 2019, Ralph & Russo notched sales of 15.2 million pounds and a loss of 14.8 million pounds, according to Companies House, the register of U.K. businesses.
In 2019, Michael Russo described the La Perla investment as strategic, and said it signifies “an important step in allowing Ralph & Russo and our team to realize our long-term growth plans whilst keeping the brand privately owned and managed.”
Pascal Perrier, La Perla Global Management (U.K.) Ltd. CEO, joined the Ralph & Russo board in a non-executive advisory capacity.
Perrier was previously CEO of Burberry Group Asia Pacific. He also served in senior management at several other luxury firms, including Gucci Group, where he executed the acquisition and subsequent integration of Yves Saint Laurent and Balenciaga.
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