A U.S. activist investor called on Japanese clothing company Sanyo Shokai Ltd. to sell itself, saying a new owner would help turn around the firm.
RMB Capital believes Sanyo Shokai should seek a partner with more capital because its own efforts to revive the company haven’t been successful and it doesn’t have enough scale to reorganize its business on its own. RMB Capital owns more than 5 percent of the brand’s total outstanding shares.
The brand has seen four consecutive years of losses and have eliminated a large portion of its workforce through three early retirement programs in the past, and reduced the number of brands and stores in its portfolio, all while cutting its marketing expenses in recent years.
Last year, Sanyo changed course and added to its marketing efforts with new brands and stores, then made strategic acquisitions of digital marketing solutions to enhance its digital transformation initiatives. However, management failed to turn around Sanyo’s business despite these actions, further damaging the shareholders’ value of Sanyo and resulting in the resignation of its president, Mr. Iwata.
RMB is concerned that the motivation of Sanyo’s talented employees may deteriorate under this ongoing business underperformance and repeated layoffs, resulting in serious damage to Sanyo’s tangible and intangible assets.
RMB goes on to recognize Sanyo’s strength in its sewing skills and overall production technologies that are cultivated through its long history as a high-end apparel company. The investment firm believes Sanyo’s craftsmanship will be more appreciated by consumers who select long-lasting apparel products based on increased awareness of environmental issues and sustainability as the “fast fashion” business fades.