A bankruptcy court is expected to announce its choice next week between the two candidates that have put in bids for the takeover of Charles Jourdan before the previously set deadline of Sept. 30. According to the latest reports, they are both offering to pay less than €1 million for the assets, including the brand name, while keeping less than half of the company’s staff of 430 persons.

While the two parties still have a few more days to improve their respective offers, the better one so far comes from Yangtzekiang Garment Manufacturing Company (YGM), the large Chinese group that licenses the brand already in China. YGM is associated in the bid with Philippe Cardon, a former commercial director of Jourdan who subsequently worked for Vivarte, the large French shoe and apparel retailing group.

The only other firm bid is more of a management buyout proposal. It has been presented by Jourdan’s present managing director, Christophe Béranger. He has reportedly been joined more recently in the deal by a former Jourdan designer, Yves Desfarges, who has been marketing his own footwear line for several years. They have the financial backing of a French investment fund, Avandis-Finalux.

According to French press reports, YGM has the upper hand for two reasons. It proposes to maintain a total of 182 jobs at Jourdan, including 80 factory workers. Béranger is instead looking at a staff of only 135 people, including 47 employees in the company’s manufacturing subsidiary, Charles Jourdan Industries, although 200 would be kept initially in their jobs. YGM is proposing to repatriate all the production that Jourdan had contracted out in Spain, to stress the «made in France» label, and to start up again the production of handbags.

The other reason is the fact YGM holds Jourdan’s licensing rights in the promising Chinese market for another ten years. It has opened 20 Jourdan stores there, and it claims to have strong ties with Itochu, which has 7 more years to go on its own Japanese license for Jourdan. The position of Itochu is essential, as its licensing contract stipulates that it will have the right to take over the rights to the brand in Japan in case of a change of ownership.

YGM already made a big investment in the French fashion market last year by taking over the Guy Laroche fashion house, of which it was a distributor in Asia, investing €2.5 million into the company. Laroche is now profitable. Based in Hong Kong, YGM is a large trading company that works with about 20 different factories in China and in Africa, generating annual sales of about $9 billion. It is also the Chinese licensee of Aquascutum.

At the request of YGM, which set this as a condition to make an offer, the Luxembourg-based holding company that owns the various components of the Jourdan group, Lux Diversity, has agreed to sell separately the Charles Jourdan brand name at a special price, said to be lower than €1 million.

The Chinese connection is important for a brand like Jourdan, considering that by 2011 the Chinese, including the inhabitants of Hong Kong and Taiwan, will overtake the Americans and the Japanese as the world’s biggest buyers of leather products, jewelry and couture items, according to a study by Merrill Lynch. They now represent 11 percent of expenditures for these types of products, including shopping done abroad.

It is not clear what will happen to Jourdan’s creditors, which are reportedly owed a total of €9 million. The verdict of the French court is expected on Oct. 26. As previously reported, one of Jourdan’s neighbors, Stéphane Kélian, has just announced the shutdown of its local shoe factory. The other major player in the region, Robert Clergerie, is instead reporting a double-digit increase in orders for the Spring/Summer 2006 collection and a 10 percent sales increase at its own stores so far this year. Sales into the Spanish market have risen by 40 percent.

Meanwhile, Jourdan’s new shoe collection for Spring/Summer 2006 has met with a very positive response from many buyers all over the world. The styles are more sober and more salable than before, and the prices are a little lower. Sales officials of the brand said they had experienced their best show in four years at the MICAM fair in Milan last month, with orders up by 50 percent as compared to one year ago.