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LONDON – Like many British fashion brands Ralph & Russo suffers from the severe business impact of COVID-19 and now faces another challenge: a lawsuit from one of its minority investors.
The London based Ralph & Russowho has favourited a wide variety of Middle Eastern princesses, high net worth individuals and celebrities like Angelina Jolie, Beyoncé, Fan Bingbing and Meghan MarkleHe is being sued by Candy Ventures, an investment company owned by luxury real estate mogul Nick Candy.
The lawsuit, filed in the High Court earlier this year, concerns the controversial terms of a £ 17 million loan. Candy had loaned the company the money, making it a minority investor.
The dispute revolves around the terms of the loan and Candy’s role as an investor.
Ralph & Russo declined to comment. A source close to the company said that candy is having ongoing discussions and there is “hope and expectation” that the issue will be resolved in the near future.
The suit comes at a challenging time for Ralph & Russo, as post-lockdown orders have dried up and weddings and red carpet events have been canceled. The shop was practically mothballed, the London workshop closed and the staff, including highly skilled artisans and tailors, on vacation.
The company also partially postponed its payments to employees in February, but these payments are expected to be immediate.
As reported in January the brand has sat out Spring 2021 couture season. No collection was created, nor was it shown as part of the Paris couture program, which is usually the case.
At the time, Ralph and Russo said they were hoping to get back to the couture calendar in July. The brand intends to revamp its membership status with the Chambre Syndicale de la Mode et de la Couture after appearing as a guest of the organization for the past six years.
Ralph & Russo, founded in London in 2010, became the French organization’s first British guest member in more than a century.
With a $ 50 million investment by La Perla Fashion Investment BV in 2019, the label diversified its range beyond couture, ready-to-wear and accessories. It launched loungewear, launched and created a new sneaker called 4.0 Lingerie and glasses in collaboration with La Perla and Linda Farrow, respectively.
It has also dipped its toes into the technology, partnering with smart glasses company Photon Lens to create its Spring 2021 rtw collection with customized AR headsets.
The brand has independent stores in London, Paris, Dubai, Doha, Monte Carlo and the USA. There is also a shop-in-shop at Harrods.
Last fall, the brand hired its first external chief executive officer, Stefano Biondo. He filled the role that Russo previously held.
Biondo was most recently CEO of Marniwhere he worked from May 2018 to December 2019. Before Marni he was as Chief Brand Officer of the Italian eyewear manufacturer Safilo.
It is believed that Biondo has been hired to help Ralph & Russo pursue its long-term plan for sustainable, profitable growth.
A source close to the company said Ralph & Russo plans to get back on the growth path once the lockdown is lifted here in the UK. The source said the company is not looking for new investments.
For the twelve months ended March 31, 2019, Ralph & Russo had sales of £ 15.2 million and a loss of £ 14.8 million, according to Companies House, the register of UK companies.
In 2019 Michael Russo described the La Perla Investment as strategic, describing it as “an important step in enabling Ralph & Russo and our team to realize our long-term growth plans while maintaining and managing the privately owned brand”.
Pascal Perrier, CEO of La Perla Global Management (UK) Ltd., joined the Ralph & Russo board in a non-executive advisory capacity.
Perrier was previously CEO of Burberry Group Asia Pacific. He has also served in the senior management of several other luxury companies, including the Gucci Group, where he led the acquisition and subsequent integration of Yves Saint Laurent and Balenciaga.
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