Zegna Sues MTR for Leasing Hong Kong Shop to Louis Vuitton

"Zegna Sues MTR for Leasing Hong Kong Shop to Louis Vuitton | AboutHK.Com - More Information About HK"

Bloomberg Ermenegildo Zegna SpA’s Hong Kong unit is suing property developer and landlord MTR Corp. for compensation for allegedly breaking an agreement over a shop lease in favor of Louis Vuitton Hong Kong Ltd. The century-old Italian clothing maker accused MTR of failing to honor a 2006 leasing agreement after allowing Louis Vuitton to occupy the shop’s premises in August, according to a Sept. 22 writ filed at Hong Kong’s High Court. Closely held Zegna said it paid MTR about HK$2.8 million ($361,000) for the lease at the Elements mall in the city’s Kowloon district. The Hong Kong business of LVMH Moet Hennessy Louis Vuitton SA paid MTR a higher price for the shop premises, Zegna alleged. Retailers are seeking to expand in Hong Kong as the city emerges from a yearlong recession and to meet demand boosted by tourists from China, the world’s fastest-growing major economy. “The MTRC, having agreed to let the premises to the plaintiff, thereafter agreed to let the premises to LVHK to the financial advantage and profit of the MTRC,” according to the writ. In March, MTR told Zegna that the premises at the Elements shopping center “no longer existed,” after signing a lease with Louis Vuitton in January, according to the writ. MTR “urged” Zegna to take other units at the mall, the document said. ‘A Commercial Matter’ “This is a commercial matter, and we will handle it according to suitable procedures,” said James Tsui, a spokesman at MTR, which operates Hong Kong’s trains and subway. The company gets most of its profit from developing properties near its rail stations. MTR has gained 45 percent in Hong Kong trading this year, matching the Hang Seng Index’s 46 percent advance. The stock fell 1.5 percent to HK$26.05 today. Suitmaker Zegna last year had the largest share of China’s luxury menswear market, followed by Hugo Boss AG, Cie. Financiere Richemont SA’s Alfred Dunhill and Giorgio Armani SpA, according to Armando Branchini, executive director of Altagamma, an association of Italian luxury companies. Porcia Leung, spokeswoman for Louis Vuitton Hong Kong, said she couldn’t immediately comment on the case. Zegna officials in Hong Kong and China didn’t return calls or e-mail messages seeking comment. Zegna had sales of 871 million euros ($1.3 billion) last year, according to its Web site. To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net This e-mail address is being protected from spambots. You need JavaScript enabled to view it