Sanjay Lalbhai, Chairman and MD of apparel and textile
conglomerate Arvind Group is looking at cracking a mega-deal through which the company may acquire the operating stores and rights of British fashion retailers Next and Debenhams along with Nautica from Planet Retail, say media reports. The negotiations between the two are said to have reached final stages and the deal would get through shortly. If the deal comes through, it will lead to another major consolidation in the apparel retail industry.
According to its planed strategy of focusing on the domestic apparel branded business, Arvind is following Aditya Birla’s decision to buy department store chain Pantaloons Retail and Reliance Retail’s moves of getting into partnerships with international fashion brands. If the deal gets through, Arvind would gain control over high-street brands, which would allow it to gain more revenues from its fashion and retailing business, which brought in more than Rs 1,200-crores in FY12. At the moment, Arvind Lifestyle Brands owns value retail chain Megamart and an international and local brands, such as Gant, Arrow , US Polo, Elle and Flying Machine. It also holds a 50 per cent stake in Tommy Hilfiger’s India unit.
It was earlier reported that Next and Debenhams were scouting for new partners in India to carry out their expansion plans in the country. When Planet Retail brought the chain to India in 2007-08, it failed to make a mark due to its positioning and the economic slowdown but with changed positioning and focus on women’s category, Planet Retail was looking forward to achieve growth results for the chain in India. Planet Retail’s chairman Ramesh Tainwala, who also controls Samsonite’s Asia-Pacific and West Asia business, and NRI entrepreneur V P Sharma equally own 97 per cent in Planet Retail. Future Group holds the remaining 3 per cent. Planet Retail controls several international retail brands through licensing deals, but the potential sale to Arvind would leave it with fewer brands like The Body Shop and Accessorize. The Mumbai-based lifestyle retailer had earlier sold the operations of another UK retailer Marks & Spencer to Reliance Retail.
Next and Debenhams entered the market five years ago through a franchise deal with Planet Retail but have few operating stores in a growth market like India. While Debenhams is active in the department store space, Next, which retails home products and accessories globally, have only selling garments in India. Both brands have underperformed with very few stores even after five-six years in the country. Sources said Arvind would acquire stores with revenue topping Rs 130 crores once the takeover of the three brands are finalized. Experts also say, the transaction will be multi-pronged with Arvind acquiring existing stores and some staff from Planet Retail and simultaneously entering into fresh agreements with Next, Debenhams and Nautica (owned by US-based VF Corp) to strike a fresh licensing agreement and business development plan for India.