Arvind’s wholly owned subsidiary Arvind Lifestyle Brands is holding advanced talks to buy a large portfolio of retail assets, including Nautica stores, from Planet Retail. “Arvind is doing due diligence to takeover operations of Next, Debenhams and Nautica, and a deal could be clinched shortly,” said one of the sources mentioned earlier.
Lalbhai’s move follows Aditya Birla’s decision to buy department store chain Pantaloons and Reliance Retail’s continuing strategy of striking partnerships with a slew of international fashion brands. Arvind would gain control over high-street brands providing fresh impetus to its fashion and retailing business , which brought in more than Rs 1,200-crore revenue in FY12.
Arvind Lifestyle Brands owns value retail chain Megamart and a slew of international and local brands, such as Gant, Arrow , US Polo, Elle and Flying Machine. It also holds a 50% stake in Tommy Hilfiger’s India unit.
Arvind declined to comment on speculation, while Planet Retail chairman Ramesh Tainwala could not be reached for immediate comments.
Tainwala, who controls Samsonite’s Asia-Pacific and West Asia business, and NRI entrepreneur V P Sharma equally own 97% in Planet Retail. Kishore Biyani’s Future Group holds the remaining 3%. Planet Retail controlled 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.
While Debenhams plays in the department store segment , Next, which retails home products and accessories globally, have been a pure-play clothing retailer 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 crore once the takeover of the three brands was finalized.
The transaction will be multi-pronged with Arvind acquiring existing operations — stores and some staff — from Planet Retail. Arvind would simultaneously enter 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.
Business valuations in fashion retailing are 1-1 .6 times topline revenue, according to industry experts.
Wholly owned subsidiary Arvind Lifestyle Brands already in talks to acquire some staff and retail assets, including Nautica stores Potential deal would leave Planet Retail with fewer brands, like The Body Shop and Accessorize Arvind will also ink fresh deals with Debenhams, Next & Nautica for India business.