India’s leading apparel retailer Arvind Lifestyle Brands Ltd. (ALBL) has signed a definitive agreement to sell its value-fashion retail chain Unlimited to retailer V-Mart Retail Ltd., for an estimated Rs. 150 crore in an all-cash transaction.
Unlimited operates 74 value fashion retail stores across South and West India and retails apparels and accessories for all categories.
The acquisition will help V-Mart to expand footprint in South India. Currently it has a large presence in northern and eastern parts of India.
V-Mart, notably, sells value clothing, accessories and footwear and other products through large format stores and focusses on smaller cities.
Lalit Agarwal, MD, V-Mart Retail Ltd. said, “The business fits well the retailer’s strategy of expanding its regional presence as well as adding capabilities in select categories. V-Mart’s expertise in creating a scalable and profitable value fashion retailing business model, and Unlimited’s large presence in South India with strong fashion mindset and delivering a differentiated store experience to customers provides a long runway for sustained stakeholder value creation.
The move is significant for Arvind Fashions Ltd. (AFL) also as it continues to lower debt and focus on six key lifestyle and beauty brands. ALBL is a wholly owned subsidiary of AFL. It will also utilise funds from the sale towards working capital purposes.
Arvind Fashions said in a statement, “As part of the transaction, ALBL will sell assets of the 74 retail stores, warehouses, inventory and the ‘Unlimited’ brand to V-Mart at its book value. ALBL would receive cash consideration estimated at about Rs. 150 crore upon the closure of transaction and thus will fully recover the capital employed in the business. In addition, there are contingent payments to be received, based on certain milestones achieved by V-Mart over next few years for these stores, post the acquisition.”
Arvind Fashion has been in consolidation mode, offloading and exiting brands and shuttering unviable stores and focusing on power brands. In its latest investor presentation, the company said it completed the exit of brands that it plans to discontinue selling including The Children’s Place, Hanes, Newport and Ruf & Tuf; it already exited Gant, Izod and Nautica in FY20.
Its exit from the GAP franchise has been delayed to the ongoing fiscal.
In FY21, the company drove cost reduction by 40 per cent or an estimated Rs. 540 crore across rentals, warehouse, manpower optimisation, it said in its Q4 and FY21 investor presentation.
It can be mentioned here that in July 2020, Flipkart Group bought a minority stake in Arvind Fashions Ltd.’s subsidiary Arvind Youth Brands for Rs. 260 crore.
Shailesh Chaturvedi, CEO, Arvind Fashions said that AFL plans to focus on six brands—US Polo Assn., Tommy Hilfiger, Arrow, Flying Machine, Calvin Klein and Sephora. The sale will help the company put capital behind growing these six focus brands. “We had created a scalable format with significant product capabilities in value retail, which has a large potential. However, in line with our strategy of focusing on our 6 high conviction brands, we decided to exit the business.