Flipkart To Buy Minority Stake In Arvind Fashions Unit For Rs 260 Crore
Arvind Youth Brands, the owner of Flying Machine and part of the Lalbhai Group, has agreed to sell a minority stake to Walmart Inc.-owned Flipkart Group for Rs 260 crore as it looks to tap online sales when shoppers are avoiding stores.
Flipkart Group and Arvind Fashions Ltd., the parent of Arvind Youth Brands, will work collaboratively to identify opportunities and synergies to innovate and develop products at attractive price points, the two companies said in a joint statement. "The investment is to build on the long-standing engagement between the two organisations."
The deal is subject to customary conditions.
"Flipkart further wants to solidify its position in the fashion category through this investment," Satish Meena, research analyst at Forrester, said over the phone. The deal also gives Arvind Fashions a way to get online customers, he said, when the offline sales have dipped due to the pandemic.
Online sale of apparel, pegged at $7 billion by Forrester, is the biggest category after smartphones for e-commerce. In 2017, Amazon bought up to 5% stake in Shoppers Stop Ltd. to ramp up its fashion portfolio. Flipkart, however, has an edge, thanks to Myntra.
"Through this investment, we look forward to continue to grow the market for Arvind Fashions' portfolio of products and enhance the strong brand equity that has been built over the last few decades," Kalyan Krishnamurthy, chief executive officer at Flipkart Group, said in the statement.
Arvind Fashions, through licensing arrangements, retails brands like U.S. Polo Assn, Arrow, Tommy Hilfiger, Calvin Klein, and is also setting up outlets for Unlimited, Sephora and GAP.
The partnership with Flipkart Group will help the firm accelerate online growth strategy and focus on developing an omnichannel retail approach for Arvind Youth Brands and Flying Machine, J Suresh, managing director and chief executive officer at Arvind Fashions, said. "Flipkart and Myntra will be our preferred online partner for the Flying Machine brand, while we continue to grow our offline sales through channels like exclusive brand stores, department stores and multi-brand stores."