Kishore Biyani’s Future Lifestyle Fashions Ltd. agreed to buy a 29.9 percent stake in online fashion retailer Koovs Plc for Rs 140 crore (15.3 million pounds), subject to regulatory and procedural approvals.
The payout is likely to be made in one or more tranches, it said. On completion of the deal, Future Lifestyle Fashions will be the largest shareholder in Koovs.
This comes at a time online sales in India, one of the fastest-growing e-commerce markets, are expected to rise 31 percent this year to touch $32.7 billion, led by e-retailers like Flipkart, Amazon and Paytm Mall, according to a report by research firm eMarketer.
“Like other physical retailers that have their own online platforms, Future Lifestyle Fashions can operate omni-channel, with services such as ‘click and collect’, ‘home delivery’, among others,” broking firm Jefferies said in a research note. “This will allow Future Lifestyle Fashions to promote its own brands online.”
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Koovs, which is based in Gurugram and listed on the London Stock Exchange, said 75 percent of its traffic and transactions are managed via its mobile application. The women’s segment contributes over 60 percent of its business, according to its website. The e-retailer has a four percent market share in the youth fashion category and it aims to ramp this up to 10 percent by 2020.
Koovs operates a curated inventory model and runs the risk of unsold inventory that has to be disposed of at higher discounts. Future Lifestyle Fashions’ Brand Factory, according to Jefferies, can help in disposing that of.