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KOLKATA | NEW DELHI: The retail unit of Reliance IndustriesNSE 1.56 % has acquired mid-segment menswear brand John Players from ITCNSE -0.68 % Ltd. This will add Rs 350 crore to Reliance Retail’s value fashion business carried out through Reliance Trends and Ajio.com, said people with knowledge of the matter. 

“The acquisition will strengthen Reliance Retail’s readymade garments and accessories portfolio in the fashion and lifestyle retail space, and further consolidate leadership position as India’s largest, most profitable and fastest-growing retailer,” a Reliance spokesperson said. 

ITC TO FOCUS ON PREMIUM SEGMENT 

As part of the deal signed last week, estimated at about Rs 150 crore, Reliance has acquired the assets of John Players, which includes the brand and distribution rights through 750 stores, including 65 exclusive franchise outlets. The acquisition will help Reliance bolster its own-brand apparel business, which will be an important element of its upcoming ecommerce business, experts said. 

The sale of the brand is part of a recast by ITC of its apparel business to focus on the premium end through the WLS stores that were relaunched last month, earlier known as ITC Wills Lifestyle. 

“A substantial portion of John Players business, around 65%, was already undertaken through Reliance Retail, through Reliance Trends stores and Ajio.com,” said one of the persons cited above. 

ITC didn’t respond to queries. 

The lifestyle retail business of ITC was hit by competition in the past two-three years from value fashion retailers such as Reliance Trends, Future Group’s FBB and Lifestyle’s Max besides heavy discounts on apparel sold by ecommerce firms like Flipkart, Myntra and Amazon. 

ITC does not disclose financials of the lifestyle retail business, but sources said it’s loss-making. The WLS chain is a larger business contributing about Rs 500-550 crore to total revenue. 

Since lifestyle retail was accounted for in the non-cigarette, fast-moving consumer goods (FMCG) business of ITC, its losses were pulling down overall segment profitability, said the people cited above. In FY18, the noncigarette FMCG business revenue was Rs 11,328 crore, while gross profit was Rs 164 crore. 

For Reliance Retail, fashion and lifestyle contributes 7-8% to overall revenue. Ten private apparel brands of Reliance Trends have an annual turnover of Rs 100 crore each at least; four of them do business of more than Rs 500 crore annually. The owned brands contribute over 70% of Reliance Trends business. 

ITC entered the lifestyle apparel business in 2000 through the Wills Lifestyle stores and launched John Players targeted at youth in 2002. However, the firm could not build the brand and it emerged in the recent restructuring exercise that it had no synergy with the premium lifestyle retail business. ITC entered women’s fashion with Miss Players in 2007, but subsequently shut down the format.

Published On : 26-03-2019

Source : Economic Times

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