Arvind Fashions Ltd (ARVINDFA), the demerged entity from Arvind Ltd. ARVINDFA enjoys a strong portfolio of ‘power brands’ comprising US Polo (USPA), Arrow, Flying Machine and Tommy Hilfiger amongst others.
The company has built a strong portfolio through multiple brands across categories and price points across the multi-channel space. It owns a large portfolio of both owned and licensed brands with each brand appropriating sharp and differentiated consumer propositions. It has presence across key segments – premium to ‘bridge to luxury’ (Tommy Hilfiger, Calvin Klein, etc.), mainstream (US Polo, Arrow, Flying Machine, etc.), a play on the value fashion segment through the Unlimited.
Key Highlights of ARVINDFA:
Distribution Strength: 1300 plus stores across 180 cities, 1800 mom n pop stores, 1400+ dept. store counters
Product/ Design Capabilities: 250+ designers and Merchants with deep understanding of Indian consumer requirement.
Sourcing Capabilities: Sourcing 33 Mn+ pcs/anumm
Let’s shed light on the licensed portfolio of the company..
Sephora is the world’s largest and leading beauty retailer with a presence in 31 countries. ARVINDFA entered into licensing agreement with LVMH in Sep'15. Presently, ARVINDFA runs 19 stores of Sephora in India. As per the report, the brand has potential to grow Potential to grow to Rs7bn-8bn by FY22 with presence in 50 stores. The brand sees huge potential upside through online platform – replicating the successful Sephora.com model in India. The brand aims to enter into tier-2 cities to expand its addressable market size in coming years.
GAP Inc. is a leading global retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the GAP, Banana Republic, OldNavy, Piperlime, Athleta, and Intermix brands. ARVINDFA has entered into licensing agreements with GAPInc for a period of 20 years in Aug2014. GAP turned EBITDA-positive in Q4FY19.
ARVINDFA has received approval and started local sourcing. The company is now focusing on expanding through new distribution channels such as Shop-in-Shop (SIS), online, kids and franchisee stores, which will contribute to growth and overall profitability. The company is seeking permission to open exclusive 'GAP Kids' store via franchise route.
Launched in 1993; one of the large formal wear brands. ARVINDFA has signed the licensing agreement up to 2038 with an option for auto-renewal. Arrow sport brand extension witnessed strong growth and contributes 34% of the revenues. Arrow denim has strong presence in online channels. The brand has recently introduced suits and blazers for special occasions and is expected to gain momentum over next 12-18 months.
US Polo Assn.
Launched in 2009, first brand in India representing a super premium lifestyle and approachable premium pricing. USPA emerging as India’s leading lifestyle brand. It is a fastest brand to cross Rs10 bn with innerwear sales doubling in FY19 and reaching three-digits mark.
Launched in 2004, one of the large brands in super-premium denim / casuals. ARVINDFA has set up 50% JV for marketing this brand in India. Licensing agreement is for perpetual period. Revenues are likely Rs3.5bn-4bn with EBITDA margin in high single digit in FY19.
(Source of revenue data used in the article is a report shared by ICICI Securities)