The $10-billion Japanese fashion retailer Uniqlo is set to partner Arvind to build a $1-billion business in India by the end of the current decade. Uniqlo's parent Fast Retailing Co, which rivals Zara, H&M, and Gap, is finalizing an equity joint venture with Sanjay Lalbhai-led Arvind to open doors in a key growth market, said people familiar with the matter.
A definite deal could be struck in the second quarter of 2013, making it the most significant global retailer after Sweden's IKEA to firm up India plans following the liberalized FDI regulations in local retailing. Uniqlo has been an unusually aggressive Japanese company that sells trendy and casual merchandise at competitive prices, with ambitions to become the world's top fashion retailer toppling Zara and H&M.
Arvind and Uniqlo teams have jointly visited the marketplace and blocked possible locations for the initial stores, said sources mentioned earlier. Uniqlo appears to have tilted towards Arvind after evaluating other potential partners, including Sunil Mittal's Bharti Enterprises, Aditya Birla's Madura Fashion & Lifestyle, and Reliance Brands. Uniqlo founder and CEO, Tadashi Yanai, among Japan's richest billionaires, last year set the ball rolling talking up his desire to open stores in India as early as possible.
The Uniqlo JV could fire up Arvind's profile in retailing where Lalbhai wants to chalk up $2 billion revenue by 2020. The $250 million Arvind Brands & Retail has had long-term ties with Philip Van Heusen (PVH), Tommy Hilfiger and VF Corp, building businesses for these global biggies in the past two decades. Uniqlo is expected to unveil an ambitious India ramp up plan, getting even into the smaller cities, to show up with $1 billion business within this decade. Arvind also holds rights for UK retailers Debenhams and Next, besides operating its own value format Megamart.
Arvind Brands & Retail CEO J Suresh declined to comment on speculation, while an emailed query to Uniqlo remained unanswered. The details of the proposed JV including the investment details could not be ascertained at the moment.
Arvind, one of the world's largest denim makers, is projected to close this fiscal with Rs 5,500 crore ($1 billion) in revenue and about Rs 900 crore (roughly $180 million) in operating profit driven by mainstay textiles and garments, fashion retail, and the recently started real estate development.
Uniqlo's biggest rival Zara already operates nine stores in India through a JV with Tata Group's Trent. The other peers H&M and Gap have revived interest in India despite a short-term negative outtlook for the retail sector due to slowing consumer sentiments—at its lowest in almost three years. Uniqlo garners 45% of its sales from women's clothing, 35% from menswear and the remaining 20% from kidswear. CEO Yanai has pushed for aggressive store openings leading to a worldwide network of more than 4,000 doors in the next eight years.
According to Uniqlo's official investor relations website, the apparel retailer has forecast to achieve net sales of 216 billion yen ($2.4 billion) and operating income of 16 billion yen ($180 million) at Uniqlo International for the fiscal year ending August 2013. The website added that the company's overseas operations accounted for more than 20% of its total sales.
A definite deal could be struck in the second quarter of 2013, making it the most significant global retailer after Sweden's IKEA to firm up India plans following the liberalized FDI regulations in local retailing. Uniqlo has been an unusually aggressive Japanese company that sells trendy and casual merchandise at competitive prices, with ambitions to become the world's top fashion retailer toppling Zara and H&M.
Arvind and Uniqlo teams have jointly visited the marketplace and blocked possible locations for the initial stores, said sources mentioned earlier. Uniqlo appears to have tilted towards Arvind after evaluating other potential partners, including Sunil Mittal's Bharti Enterprises, Aditya Birla's Madura Fashion & Lifestyle, and Reliance Brands. Uniqlo founder and CEO, Tadashi Yanai, among Japan's richest billionaires, last year set the ball rolling talking up his desire to open stores in India as early as possible.
The Uniqlo JV could fire up Arvind's profile in retailing where Lalbhai wants to chalk up $2 billion revenue by 2020. The $250 million Arvind Brands & Retail has had long-term ties with Philip Van Heusen (PVH), Tommy Hilfiger and VF Corp, building businesses for these global biggies in the past two decades. Uniqlo is expected to unveil an ambitious India ramp up plan, getting even into the smaller cities, to show up with $1 billion business within this decade. Arvind also holds rights for UK retailers Debenhams and Next, besides operating its own value format Megamart.
Arvind Brands & Retail CEO J Suresh declined to comment on speculation, while an emailed query to Uniqlo remained unanswered. The details of the proposed JV including the investment details could not be ascertained at the moment.
Arvind, one of the world's largest denim makers, is projected to close this fiscal with Rs 5,500 crore ($1 billion) in revenue and about Rs 900 crore (roughly $180 million) in operating profit driven by mainstay textiles and garments, fashion retail, and the recently started real estate development.
Uniqlo's biggest rival Zara already operates nine stores in India through a JV with Tata Group's Trent. The other peers H&M and Gap have revived interest in India despite a short-term negative outtlook for the retail sector due to slowing consumer sentiments—at its lowest in almost three years. Uniqlo garners 45% of its sales from women's clothing, 35% from menswear and the remaining 20% from kidswear. CEO Yanai has pushed for aggressive store openings leading to a worldwide network of more than 4,000 doors in the next eight years.
According to Uniqlo's official investor relations website, the apparel retailer has forecast to achieve net sales of 216 billion yen ($2.4 billion) and operating income of 16 billion yen ($180 million) at Uniqlo International for the fiscal year ending August 2013. The website added that the company's overseas operations accounted for more than 20% of its total sales.
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