Mumbai: Flipkart has divested its 6% stake in Aditya Birla Lifestyle Brands Ltd (ABABL) for around Rs.950 crore through a block deal. Flipkart had bought into Aditya Birla Fashion in 2020 as part of a partnership to improve its omni-channel capabilities.
Now owned by Walmart, this could be a setback to the company, which needed Flipkart-Myntra’s wide appeal and reach to boost the brand’s sales. Though there isn’t any mention about the brand’s partnership post the divestment, it is clear that ABABL needs Flipkart’s support more than Flipkart needs the company’s brands.
The Aditya Birla Group demerged its premium lifestyle brands including Louis Philippe, Allen Solly and Peter England as part of an attempt to sharpen its focus on each brand’s core competencies and target markets, even as the company’s flagship brands Pantaloons, along with TASVA and designer brands of Sabyasachi and House of Masaba, haven’t been able to deliver on the promises given.
Lifestyle brands had contributed 85% of Aditya Birla’s retail operations before the merger. Although these premium lifestyle brands were offering steady sales, the company’s profitability was affected as the other loss-making brands were a drag on the company’s overall profitability, necessitating the demerger.
According to a report by Bain & Company, the online fashion and lifestyle market is expected to be worth $40-45 billion by 2028, with a CAGR of about 10-12%. According to the report, standalone brands and platforms need to collaborate to offer the best value for its customers, along with a highly targeted social media campaign.
ABABL currently has reputed brands like Louis Phillippe, Peter England, and American Eagle under its belt, and the company will need to do more to deal with the rapidly updating trends and styles amplified by the reach of social media.
Following the news, ABABL’s shares rose 7% to Rs.146 on the bourses.
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