Aditya Birla Fashion buys Forever 21's India business

India: Aditya Birla Fashion and Retail (ABFRL) announced its plan to acquire the India business of Forever 21 from its franchisee Diana Retail Pvt Ltd. for USD26 million. Diana Retail, which was promoted by DLF Brands Ltd, in India was the franchisee for Forever 21 for past three years. The company operated 12 stores across India and also sold products online. The company’s reported net sales of around USD40.3 million in FY2015-16. The company’s new undertaking will be part of Madura Fashion & Lifestyle. Moreover, Aditya Birla Fashion will also have the exclusive rights to sell its products through online and offline channels in India. Forever 21's clothes, artificial jewellery, accessories and all related merchandise would now be a part of Aditya Birla Fashion. The transaction was an all-cash deal through a business transfer agreement.

According to TechSci Research, the acquisition will help Aditya Birla Fashion increase its presence in women’s wear segment. The company will also increase its foothold in the online channel where the company plans to increase its portfolio through its brand ABOF. Furthermore, Aditya Birla Fashion, which posted net sales of around USD932 million in 2015-16 has been in the loss since past two years due to its loss making Pantaloons Business and is planning to increase its net sales in the coming period.

According to a recent report by TechSci Research “India E-commerce Market Forecast & Opportunities, 2020”, the country’s e-commerce market is projected to grow at a CAGR of more than 36% during 2015-2020. E-services segment, which comprises online travel, online payments, online classifieds, etc., is expected to continue its domination through 2020. However, the e-tail segment that includes electronics, apparels & accessories, health and personal care, etc., is expected to witness significantly higher market growth compared to e-services segment over the next five years. During 2015-20, the western region is expected to remain the largest e-commerce market in the country. Major players operating in India’s e-tail market include Flipkart, Snapdeal and Amazon.