“Superdry Strikes $48 Million Deal to Sell South Asian Assets to Reliance Retail”
UK fashion retailer Superdry is set to sell its licenses and brand assets in Sri Lanka, Bangladesh, and India to Reliance Retail for $48 million. The deal, conducted through a joint venture, will provide Superdry with much-needed funds to boost liquidity and fuel its turnaround efforts. Reliance Retail, India’s largest retailer, continues to expand its foreign brand partnerships, aiming to strengthen its presence in the market.
In a strategic move to bolster its financial standing and reinvigorate its brand, Superdry, a UK-based fashion retailer, has announced the sale of its licenses and brand assets in South Asia to Reliance Retail, India’s retail giant, for a sum of $48 million (£40 million). This transaction represents a lifeline for Superdry, allowing the struggling fashion company to secure much-needed capital and redirect its focus towards its core markets.
Superdry’s decision to sell its intellectual property assets in Sri Lanka, Bangladesh, and India is expected to provide the company with a substantial boost in liquidity, with net proceeds estimated at £28.3 million. This influx of funds will play a pivotal role in supporting Superdry’s ambitious turnaround plan.
The deal, executed through a joint venture, involves Superdry investing £9.6 million for a 24% stake in the venture. This partnership expands upon Superdry’s existing collaboration with Reliance Retail, which dates back to 2012. Mukesh Ambani’s Reliance Retail boasts an impressive network of over 18,000 stores offering a diverse range of products, from groceries to electronics, and boasts partnerships with renowned international brands like Jimmy Choo, Marks & Spencer, and Pret A Manger.
Reliance Retail’s willingness to invest in Superdry’s South Asian assets reflects its continued pursuit of foreign brand partnerships. The move also aligns with Reliance Retail’s broader growth strategy, which includes courting investments from sovereign wealth funds of countries like Singapore, Abu Dhabi, and Saudi Arabia, with a reported goal of securing approximately $1.5 billion in investments.
On the other hand, Superdry has been grappling with declining orders from wholesale partners, exacerbated by a cost-of-living crisis and a decrease in real wages among consumers. The company recently issued a cautionary statement, anticipating subdued revenue growth for the year, following a larger-than-expected annual loss. As Superdry prioritizes cost-cutting measures, the deal with Reliance Retail comes as a lifeline, enabling the company to redirect its resources and expertise towards strengthening its brand presence in more established markets.
Superdry’s assets in the South Asian markets accounted for approximately 1.8% of its total group sales in the fiscal year ending April 30th.
Following the announcement of the deal, Superdry’s shares surged by 18%, reaching a nearly two-month high, reflecting investor optimism regarding the company’s potential turnaround. In contrast, shares of Reliance Industries, the parent company of Reliance Retail, experienced a minor dip of 0.8% in afternoon trading.
As Superdry and Reliance Retail embark on this strategic partnership, both companies are expected to leverage their strengths to navigate the evolving retail landscape and seize new opportunities in the dynamic South Asian markets.
Sources By Agencies
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