Aditya Birla Fashion and Retail Ltd (ABFRL) has signed a long-term licensing agreement with US-based brand management company Authentic Brands Group (ABG) to distribute and sell Reebok products in India and other ASEAN (Southeast Asian) countries. The deal signals ABFRL’s foray into the sports and activewear segment, one of the fastest growing fashion and apparel segments.
“The transaction marks a significant milestone in the journey of ABFRL, which has evolved its portfolio into a powerhouse of brands across all major fashion and lifestyle segments over the last several years. The addition of Reebok, a marquee global sports and activewear brand, will fill an important white space in ABFRL’s portfolio,” the company said in a press statement.
The sportswear bet
ABFRL, known for its lifestyle and formalwear brands such as Allen Solly, Louis Philippe, Peter England, Pantaloons and Van Heusen, has been on an acquisition spree of late and has bought several brands across fashion segments. The company has shown a particularly keen interest in building its ethnicwear portfolio and acquired key designer labels. In January this year, it acquired a 51 percent stake in bridal couture brand Sabyasachi, established by Kolkata-based designer Sabyasachi Mukherjee, and later in February partnered with Tarun Tahiliani, taking a 33 percent holding in his men’s ethnicwear label house. The retail major had also acquired Shantanu & Nikhil's apparel brand Finesse in 2019.
(Read: Retail biggies make a beeline for ethnic wear market in India)
However, with Reebok the company now enters the sports and activewear category.
“ABFRL is a leader in the fashion and apparel segment with some marquee brands but their mainstay so far has been men’s formal wear. However, the company has identified the shift of consumers from formals to casuals and hence have made a move towards it,” said Ankur Bisen, senior partner and head (consumer, food and retail), Technopak Advisors, a business management consultancy.
According to Bisen, ABFRL has a clear ambition to maintain its position as the leading apparel retailer and this strategy is in line with that goal.
The sports and activewear market has witnessed growth in the last few years driven by the trend towards athleisure and casualisation. According to ABFRL, the segment is projected to grow to $13 billion by FY24 at an annual growth rate of about 14 percent. As per industry estimates, the sports and activewear segment has been an outlier in the apparel retail category since the onset of the pandemic and grew 15-18 percent, while the demand for other categories (in apparel) suffered.
ABFRL will be competing with sportswear brands like Puma, ASICS and Nike, and lifestyle brands such as H&M, Levi’s and Zivame, apart from private labels by e-commerce majors such as Dressberry and HRX, for a share of the athleisure and activewear pie.
A strategic move
Ashish Dikshit, managing director, ABFRL, said, “As Indians get more active, athletic and health focused, their consumption of apparel and accessories is expected to increasingly change in line with these trends, providing an opportunity to build iconic brands of global repute.”
“Reebok is one of the leading brands in the sporting goods industry globally and has built a very strong presence in the Indian market over the last two decades. In partnership with ABG, we plan to accelerate Reebok’s business in India, combining its global appeal and salience amongst Indian youth. This transaction further strengthens the ABFRL portfolio and increases our ability to engage with consumers across various need spaces,” he added.
ABFRL will partner with Reebok Design Group (RDG), the newly-established global brand hub based in Boston, on all product design, development, innovation and creative direction to drive a unified brand voice and vision, the company said. The transfer of ownership of the Reebok brand from Germany’s Adidas to ABG is expected to close in the first quarter of 2022.
Globally, Reebok has seen frequent ownership changes. In the latest such instance, sportswear major Adidas, which acquired the brand in 2006 to pit it against Nike, sold it to ABG in August this year after sluggish performance over the years.
In India, Reebok posted a 26 percent fall in net revenue for FY21 to Rs 321 crore compared to FY20, according to business intelligence firm Tofler. The company reported a net profit of Rs 4.9 crore during the fiscal, a 93 percent decrease from the previous financial year. The company’s total expenses for fiscal 2021 were reported as Rs 315 crore, said Tofler.
ABG is a brand development, marketing and entertainment company, which owns a portfolio of global media, entertainment and lifestyle brands such as Nautica, Forever 21, Aeropostale, Van Heusen, Arrow, etc.
ABFRL’s stock was trading up 6.13 percent on the BSE at Rs 282.35 as of 3.13 PM.
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