Aditya Birla Fashion and Retail on December 14 announced that it will take over Reebok’s operations in India.
Aditya Birla Fashion and Retail (ABFRL) has signed a long-term licensing agreement with Authentic Brands Group (ABG) to distribute and sell Reebok products in India and other ASEAN (Southeast Asian) countries. The deal marks 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 formal wear brands such as Allen Solly, Louis Philippe, Peter England, Pantaloons, and VanHeusen, has been on an acquisition spree, of late, and has acquired several brands across fashion segments. The company has particularly shown a keen interest in building ethnic wear portfolio and acquired key designer labels. Earlier 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 ethnic wear label house. The retail major had also acquired Shantanu & Nikhil’s apparel brand Finesse in 2019.
However, with Reebok, the company now enters the sports and active wear 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), Techopak Advisors.
According to Bisen, ABFRL has a clear ambition to maintain its position as the leading apparel retail and this strategy is in line with that ambition.
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 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, Nike, lifestyle brands such as H&M, Levi’s, Zivame, and private labels by e-commerce majors such as Dressberry, HRX for a share of the athleisure, activewear pie.
A strategic move
Commenting on the transaction, Ashish Dikshit, managing director, ABFRL said, “As Indians get more active, athletic and health focussed, 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.
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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 Adidas to ABG is expected to close in the first quarter of 2022.
Globally, Reebok has seen frequent ownership changes. Sportwear major Adidas, which has acquired the brand in 2006 to pit it against Nike, however, sold it to Authentic Brands Group in August this year after its sluggish performance over the years.
In India, Reebok posted a 26 percent fall in net revenue for FY21 at Rs 321 crore as compared to the FY20, according to business intelligence firm Tofler. The company further reported a net profit of Rs 4.9 crore during the fiscal, a 93 percent decrease from the last financial year. The company’s total expenses for fiscal 2021 were reported as Rs 315 crore, said Tofler.Authentic Brands Group (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.
