Reliance Retail Ventures, India’s largest retail conglomerate, has announced its acquisition of UK-based Superdry’s brand licenses and intellectual property assets across three key Asian markets for a total of £40 million (equivalent to $48 million USD). This significant move not only strengthens Reliance Retail’s portfolio of international brand partnerships but also extends a lifeline to the beleaguered UK fashion retailer.
Superdry saw its shares surge by 18%, reaching a nearly two-month high following the announcement. The company revealed its intention to utilize the anticipated £28.3 million net proceeds from the deal to bolster its liquidity and fulfill its capital requirements as part of a comprehensive turnaround strategy.
This strategic acquisition will be executed through a joint venture, with Superdry making a £9.6 million investment to secure a 24% stake in the partnership. The agreement encompasses the regions of Sri Lanka, Bangladesh, and India, where Superdry has had a presence since 2012, thanks to its collaboration with Reliance Retail.
Reliance Retail, helmed by billionaire Mukesh Ambani, boasts an expansive network of over 18,000 stores, offering a diverse range of products, from groceries to electronics. The company has also forged strategic partnerships with renowned international brands, including Jimmy Choo, Marks & Spencer, and Pret A Manger.
In addition to this deal, Reliance Retail has been actively engaged in discussions with potential investors, including sovereign wealth funds from Singapore, Abu Dhabi, and Saudi Arabia, with a view to securing investments totaling approximately $1.5 billion, as reported by Reuters.
Superdry, primarily known for its signature sweatshirts, hoodies, and jackets, has grappled with dwindling orders from its wholesale partners due to challenges stemming from a cost-of-living crisis and diminishing real wages. The company recently issued a cautionary statement regarding subdued revenue growth for the year, which was further exacerbated by a larger-than-expected annual loss. As a result, fundraising initiatives and cost reduction measures have become top priorities for Superdry.
The collaboration with Reliance Retail is anticipated to enable Superdry to refocus its efforts on expanding its brand presence and boosting sales in its well-established territories, where it already possesses a strong market foothold. Superdry disclosed that the assets involved in this transaction accounted for approximately 1.8% of its total group sales during the fiscal year ending on April 30.
Meanwhile, Reliance Industries, the parent company of Reliance Retail, experienced a marginal 0.8% decline in its shares during afternoon trading. Nevertheless, this strategic acquisition underscores Reliance Retail’s unwavering commitment to expanding its portfolio of global brand partnerships and strengthening its position in the Asian retail landscape.
Superdry, founded by Julian Dunkerton and James Holder following a trip to Tokyo in 2003, views the deal with Reliance Retail as a critical step in bolstering liquidity, reinforcing its balance sheet, and meeting ongoing working capital needs as part of its turnaround strategy.
