The Hindu Business Line : VF Corp not to buy out Arvind’s stake in joint venture

Bangalore, May 21 VF Arvind Brands, the 60:40 joint venture between VF Corp and Arvind Brands, expects a 30 per cent sales growth this year, down from the 40 per cent it saw last year. It attributes this to an uncertainty in the retail market and real estate concerns. (The company follows a January-December financial year).

Dismissing media reports of VF buying out Arvind’s stake in the joint venture over poor retail performance and “relationship issues” between the two partners, Mr Aidan O’Meara, President, VF Asia Pacific, said “current” retail expansion plans have been “cautious” due to “cost of retail space” and uncertainties in the retail market. “The retail market was hot last year. Whether this will continue and whether the market can sustain it is still uncertain. But 30 per cent is still a healthy growth. There is no change in our strategy in India. We are not contemplating buying out Arvind’s stake,” said Mr O’Meara. He also ruled out hiking its stake in the near future.

VF Arvind plans to invest in India in retail, people, infrastructure, and a new distribution centre in Whitefield, added Mr O’Meara. VF Arvind Brands is committed to setting up 30 stores this year (20 have already come up), said Mr Kanchan Pant, Managing Director, VF Arvind Brands. Although this may be “marginally shorter” than what one would have expected 12 months ago, the overall health of the business is good, he added.

The company has 150 stores in total, across brands such as Lee (80), Wrangler (50), Nautica (10) and Kipling (10).

Lee-Wrangler

The company is toying with the idea of setting up jeans wear ‘destination stores’ which will sell both Lee and Wrangler. Both these brands drive “overall business,” contributing about 80 per cent of the company’s sales turnover, said Mr Pant.

A large format model store (about 4,000 sq ft) will be set up in Bangalore in 8-12 weeks. “We want to use large retail spaces productively. We will go to the market with a combined destination store in Bangalore which we hope will be a compelling proposition for consumers. VF has done this in Europe successfully,” said Mr Pant. VF Arvind hopes to roll out more such stores, depending on location, market place and consumer demand.

More global brands

VF Corp hopes to bring to India brands such as North Face (an outdoor apparel and equipment brand considered to be VF’s fastest growing brand), Vans (a youth brand), and Napapijri (a sportswear brand) from its global portfolio; activity on this front is expected by next year.

Globally, the $7.2 billion US-based VF Corp owns 18 core brands. Five of them are already in India.

VF expects to acquire more ‘lifestyle’ brands from across the globe and India could be a key potential market for these, said Mr O’Meara. “In the fullness of time, given the right opportunity and timing, potential is there in India for a majority of VF’s brands to be launched here.”

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