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Diversified conglomerate, ITC Ltd, has sold is apparel brand John Players and its related trademarks and intellectual property to Reliance Industries’ retail unit, Reliance Retail, for an undisclosed sum.
Market sources peg the deal to be in the range of ₹150 crore.
The move comes as a part of the restructuring exercise that the Kolkata-based ITC has taken up for its loss-making apparel business.
“As part of the strategic review of the lifestyle retailing business, a restructuring plan is underway. In line with this ongoing restructuring, ITC has sold the brand John Players and related trade-marks and intellectual property, and the goodwill related thereto, to Reliance Retail Limited,” an ITC spokesperson sai. Nearly 65 per cent of John Players’ sales come from Reliance Retail’s Reliance Trends and ajio.com, sources say.
Focus on premium brand
According to Abneesh Roy, Research Analyst, Senior Vice President, Institutional Equities, Edelweiss Securities, the sale is likely to improve margins of ITC’s consumer business. The apparel business was loss making and dragged down the consumer business’ profitability. Post the sale, the company will be able to focus more on its food, household and personal care businesses.
“This (sale of John Players) will improve margins of ITC’s consumer business; but will impact sale by 3 per cent,” he said.
Apart from John Players, which caters to the mid-end segment; the company operates the premium WLS brand (formerly Wills Lifestyle), which will now be the focus brand.
Incidentally, apparels were amongst the first businesses that ITC forayed into post diversification from cigarettes and into the other FMCG categories. However, the business was hit by competition from value players and deep discounting by e-tailers, over the last three years.
The acquisition will strengthen Reliance Retail’s portfolio, and according to Roy, it could also lead to addition of more John Players stores.
“As it launches e-commerce businesses, brands will help it differentiate especially in the mid-end (where John Players has a presence),” he said.
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