Reliance Retail to acquire Arvind Fashions' beauty retail business

New Delhi, Nov 3 (PTI) The country's leading retailer Reliance will acquire the beauty retail business of Arvind Fashion, which also includes the Sephora business operated by the Lalbhai family-promoted firm in India.

As per the deal, Reliance Beauty & Personal Care, a wholly-owned subsidiary of Reliance Retail Ventures Limited (RRVL), will take over 26 stores of French beauty retail brand from Arvind Fashions Limited, said a joint statement.

"As part of the partnership with Sephora, Reliance Beauty & Personal Care take over the current India operations of Sephora's 26 stores across 13 cities from Arvind Fashions Limited, as it sets in motion a plan to expand Sephora's presence in the country," it said.

During this period of transition, the stores and website will be operating business as usual.

Reliance Beauty & Personal Care operates the beauty business for RRVL, which is the holding company of all the retail companies under the RIL (Reliance Industries Limited) group.

Earlier in the day, Arvind Fashion in a regulatory statement said it has "entered into a Share Purchase Agreement (SPA) with Reliance Beauty & Personal Care Ltd, to sell and transfer the entire equity stake held by the company".

Upon completion of the formalities under the said SPA, Arvind Beauty Brands Retail would cease to be a subsidiary of the company, according to a regulatory filing from the Ahmedabad-based company.

Over consideration of sales, the company said: "Transaction has been done at an enterprise value of Rs 216 crore towards the sale of the entire equity stake and repayment of loans. The purchase consideration towards the sale of the entire equity stake is Rs 99.02 crore." Arvind Beauty Brands Retail had a turnover of Rs 336.70 crore in FY23 and contributed 7.60 per cent of the consolidated revenue of Arvind Fashions.

Sephora, headquartered in Paris, is a part of 80 billion Euro LVMH group, a French multinational holding and conglomerate specialising in luxury goods. It had forayed into India in 2012.

Over the development, Sephora Asia President Alia Gogi said: "We are tremendously excited to partner with the largest retail group in India to step-change our business. Rising affluence, increasing urbanisation and the proliferation of social media have driven greater awareness of self-care and beauty, unlocking major opportunities for prestige beauty. It is an opportune time for us to invest in expanding our presence, and bring new, exciting, and exclusive brands to delight our growing community of beauty enthusiasts." He also thanked Arvind for the partnership over the past eight years, saying it helped Sephora to get positioned for the next stage of growth.

RRVL Director V Subramaniam said: "The burgeoning Indian beauty market is being propelled by a new generation of customers with a strong desire to express their individuality, rising aesthetic refinement and a growing number of women in the young workforce of India. The Indian consumerism journey is at a tipping point, providing the perfect tail wind to this partnership." This partnership will help us straddle across the value chain in the beauty and personal care segment, he added.

In a separate statement, Arvind Fashion said after this deal, it will emerge as a pure-play branded fashion company. It will focus on growing its 5 marquee industry-leading brands which include U.S. Polo Assn, Tommy Hilfiger, Arrow, Flying Machine and Calvin Klein.

"This transaction will help AFL put capital behind growing our 5 high conviction brands and accelerate the journey towards higher free cash flow and return on capital employed," said Arvind Fashions CEO Shailesh Chaturvedi.

Reliance Retail has entered into the fast-growing beauty business with Tira, an omni-channel beauty retail platform. It has also launched another retail brand Blush Lace, a beauty-cum-lingerie format for masses.

The country's leading retailer competes with brands like HUL's Lakme, Nykaa, Tata and LVMH's Sephora in India's growing beauty and personal care marketplace.

According to a joint report by Redseer Strategy Consultant and Peak XV (formerly Sequoia Capital India & Southeast Asia), the Indian beauty and personal care market is estimated to grow to USD 30 billion by 2027, accounting for 5 per cent of the global market.

The Indian Beauty and Personal Care (BPC) market -- estimated to be around USD 19 billion in 2022 -- has very low per capita spend in the category but as the country prospers, the growth headroom will materialise strongly, the report said India is uniquely positioned as one of the most attractive and fastest-growing BPC markets globally, the report said. PTI