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Rediff.com  » Business » Aditya Birla Nuvo bets big on apparel retail

Aditya Birla Nuvo bets big on apparel retail

May 02, 2008 11:37 IST
Aditya Birla Nuvo plans to extend its footprint in apparel retailing through two subsidiaries for mens exclusive lifestyle and Peter England family stores. Madura Garments, the company's branded apparel division, crossed a turnover of Rs 1,000 crore (Rs 10 billion) in FY08.

The company is eyeing the super premium and luxury segment with plans to open three mens exclusive lifestyle stores in Bangalore, Delhi and Mumbai. Madura Garments will introduce international brands and is expecting a turnover of Rs 4,500 crore (Rs 45 billion) in three years.

Vikram Rao, business director (textile and apparel), Aditya Birla Nuvo, said, "We plan to open 10-15 mens lifestyle stores in three years with investments of Rs 600 crore (Rs 6 billion).

The foray in luxury retail will provide us an opportunity to trade up and gain a larger market share." Madura currently retails premium shirts up to Rs 4,000 and the new venture will cater to higher price points.

The company will also invest Rs 400 crore (Rs 4 billion) in the next five years to open 80 Peter England family stores and consolidate the mass brand business. It plans to launch 10 stores in this financial year, with the first five stores expected to open in 6-8 weeks.

The Peter England family stores, spread across 12-15,000 sq ft, are estimated to clock business worth Rs 1,350 crore (Rs 13.50 billion) in five years.

Meanwhile Madura Garments, which retails brands such as Allen Solly and Louis Phillipe, posted 26 per cent jump in revenues for the fourth quarter ended March 08 to Rs 276 crore (Rs 2.76 billion) as against Rs 218. 93 crore (Rs 2.18 billion) in the corresponding period last year.

India's largest branded apparel player reported revenues worth Rs 1,025 crore (Rs 10.25 billion) in FY08, up 24 per cent, as against Rs 830 crore (Rs 8.3 billion) in the previous year.

However, the high real estate costs and long gestation period for new stores impacted the profitability of the branded apparel business. Rao said,

"The fashion brands operations grew by 28 per cent and mass brands registered a growth of 23 per cent. But the bottomline was impacted due to the high realty prices as the company made critical investments for retail expansion last year. The fourth quarter was better as we took measures to improve retail productivity and manage cost pressures."

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