Arvind Said In The Filing That Currently It, Along With The US Fashion Company, Is Looking For A Buyer For Gap Franchisee In India.
Gap Inc. and Arvind Fashions are parting ways, six years after the Bengaluru-based company signed a master franchisee for India and Arvind Fashions and the US fashion group are currently looking for a buyer for Gap’s India business.
“We wish to inform that Arvind Lifestyle Brands Limited, a wholly owned subsidiary of Arvind Fashions Limited (AFL) and Gap Inc., have decided to mutually terminate their franchise business relationship in India,” Arvind Fashions told the Bombay Stock Exchange in a filing. Arvind said in the filing that currently it, along with the US fashion company, is looking for a buyer for Gap franchisee in India.
“As next steps, both companies will work out modalities regarding transition of the Gap business,” the filing further said. “Arvind Lifestyle Brands Limited, has appointed an investment bank to find a buyer for the Gap business.” One person familiar with the development said the companies have approached one of India’s largest retail groups and an e-commerce company for a possible deal. Arvind said Gap contributed about 4.7% of Arvind Fashions’ consolidated turnover or Rs 182 crore in the fiscal year ending March 2020 with a loss of Rs 34 crore before taxes.
Over the years, Arvind has been trying to make Gap business profitable by pruning the store sizes and by increasing local sourcing for the brand in India but the Covid-19 pandemic hit it hard with stores shut for months and with dwindling footfalls even after that as consumers shied away from malls and high streets.
Arvind Fashions blamed poor business amid the pandemic that is leading to the snapping of ties.”Due to circumstances post the corona pandemic, both companies agreed that a mutual termination was in both companies best interest,” the filing said.