Aditya Birla group to take over Reebok's India operations

In a major expansion into sportswear and lifestyle wear segment, the Kumar Mangalam Birla-led Aditya Birla Fashion & Retail has signed a long-term licensing agreement with Authentic Brand Group of New York, which has the marketing and branding rights of Reebok, to run the operations of the global sportswear, athletic and lifestyle major in the country and ASEAN markets.

The new agreement between the largest domestic multi-brand fashion retailer and Authentic Brand is an extension of their existing relationship as ABFRL already markets and sells some ABG brands like Forever 21.

The agreement follows the global transfer of ownership of the Reebok brand from Adidas to ABG, which is expected to close in the first quarter of 2022.

The deal is subject to customary closing conditions and due diligence, the companies said in a joint statement on Tuesday.

The New York-based Authentic Brands Group is a global brand development, marketing and entertainment company that owns such rights of as many as 30 iconic global brands.

The long-term licensing agreement with Aditya Birla Fashion & Retail (ABFRL) grants it exclusive rights to distribute and sell Reebok products through wholesale, e-commerce and Reebok branded retail stores in India and other ASEAN countries, the companies said.

This deal marks Birlas' entry into the fast-growing domestic sports and activewear segments and they expect the addition of the global marquee sports brand to fill an important white space in its portfolio.

Ashish Dikshit, managing director of ABFRL, said Reebok has built a very strong presence in the domestic market over the past two decades.

In partnership with ABG, ABFRL plans to accelerate Reebok's business, combining its global appeal and salience amongst youth.

This transaction further strengthens our portfolio and increases our ability to engage with consumers across various need spaces, he added.

Reebok India had reported a net profit of Rs 4.9 crore in FY21, down 93 per cent from FY20, hit by lower sales due to store closures on account of lockdowns.

Its revenue fell 26 per cent to Rs 321 crore on-year while its total expenses stood at Rs 315 crore.

Earlier this year, the German sportswear major Adidas had announced that it had entered into a definitive agreement to sell Reebok to Authentic Brands Group for a total consideration of up to 2.1 billion euros.

Adidas had bought the rival American brand Reebok in 2006.

Over the past few years, this sportswear segment has been growing rapidly on the heels of increased health consciousness and the adoption of active lifestyles by youngsters.

This segment is expected to grow to $13 billion by FY24, clipping annually at around 14 per cent.

The partnership will help further ABG's global Reebok strategy of assembling a network of core operating partners around the world who are driving innovation and growth while upholding the brand's integrity and values, the statement said.

Accordingly, ABFRL will partner with Reebok Design Group, the newly-established global brand hub based in Boston, on all product design, development, innovation and creative direction to drive a unified brand voice and vision.

Corey Salter, chief operating officer at Authentic Brands Group, said ABFRL has proven expertise in building and operating large-scale lifestyle brands across India.

ABG is pleased to expand the existing partnership with ABFRL, which includes Forever 21 and other brands, and it is confident that ABFRL will be successful in solidifying Reebok's position with a growing customers in India and Southeast Asia, he added.

Apart from Reebok, ABG's portfolio of world-renowned brands includes Marilyn Monroe, Elvis Presley, Muhammad Ali, Thalia, Sports Illustrated,  Spyder, Nautica, Forever 21, Frederick's of Hollywood, Van Heusen and Arrow, among others.

ABFRL is the country's largest pure-play fashion powerhouse with a bouquet of leading fashion brands and retail formats.

As of the September 2021 quarter, it operated 3,264 stores across over 26,840 multi-brand outlets and over 7,090 points of sale in department stores.

Its brands include Louis Philippe, Van Heusen, Allen Solly and Peter England which have been established for over 25 years.

Its Pantaloons is one of he largest value fashion retail brands in the country while its international brands portfolio includes The Collective, which is a leading domestic multi-brand retailer of international brands; Simon Carter and select mono-brands like Forever 21, American Eagle, Ralph Lauren, Hackett London, Ted Baker and Fred Perry.

Additionally, the Birla group company has also made a foray into branded ethnic wear through the acquisition.

In the September quarter, ABFRL had reported a revenue of Rs 2,054 crore, up from Rs 1,028 crore a year ago and earned a pre-tax profit of Rs 338 crore, up from Rs 136 crore in the previous year.

Photograph: Grigory Dukor/Reuters