Tuesday, May 21, 2024
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Reliance Retail Acquires Sephora India: A New Chapter for Beauty Retail

Reliance Retail has acquired the Sephora India operations from Arvind Fashions in a deal valued at approximately $11.89 million (Rs 99 crore), with the enterprise value pegged at Rs 216 crore, as per the details shared in a regulatory statement by Arvind Fashions.

This strategic move is in line with Arvind Fashions’ intent to concentrate on its primary apparel segment, following a period of financial challenges and an initiative to shed its non-essential assets.

The transaction is noteworthy as it marks a significant expansion of Reliance Retail’s portfolio with international brands, especially following speculative reports that earlier discussions for a retail alliance between Sephora and Reliance Retail in India had been discontinued.

Reliance Retail’s entry into the beauty retail sector was marked by the launch of its own platform, Tira, in April, positioning itself as a competitor to established players like Nykaa and the Tata Group.

Under the new arrangement, Reliance Beauty & Personal Care Limited will assume control of Sephora’s existing network of 26 stores spread across 13 Indian cities, previously managed by Arvind Fashions Limited. The transition phase will see the Sephora stores and their online presence continue to operate without interruption.

The announcement of the deal led to a notable 11.5 percent rise in Arvind Fashions’ share price, which later settled at a 7.3 percent increase.

Sephora’s operations within Arvind Fashions’ beauty division generated revenues of Rs 337 crores in the fiscal year 2023, contributing to 7.6 percent of the company’s total revenue.

V Subramaniam, Director of Reliance Retail Ventures Limited, expressed enthusiasm about the partnership with Sephora, citing the dynamic Indian beauty market’s potential, driven by a new generation seeking to express their individuality, enhanced aesthetic sensibilities, and the increasing number of young working women.

Reliance Retail’s foray into the beauty and personal care market places it in direct competition with other major brands such as HUL’s Lakme, Nykaa, Tata, and LVMH’s Sephora in India.

A joint report by Redseer Strategy Consultants and Peak XV (formerly known as Sequoia Capital India & Southeast Asia) projects that the Indian beauty and personal care market will expand to a $30 billion industry by 2027, capturing 5 percent of the global market share. With a current valuation of around $19 billion in 2022 and relatively low per capita spending, the sector is poised for substantial growth as India’s economy continues to flourish.

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Tuesday, May 21, 2024

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