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Arvind Fashions to terminate GAP business in India

Nidhi Jani
·1-min read

Arvind Fashions Limited, India's top casual and denim player, on Tuesday after the market hours, informed the bourses about the closure of operations of its GAP business.

Arvind Lifestyle Brands Limited, a wholly-owned subsidiary of Arvind Fashions Limited (AFL) & GAP Inc. has decided to mutually terminate its franchise business relationship in India.

Taking into consideration the circumstances post the Coronavirus pandemic, both the companies came to this conclusion i.e. for mutual termination, which has been taken in the companies’ best interest. Following this, both the companies will work out on the modalities regarding the transition of GAP business. Arvind Lifestyle Brands Limited has appointed an investment bank to find a buyer for the GAP business.

The GAP business delivered revenues of Rs 182 crore (4.7 per cent of AFL's consolidated turnover) with a PBT loss of Rs 34 crore in FY20.

Q1FY21 sales & financial performance was significantly affected by disruptions due to lockdowns caused by the COVID-19 pandemic. However, approximately 80 per cent of the stores have opened in the month of August. The company managed to reach 46 per cent of sales on August 20, compared to the same month last year.

The company has strengthened its balance sheet in Q2FY21 through the infusion of Rs 660 crore of non-debt funds through a strategic investment by Flipkart in Flying Machine and the rights issue for Rs 400 crore.

Arvind Fashions is a host of renowned brands, both international and indigenous, like US Polo Assn., Arrow, GAP, Tommy Hilfiger, Calvin Klein, Flying Machine, and Sephora.