India's Reliance acquires Superdry's South Asia assets

INDIA's Reliance Retail is set to acquire UK-based Superdry's licenses and brand assets in three Asian countries, including Sri Lanka, Bangladesh, and India, for £40 million, media reports said.

This move expands Reliance Retail's portfolio of foreign brand partnerships and provides a financial boost to the struggling UK fashion retailer.

Superdry's shares surged by 18 per cent, reaching a nearly two-month high in response to the announcement on Wednesday (4).

The company plans to use the expected net proceeds of £28.3m to bolster its liquidity and support its capital requirements as part of a broader turnaround strategy.

The deal will be executed through a joint venture, with Superdry investing £9.6m to secure a 24 per cent stake in the partnership. This collaboration builds upon their existing relationship, which began in 2012 when Superdry initially partnered with Reliance Retail.

Reliance Retail, owned by billionaire Mukesh Ambani, operates over 18,000 stores selling a wide range of products, including groceries and electronics.

It has previously formed partnerships with foreign brands like Jimmy Choo, Marks & Spencer, and Pret A Manger. The company is also in discussions with various investors, including sovereign wealth funds from Singapore, Abu Dhabi, and Saudi Arabia, for potential investments totaling around £1.24 billion, according to reports.

Superdry, primarily known for its sweatshirts, hoodies, and jackets, has been grappling with weak orders from wholesale partners. The company's financial challenges exacerbated by consumer concerns related to the cost-of-living and declining real wages.

Last month, Superdry issued a warning of subdued revenue growth for the year after reporting a larger-than-expected annual loss. The company has been actively raising funds to strengthen its financial position, with cost reduction as a top priority.

The fashion firm believes that the deal with Reliance Retail will enable it to focus on growing its brand and increasing sales in its more established markets.

According to Superdry, the assets involved in the agreement accounted for approximately 1.8 per cent of the company's total group sales for the fiscal year ending on April 30.

Its founder and boss, Julian Dunkerton, has been racing to raise funds amid a steep downturn in its trading performance.

"It had been a difficult year for the business and the market conditions have been extremely challenging. The good news is that despite the external turbulence, the brand is in sound health and has momentum," Dunkerton said in August.

He founded the company in 2003 but was later removed from leadership before making a comeback.

The Cheltenham-based firm garnered £12m through a share sale at a rate of 76.3p per share in May.

Superdry's shares currently trade at a market valuation of £41m, and there have been periodic speculations about Dunkerton's interest in taking the company private, the Sky News reported.