Superdry confirms its partnership with Reliance Brands, expanding its presence in India, Sri Lanka, and Bangladesh. Discover the details of this strategic collaboration and its implications for both brands.
Superdry has officially solidified its strategic partnership with Reliance Brands Holding UK Ltd (RBUK), India’s premier retailer. This landmark collaboration involves a joint venture agreement focusing on intellectual property (IP) and brand assets.
Under the agreement, Superdry is set to transfer its IP assets, encompassing the brand itself and related trademarks, to the joint venture entity operating in India, Sri Lanka, and Bangladesh. Ownership of the joint venture will be divided, with RBUK holding a majority stake of 76%, and Superdry maintaining a 24% interest.
RBUK, an integral part of Reliance Retail Ventures Limited, operates through Reliance Brands Limited (RBL). RBL has been Superdry’s exclusive franchise partner in India since 2012, marking a longstanding and successful partnership.
The total value of this strategic alliance is £40 million, with Superdry’s investment amounting to £9.6 million. This investment is anticipated to generate gross cash proceeds of approximately £30.4 million, equivalent to £28.3 million after considering fees and taxes.
Post-transaction, RBL will retain its role in overseeing brand operations within the specified territories, further strengthening the established collaboration between RBL and Superdry.
RBL boasts a vast retail presence across India, with over 18,000 stores representing 50 luxury fashion brands in 7,000 towns. Its total shopping area exceeds an impressive 65 million square feet. Superdry’s growth trajectory in India since 2012, coupled with the nation’s growing economy, a burgeoning population of affluent consumers, and an upward trend in apparel consumption rates, makes the Indian market an attractive proposition for the Superdry brand.
Superdry’s decision to engage in this partnership underscores its belief that RBUK, as the preeminent fashion retail operator in India, is optimally positioned, with a majority IP ownership stake, to maximize the growth potential within the region.
All of Superdry’s brand IP assets in the designated territories will be consolidated within the new joint venture entity. The agreement also outlines provisions for long-term collaboration, encompassing the utilization of innovative designs, customary IP co-existence arrangements, and standard provisions pertaining to IP rights upkeep and enforcement.
This partnership empowers Superdry with a perpetual, irrevocable, and sub-licensable license to continue manufacturing goods within the specified territories. The collaboration further entails Superdry supplying finished products to Reliance at standardized commercial terms.
While the deal has secured approval from Superdry’s board, it remains contingent on the agreement of shareholders and the consent of the company’s lenders. The completion of this transformative partnership is anticipated over the next few months.
Superdry views this strategic collaboration with Reliance as an ideal opportunity to fuel its growth in the designated territories, enabling the company to concentrate on expanding its brand presence and increasing sales in its more established markets, where it boasts a robust foothold.
From a financial standpoint, the South Asian IP segment contributed approximately 1.8% of the total group sales for Superdry in the fiscal year ending April 2023. This translated to revenue of £11 million and pre-tax profit of £2.6 million, inclusive of centralised costs allocation.
The net proceeds stemming from this collaborative venture will fortify Superdry’s balance sheet, enhance liquidity, and serve as crucial working capital, reinforcing its ongoing Turnaround Plan.