Arvind Fashions - A play on foreign brands in clothing & cosmetics

Dear Fellow ValuePickr Members,

Due to recent market slowdown an interesting company known as Arvind Fashions Ltd that recently demerged from Arvind Ltd has caught my attention after a severe price/value correction. It is a newly listed entity that went for few upper circuits post listing and now is around half the price of its listing. It is owner/ master franchise of many foreign brands like Gap, The Children’s Place, Sephora, Tommy Hilfiger, USPA, Aeropostale, Arrow, GANT, Izod, Nautica, Ed Hardy and many more for their india operations. There were some news about them discontinuing few brands like Ed Hardy, GANT due to lack of demand.

The company has posted net loss for the last two quarters and as per their recent BSE announcement, The company is planning a Rs.300 Crore right issue. The company has confirmed that they have successfully exited GANT and Nautica in Q2 FY20. Moreover, The management has opted for a very aggressive strategy of moving from retail oriented distribution to a wholesale and online oriented distribution and as a result incurred loss in Q2 FY20.