Anita Dongre no longer wants to be seen as a discount fashion brand

The company will also consider giving its private equity investor General Atlantic an exit in the next one to two years by bringing in new investors, said Yash Dongre, the company's chief executive. mint in an exclusive conversation. The company manages the luxury brand Anita Dongre as well as the premium brands AND and Global Desi with a strong presence in the womenswear segment.

The fashion house is positioning itself as a premium player for its AND and Global Desi brands, and has been closing some stores to streamline its business. It currently has 150 outlets, down from 170 earlier. It has 140 exclusive stores and 11 in the luxury couture segment, Anita Dongre. It has closed several stores in markets like Lucknow and Raipur.

“Over the last two years, we have focused on consolidation and profitability. We have fewer stores in some cities, but we are also using better materials in our clothing, which customers recognize. We no longer want to be perceived as a discount brand. We are no longer closing stores and we are done with consolidation,” Dongre said.

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About two-thirds of its 500 crore revenue comes from the two brands, the rest from the luxury business. This year, the company is targeting a similar turnover to last year. Rating agency Icra expects the group's turnover to be in the range of 500-550 crores in FY25, as against 606 crore in FY23. It attributed the decline to industry-wide demand headwinds and general liquidation of inventories at steep discounts.

The company has 11 Anita Dongre stores, including one in New York, which opened in 2018, and one in Dubai. It plans to open an additional store in each of these countries in the near future. It will also expand to other international markets in the Gulf Cooperation Council region or the six West Asian countries: Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman. Wherever we expand internationally, it will largely be to sell second-hand clothing and where there is a huge Indian diaspora,” Dongre said.

The company raised private equity about nine years ago and was one of the first organised players to do so in the country. At the time, Ritu Kumar was the only other brand that had also raised private equity. Singapore-based Everstone had bought Ritika Pvt. Ltd after investing $16.6 million in 2014. The same year, General Atlantic bought about 23% stake in Dongre-owned fashion house AND Designs India Ltd from Future Lifestyle Fashions Ltd. Today, it owns about 38% and the rest is owned by the Dongre family. Typically, PE firms invest for 5-6 years, but General Atlantic has stayed put, perhaps because of the pandemic.

“We have had strong partners who have worked with us. Back then, the fashion industry was never considered a serious investment but today, everyone is watching the sector closely. We are opening new stores and that requires capital expenditure. So we might look at another round of funding and our current investor partner will also look at an exit because they have been with us for a long time and in the next one to two years, there will be changes,” Dongre said.

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In 2021, Aditya Birla Fashion and Retail Ltd (ABFRL) acquired a 51% stake in fashion house Sabyasachi Mukherjees for around 398 crore, followed by a 33.5% stake in couture brand Tarun Tahilianis in February for 67 crores. In the same year, Reliance Brands acquired a 40% stake in Manish Malhotras MM Styles. The following year, in 2022, ABFRL announced a strategic partnership with designer Masaba Gupta, acquiring a 51% stake in the House of Masaba brand for “Many families in the fashion industry have sold a majority stake in their business. But we are very happy to manage it as majority shareholders for the time being,” Dongre added.

The apparel industry witnessed rapid post-pandemic growth in 2022, followed by a sharp decline across all categories in 2023. Dongre said that when the pandemic hit (early 2020), the one and a half years after that till the end of 2021 was quite difficult for the entire retail sector. In 2022, there was a huge amount of revenge buying. We were better off in 2022, but in the summer of 2023, there was a drop in demand. The entire fiscal 2024 was a discount year for the entire apparel sector due to excess inventory produced in 2023. Buyers are now addicted to discounts, but we want to be completely free from discounts eventually,” he said.

Looking at the sector as a whole, Dongre said new formats like Tata-owned affordable apparel brand Zudio have also disrupted the market. They have challenged formats like Shoppers Stop, Pantaloons etc and many shoppers are now flocking to them. Many companies are even bringing forward their end-of-season sales and extending them for longer periods because of the unprecedented discounts offered online, Dongre said.

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