Arvind Fashions Limited (AFL), the retailer of brands such as Calvin Klein, Tommy Hilfiger and US Polo Assn, is raising Rs 200 crore on rights basis to strengthen its balance sheet this year.
“The Board has approved issue of equity shares for an amount up to Rs 200 crore on rights basis. The Board evaluated various options and is of the view that rights issue would be an equitable mode of fund raising as it gives its shareholders an equal opportunity to participate in the growth of the Company. The Company intends to utilize the funds to meet its objectives of strengthening its balance sheet and for general corporate purposes, including working capital for growth,” AFL stated in a stock exchange filing to the BSE.
In July, Walmart-owned Flipkart had picked up about 27% stake in AFL’s newly formed subsidiary Arvind Youth Brands which owns denim label Flying Machine. In the third quarter ended December, AFL stated that Flying Machine registered 70% online growth aided by Flipkart strategic partnership.
AFL on Wednesday widened its net loss to Rs 66.62 crore for the quarter ended December as the impact of the pandemic persists.
The casual wear and denim player reported a 14.22% drop in revenue in the third quarter at Rs 911.13. A year ago, it had sales of Rs 1062.28 crore with net loss of Rs 46.26 crore.
In a stock exchange filing, the fashion retailer, said revenue, however, grew sequentially by 106%, led by strong festive season and winter shopping, along with increased footfall across stores as lockdown gradually lifted and continuing progress in the ecommerce channel.
“Our focus on digital and omni-channel initiatives and a deep cost focus continue to deliver robust outcomes. At the back of strong Q3, we expect H2 FY21 to be significantly better in terms of sales and profitability growth,” said J Suresh, chief executive of AFL.
The company said its online channel sales increased by 130% Y-o-Y in the third quarter and direct-to-consumer online sales witnessed 3.3X growth over last year and now comprise 38% of its digital sales. Innerwear and footwear division is on the growth path, the company added.
AFL added that the company is optimistic of sales in the upcoming season with the benefit of lower inventory level, new ways of buying resulting in freshness of stock across channels and improved customer sentiment, barring any rise in Covid-19 pandemic cases.
So far, the company registered higher offline sales recovery in January over December. However, product cost is estimated to go up in the fourth quarter due to sharp increase in cotton and yarn prices. The company said that margin pressure would be mitigated through price increase.
“Our leadership positioning in casual, denim and prestige beauty segment will enable AFL to pursue accelerated growth in the long term and create value for all our stakeholders,” Shailesh Chaturvedi, the newly appointed MD and CEO said in the stock exchange filing.
In the ongoing fiscal, AFL discontinued retail operations for brands Gap, Ruf & Tuf, NewPort, The Children’s Place and Hanes.