Skechers, a US-based lifestyle and footwear brand, has been a part of the Indian market indirectly for a long time. Earlier it had taken the merger and partnership route to carefully make a presence in India. Now, it seems that the company has decided to go solo, and expand its operations vertically.
Skechers has bought Future Group’s 49 per cent stake in their joint venture for about Rs 580 crore. The company earlier used to sell its product via several B2B and B2C platforms in India, and the joint venture with Future Group was a major part of that.
US’ second largest shoe brand had entered in India in 2012 and claims to have been witnessing significant year-on-year growth ever since. Last year, it has seen over B2B and B2C sales increase by at least over 10 per cent. Further, the number of pairs sold rose by 80 per cent to 2.7 million.
These figures, reflecting the market’s potential for growth, boosted the company’s plans to have a larger independent presence in India to open 80-100 more stores out which they will own and control 20 stores directly. On the worldwide scale, the company has 223 self-owned stores which also count 61doors, as per ET report.
The fact that Skechers has had a huge conflict with Flipkart in July last year, can also be one of the motivators behind the decision to opt for an independent run. Flipkart had engaged in the selling of fake Skechers shoes imported from China via its sellers over the platform. When Skechers had filed a case, Flipkart had reportedly offered cash and business proposition as an out of court settlement. However, the case is still open.
For Kishore Biyani led Future Group this exit is a positive move. It had expected to clock Rs 2,500 crore in revenue from footwear sales this year, and it already owns 3 popular chains for that – Lee Cooper, Converse, and Clarks. Earning Rs 580 crore in the exit is beneficial for the company as it will be able to invest the money in the best of the options.
Not to forget that it’s term sheet agreement with Amazon has been put on hold after the new FDI norms. In this agreement, Amazon was all set to buy 10-15 per cent stake in Future Group for about Rs 2,500 crore, but put a brake on the processings after the FDI policy change was enforced this February.