Aditya Birla Fashion plans to trim Forever 21 to turn the label profitable

NEW DELHI: Aditya Birla Fashion & Retail (ABFRL) will downsize and rightsize the Indian franchisee outlets of US brand Forever 21, in changes aimed at turning the label profitable by the end of this fiscal, according to a top executive of the company.
"Our goal is to turn positive in Forever 21 next year, which is the first landmark we have set for the brand," Ashish Dikshit, business head at ABFRL, said during a conference call with investors after announcing the fourth-quarter results. "It is going to come both through some of the levers on the margin side that we are playing, as well as the rapid expansion and the right business model that we are doing with the new stores that we are launching. So, growing the business rapidly and turning it positive is the first goal post for next year."

Mumbai-based ABFRL had acquired the retailing rights of Forever 21 last year from Diana Retail, a wholly owned subsidiary of DLF Brands, through a slump sale of the business undertaking for $26 million. ABFRL had also entered into a franchisee agreement with Forever 21for the online and offline channels for the Indian market.

Dikshit said ABFRL will open more economically viable Forever 21 stores. "Both in terms of size and rental, and clearly the newer stores that we are signing are far more economically viable and more profitable," he said.

There are 17 Forever 21 stores in the country, a majority of which are in the range of 15,000 sq ft to 20,000 sq ft. ABFRL plans to roll out about 15 new 8,000 sq ft to 12,000 sq ft stores this fiscal. "We are also planning to resize two of our existing stores, which were much bigger," a company spokesperson said.