‘Anita Dongre doesn’t want to be seen as discount-led fashion brand anymore’

The company will also look at giving its private equity investor General Atlantic an exit in the next one to two years by bringing in new investors, Yash Dongre, the company’s chief executive officer (CEO) told Mint in an exclusive conversation. The company runs luxury brand Anita Dongre as well as premium brands AND and Global Desi with a large presence in the women’s wear segment.

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

“For the last two years, we have focused on consolidation and profitability. We have fewer stores in some cities but are also using better materials in our clothing, which customers are recognizing. We don’’t want to be seen as a discount-led brand anymore. We are not closing any more stores and are done with the consolidation,” Dongre said.

About two-thirds of its ₹500 crore revenue comes from the two brands, and the remainder from the luxury business. This year, the business is targeting a similar revenue to last year’s. Ratings agency Icra forecasts the group’s revenue to be in a range of ₹500-550 crore in FY25, against ₹606 crore in FY23. It attributed the decline to industry-wide demand headwinds and general inventory liquidation at steep discounts.

The company has 11 Anita Dongre stores, including one in New York that it opened in 2018 and one in Dubai. It will look to add one more store in each of these countries in the near future. It will also grow to other international markets in the Gulf Cooperation Council region or the six West Asian countries—Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain and Oman. “Wherever we grow internationally, it will largely be to sell occasion wear 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 organized players to do so in the country. Back then, Ritu Kumar was the only other brand that also had private equity— Singapore-based Everstone had bought into Ritika Pvt. Ltd after investing $16.6 million in 2014. That same year, General Atlantic purchased about a 23% stake in the Dongre-owned fashion house AND Designs India Ltd from Future Lifestyle Fashions Ltd. Today, it owns about 38% and the remaining is with the Dongre family. Typically, private equity firms invest for 5-6 years, but General Atlantic stayed on, possibly due to the pandemic.

“We have had strong partners that have worked with us. Back then, the fashion industry was never looked at as a serious investment, but today everyone’s keenly watching the sector. We are opening new stores and that requires capex. So we may consider another round of funding and our existing investor partner will also look at an exit, since they have been with us for a long period of time and in the next one to two years, there will be some changes,” Dongre said.

In 2021, Aditya Birla Fashion and Retail Ltd (ABFRL) acquired a 51% stake in Sabyasachi Mukherjee’s fashion house for about ₹398 crore, followed by a 33.5% stake in Tarun Tahiliani’s couture label in February for ₹67 crore. That same year, Reliance Brands acquired a 40% stake in Manish Malhotra’s MM Styles. Next year, in 2022, ABFRL announced a strategic partnership with designer Masaba Gupta, acquiring 51% stake in the brand House of Masaba for ₹90 crore. “A lot of the families in fashion have sold off a majority stake. But we are very happy to run it as majority owners for now,” Dongre added.

There was a rapid post-pandemic growth for the clothing industry in 2022, followed by a sharp decline across categories in 2023. Dongre said when the pandemic hit (in early 2020), a year-and-a-half after that till the end of 2021 was quite challenging for the entire retail sector. “In 2022, there was a huge amount of revenge buying. We were better off in 2022, but by summer of 2023, there was a drop in demand. The whole of FY24 was a discount year for the entire clothing industry because of excess stock produced in 2023. The shoppers are now hooked to discounts, but we want to be completely discount-free eventually,” he said.

On the overall industry, Dongre said that newer formats like Tata-owned affordable clothing brand Zudio have also disrupted the market. They have challenged formats like Shoppers Stop, Pantaloons, etc., and a lot of shoppers are going there now. Many firms are even advancing their end-of-season sales and extending them for longer periods because of the unprecedented discounts being offered online, said Dongre.