Cost cutting measures has forced Paris-based fashion retailer Etam to withdraw its 50:50 joint venture with the Future Group (through Pantaloon Industries).
Restricting its lingerie and clothing brand in certain markets like France and China, Etam is also withdrawing from other European countries such as Belgium and Italy.
According to Future Group, the product profile of Etam did not fit into their customer profile. Other reason being cited for calling off JV is the appreciation of the Euro coupled with steep import duties, making it a non-viable business to be in for Future Group.
The less than two-year-old venture recorded an Rs18 crore turnover last year. It was formed to develop the Etam’s lingerie and ready-to-wear businesses drawing on the experience of its partner The Future Group.
The company had set up 14 exclusive Etam branded stores and another 37 shop-in- shops across the country, all of which are expected to face a closure in the near future.
We believe that closure of this JV will not influence Pantaloon’s long-term growth. We maintain our BUY recommendation on Pantaloon Retail with target price of Rs239.