Jabong, which recently shut its design office in London, is under pressure from its parent to focus on cutting losses
Online fashion retailer Jabong.com is searching for a new chief executive officer (CEO) as co-founders Praveen Sinha and Arun Chandra Mohan are leaving the company, three people aware of the development said.
Mohan confirmed the news of his departure and said he will be starting his new venture in the Internet mobile segment.
While Mohan is expected to leave this month, Sinha may exit the company by the year end. “The hunt for a new CEO has been on for over a month now and the global team has given the mandate to an international executive search firm," one of the three people said on condition of anonymity.
The Economic Times reported on 23 July that Sinha and Mohan are moving to new roles within Rocket Internet, the German venture capital group which is one of Jabong’s promoters. But people cited above confirmed that both founders will be moving out of Rocket.
Jabong, which recently shut its design office in London and is shifting its design hub back to India, is under pressure from its parent to focus on cutting losses.
Jabong fired its 10-15 people team in London and shut the office that designed its western private label, the three people said.
Sinha did not respond to Mint’s email queries. Emails sent to Jabong’s global office did not elicit any response.
While the reason for the departures is not clear, Sinha, too, is believed to be starting a new venture, according to two people cited above.
In September 2014, Rocket Internet merged Jabong with four other online fashion retailers in Latin America, Russia, Middle East, South-East Asia and Australia to create Global Fashion Group (GFG), an entity that was valued at €3.1 billion in July.
GFG houses the German e-commerce company’s fashion businesses from emerging countries, including India’s fashion website Jabong, Latin America’s Dafiti, Russia’s Lamoda, Namshi of the Middle East and Zalora of South-East Asia and Australia.
Rocket Internet and Swedish Investment AB Kinnevik currently hold close to 21.9% and 25% stake, respectively, in GFG.
The group is pushing its portfolio firms to improve their financial matrix and achieve profitability ahead of a stock market listing, according to two of the three persons mentioned above.
Jabong posted sales of ₹ 811.4 crore at a loss of ₹ 454 crore for the year ended 31 December.
Fashion is an important, high-margin product category for online retailers in India and marketplaces such as Flipkart, Amazon and Snapdeal are trying to increase their presence in the segment by offering aggressive discounts to win market share.
Jabong currently offers more than 190,000 products from 1,800 brands, including well-known international brands and its own labels. Since the start of 2015, investors have pumped in over ₹ 300 crore into Jabong, documents filed with the Registrar of Companies show.
But while Jabong was neck and neck with rival Myntra until early 2014, the latter has significantly increased its market share over the past 15 months or so. Flipkart acquired Myntra in May 2014 and has been pumping in hundreds of crores of rupees to grow its offering and give deep discounts to boost sales growth.
Rocket Internet portfolio companies in India have witnessed a churn in the top management during the last three months. Online furniture company Fabfurnish founders Mehul Agrawal and Vikram Chopra left the company to start their own venture. In August, online food ordering platform FoodPanda’s founder Rohit Chadda stepped down.