Jabong in talks with Benetton’s Sanjeev Mohanty for CEO post3 min read . Updated: 28 Oct 2015, 02:51 AM IST
The restructuring comes at a time when the largest shareholders in Jabong parent Global Fashion Group, AB Kinnevik and Rocket Internet, continue to look for a potential suitor for selling the e-commerce firm
New Delhi: Online fashion retailer Jabong, which has seen an exodus of leaders over the past year, has a new senior management team in place, is close to name a new chief executive officer (CEO), and is pumping in fresh capital as it seeks to revive its struggling business and regain ground lost to rivals such as Flipkart, Myntra and Amazon India.
Gurgaon-based Jabong, owned by Global Fashion Group (GFG), is in advanced talks with Benetton India managing director Sanjeev Mohanty to take charge as the new CEO, according to two people aware of the development.
The company has also hired former Gaana.com product head Saurabh Goel as chief product officer; Sumit Jain, the former chief technology officer of HT Media Ltd’s digital business, as the chief technology officer; and Saurabh Srivastava from MobiKwik as the chief marketing officer, according to two people who spoke on condition of anonymity
In a statement, Nils Chrestin, interim CEO at Jabong and the chief financial officer at GFG, confirmed the appointments of Goel, Jain and Srivastava.
“We are in advanced discussions on a number of potential hires including the CEO. We do not currently have any further binding appointments and will announce those as soon as we can. In the meantime we do not encourage speculation on individual names," Chrestin said in the statement.
Mint reported in September that the online fashion retailer was searching for a new CEO as co-founders Praveen Sinha and Arun Chandra Mohan were leaving the company. While Mohan has already left, Sinha will leave in a couple of months.
The restructuring comes at a time when the largest shareholders in GFG, AB Kinnevik and Rocket Internet, continue to look for a potential suitor for selling Jabong.
Mint reported in September that Kinnevik was talking to multiple companies, including Paytm, for a potential sell-out of Jabong ahead of GFG’s proposed stock market listing.
Chrestin admitted in an interview that the investors did explore the option of a sale. He declined comment on whether the talks were still on.
“As group management and shareholders, we have to evaluate all options which we have. The one which is the most exciting... which will create the most largest shareholder value and will be beneficial for the employees and customers, is something that we are doing now. We are putting in place the new management team and fresh capital," he said.
The company is now looking to focus on profitability, Chrestin said.
“We are now in the next phase of development in the company where we are making a big push towards profitability and building a sustainable business."
One of the two people cited in the first instance insisted that “the talks haven’t died out".
“They are not getting the kind of valuation they are looking for and hence the change in strategy," this person said.
In September 2014, Rocket Internet merged Jabong with four other online fashion retailers to create GFG, an entity that was valued at €3.1 billion in July this year.
GFG houses the German e-commerce company’s fashion businesses from emerging economies, including Jabong, Latin America’s Dafiti, Russia’s Lamoda, West Asia’s Namshi and Zalora, which spans Southeast Asia and Australia.
Kinnevik is the largest shareholder in GFG with a stake of around 25%. Rocket Internet owns more than 21% of GFG.
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 posted sales of ₹ 811.4 crore and a loss of ₹ 454 crore in 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 have managed to gain significant market share from specialty firms such as Myntra (owned by Flipkart Ltd) and Jabong.
Jabong currently offers more than 190,000 products from 1,800 brands, including well-known international brands and its own labels.
Since the beginning of 2015, investors have pumped over ₹ 300 crore into Jabong, according to documents filed with the Registrar of Companies.
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. Flipkart acquired Myntra in May 2014 and has been pumping in hundreds of crores of rupees to expand its offering and give deep discounts to boost sales growth.
Chrestin believes that with the new team in place and fresh capital from GFG, “Jabong is equipped to develop the success that the team has already built here".