The demerger of the lifestyle business from Aditya Birla Fashion and Retail (ABFRL) has given flexibility to the latter to pursue aggressive growth, chairman Kumar Mangalam Birla said in the company’s latest annual report for FY25.
Addressing shareholders, Birla said ABFRL would focus on organic growth and sustainable profitability, targeting earnings before interest depreciation and amortisation (Ebitda) margin improvement of 300 basis points in five years for its retail chain, Pantaloons.
“We will prioritise profitability and strengthen overall network health. Our long-term strategy remains clear, which is to be present across all major fashion consumption themes aligned with evolving consumer behaviour,” Birla said.
Dual growth engines post demerger
Apart from Pantaloons, ABFRL houses digital-first brands under TMRW, along with a host of ethnic brands, which it owns, such as designer-led Sabyasachi, Shantnu & Nikhil, House of Masaba, and Tarun Tahiliani. It also has premium ethnic wear brands of Jaypore, Tasva & TCNS portfolio under it.
The demerged Aditya Birla Lifestyle Brands (ABLBL), on the other hand, has brands such as Louis Philippe, Van Heusen, Allen Solly, and Peter England, along with Reebok and American Eagle. This business was listed on the bourses in June this year.
Describing ABFRL and ABLBL as “dual growth engines”, Birla said the two companies were strategically positioned to capture emerging opportunities in the Indian fashion industry.
“With India’s dynamic economic growth, an expanding middle class and rapid shifts in consumer behaviour, we are confident that the opportunities ahead are significant,” he said.
The Aditya Birla group was also strengthening ABFRL by raising $490 million through a combination of a qualified institutional placement (QIP) and preferential issue, he said.
Store expansion and profitability targets
Over the next five years, ABLBL had targeted to deliver consistent double-digit growth in revenue and Ebitda, driven by a combination of like-to-like (LTL) growth and continued retail expansion.
“Over 250 stores are already in the pipeline for FY 2025-26, reinforcing the company’s growth momentum. The upcoming store additions are planned to be a balanced mix of franchise-operated and company-owned stores,” he said.
On ABFRL, the plan is to add 20-25 new store additions per year, with each expected to achieve profitability within the first year of operations and a payback period of around four years.
“At Style Up (value fashion chain), the emphasis will be on improving unit economics by increasing sales-per-square-foot and overall profitability. We aim to open around 50 stores in FY 2025-26, followed by an incrementally aggressive expansion in the subsequent years, scaling the network to 200+ stores by FY 2027-28,” the company said.