Future revives JV deal with Skechers shoes

Meghna Maiti, Financial Chronicle

Mumbai, February 22, 2012

Kishore Biyani, whose proposed licensing and distribution venture (JV) with US footwear retailer Skechers fell through last year, has revived partnership plans with the foreign firm. It has even seconded one of its senior most executives Sanjeev Agrawal previously joint CEO at Future Value Retail as CEO of the proposed JV.

“The group is in the process of signing a JV agreement with Skechers and Agrawal will head this venture,” said at least three company officials in the know of the development. Future Group already has a 50:50 joint venture with UK-based footwear brand Clarks which is steadily scaling up.

“The footwear segment is seeing evolution in terms of product mix, pricing and demand growth, helped by the availability of international brands,” said Devangshu Dutta, CEO, third Eyesight, a consulting firm focused on retail and consumer products sector.

Earlier Future group had tied up with Liberty Shoes in a joint venture that was scrapped because of poor customer response. India is one of the strategic markets for Skechers and the company is said to have done good research over the last three years to establish the right strategy and partnership to develop the brand in India.

An email sent to Kishore Biyani, group CEO at Future group on February 20, 2012 seeking comments on the Skechers JV did not elicit any response till the time of going to press. Sanjeev Agrawal, ex-joint CEO at Future Value Retail said, “No comments.” Skechers USA in an email said, “Your email has been forwarded to the appropriate department for review.”

Purnendu Kumar, vice president at Technopak Advisors said, “The growth opportunity in the footwear segment is very high primarily because of low penetration in terms of point of sales, number of brands. There is pent-up demand in the market. Growing affluence is also driving demand in this category.”

Skechers USA, incorporated in 1992, designs and markets Skechers-branded lifestyle footwear for men, women and children under several lines such as those for shaping up, running and walking. The over $ 2 billion Skechers had signed a deal with Pantaloon Retail in the year 2009 to licence and distribute Skechers footwear and apparel in India. The deal involved Winner Sports, a wholly owned subsidiary of Pantaloon Retail India (PRIL) as the licensee and distributor of Skechers footwear and apparel through Future Group’s retail format Planet Sports.

The market for premium shoe products is growing at 15-20 per cent annually, according to Technopak Advisors. The growth potential has prompted several firms to enter the market in the past few months. Tata global trading arm Tata International started its chain of stand-alone stores, Tashi, targeting the segment late last year. Reliance Retail has entered into a licence dela with US-based Timberland.

Future Group’s other footwear JV Clark, has five standalone stores and around 10 shop-in-shops across India. “This venture will take two years to become profitable and it’s now in scale-up mode. By the end of the next financial year, we are confident that cash accruals from existing stores will be able to take care of the growth requirements of the lifestyle footwear, bags and accessories joint venture,” said a top Future group official involved with that business