Tommy Hilfiger buys 50% in Arvind-Murjani JV

After partnering iconic fashion designer Tommy Hilfiger for 25 years to create a global fashion brand under the designer's name, Mohan Murjani, founder of Murjani group, is exiting the brand in India.

Tommy Hilfiger Group, currently owned by clothing conglomerate PVH Corp, on Thursday said it had bought out the 50 per cent stake of the Murjani Group in Arvind Murjani Brands (AMB) which has sub licence for its products in India.

The brand has also acquired Murjani Group's license for Tommy Hilfiger trademarks in India. Murjani had perpetual licensing rights for Tommy Hilfiger. Though Tommy Hilfiger did not disclose the terms of the deal, it is believed to be between $50 million to $60 million (aroundRs 250 crore), according to sources in the know. Mohan Murjani could not be reached for the comments.

Arvind will continue to remain as a joint venture partner and the redefined joint venture will continue its existing businesses going forward and take on the management of the other sublicensees in India, a release said. Candle Partners were the advisors to the Murjani group. According to sources, Tommy Hilfiger is doing business of aroundRs 200 crore in India and growing at 50 per cent every year.

For the Murjani Group, which had given up the franchises of two luxury brands Jimmy Choo and Gucci, this will be the third such exit. Mohan Murjani partnered with Hilfiger in 1985 to launch the American designer’s brand and company in the United States. In 2004, Murjani launched the Tommy Hilfiger brand in India and had perpetual rights in the country. Murjani later sublicensed the apparel, footwear and handbags businesses to AMB and separately sublicensed other product categories to other companies.

Tommy Hilfiger said the move was in line with similar steps the Group had taken in other markets to support its strategy of consolidating brand management and approaching markets in a more coordinated manner.

Fred Gehring, Chief Executive Officer of Tommy Hilfiger Group, said: “The transaction allows us to integrate India into our global platform for design and sourcing ensuring consistency of the brand while providing dedicated regional expertise where needed.”

“We are pleased to be continuing the Tommy Hilfiger brand’s partnership with Arvind with this exciting new venture. We believe that continuing the relationship will allow us to benefit from their expertise in the Indian apparel and manufacturing business, both with the Tommy Hilfiger brand, as well as other brands, including our sibling brands, IZOD and Arrow.”

Analysts expect the deal to help Tommy Hilfiger’s rapid growth. “Tommy, in India, has been a success story over the years and Tommy has outperformed competition consistently . I expect Tommy to become more aggressive in the Indian market . The customers can also expect to see a wider product range from Tommy's International range and overall more focus on building up the brand and connect with the Customer,” said Sharad Mehra, senior vice president, Technopak Advisors.

“It’s a step forward for Arvind as now they are the sole partners with Tommy in both the apparel and accessories space giving them the opportunity to expand. This is a perpetual license so I expect Arvind to be extremely committed to the relationship.”

Tommy Hilfiger products are distributed in India through a network of more than 80 standalone stores and shop-in-shops across 30 cities, including Delhi, Mumbai, Bangalore, Chandigarh and Hyderabad.