SKNL's woes drown Reid & Taylor

The brand once had Bollywood megastar Amitabh Bachchan and James Bond star Pierce Brosnan as its ambassadors

A Reid & Taylor store in the busy Flora Fountain area in Mumbai has a banner on the frontage which says: '50 per cent off: End of season sale.' When most brands and retailers have long wound up their end-of-season sales, the banner in front of the showroom says it all about the marquee-suiting brand, which once "bonded with the best", had Bollywood megastar Amitabh Bachchan and James Bond star Pierce Brosnan as brand ambassadors.

Reid & Taylor also held polo championships to promote the brand, reinforcing its super-premium positioning.

The store staff nonchalantly says that the merchandise is old and it is part of clearance sale and "fresh stock will come within a month". The wait for him as well as his customers is surely going to be a long one.

Reid & Taylor was launched by S Kumar's Nationwide (SKNL) in India in 1998 with a fabric plant at Mysuru in Karnataka, which produces worsted and poly viscose suiting. SKNL, which owned rights to manufacture and market the brand here, sells formal and casual wear suits, jackets, trousers, shirts, ties and accessories, T shirts, jeans and weekend wear.

The apparel was produced by a dedicated facility in Bengaluru. SKNL had also claimed Reid & Taylor was the finest cloth that was available in the country and was the second largest suiting brand in India in the luxury segment.

The high point came when Singapore's wealth fund GIC invested Rs 900 crore. SKNL planned an ambitious Rs 1,000 crore initial public offer (IPO) in 2011 which had to be shelved due to poor market conditions. Also, its plans to open 15 flagship stores and 160 exclusive stores for Reid & Taylor did not materialise.

Those are now part of distant memory. Today, it owns only a couple of company-owned stores in cities such as Mumbai and franchisee stores elsewhere. Its advertisements have vanished from everywhere - TV, print and outdoor - though its products sell on e-commerce stores on discount.

So what went wrong with the aspirational brand?

Reid & Taylor's problems are synonymous with that of its parent's financial woes. Riding the boom years, SKNL did multiple acquisitions and had ambitious plans which led to a debt pile-up of Rs 4,484 crore as in March 2013, causing the company to default on its interest commitments that set off a chain of other problems.

At its peak in FY 2012, SKNL's profits jumped to Rs 470.84 crore, but it soon fell on bad times, leading the promoters to pledge their shares to financial institutions.

A former executive, who does not want to be named, says, "the company drew up plans thinking funds will come, but that did not happen. When you are highly leveraged, interest burden will suffocate you."

Sure enough, things went from bad to worse as the financial institutions started redeeming the pledged shares. According to BSE data, the promoter group and entities now hold just 3.59 per cent stake in the company.

Shelving the IPO of Reid & Taylor, coupled with damning impact of the economic slowdown did not help the brand either, say experts.

According to Prashant Agarwal, joint managing director at Wazir Advisors, SKNL cut corners everywhere after the financial problems started. "They spent less on advertising and marketing, produced less and limited the options. All these impacted the brand," says Agarwal.

According to him, if a brand is in the market, its products should be available in MBOs (multi brand outlets) and EBOs (exclusive brand outlets) in full range and the brand should advertise for top of mind recall. "Their products were available more in MBOs than EBOSs. If you advertise less, your sales will also reduce," he adds.

Nitin Kasliwal, chairman and managing director of SKNL declined to comment about Reid & Taylor.

A former executive with the company says: "It followed a strong brand ambassador-led strategy but did not deliver on the operations front. I feel somewhere it lost customer connect due to lack of innovation in merchandise and marketing."

A chief executive of a Mumbai-based textile company says SKNL paid high rentals for its stores stocking premium brands such as Reid & Taylor and Belmonte in a bid to build valuations. But this ate into its operating profits. Arvind Singhal, chairman of retail consultancy Technopak Advisors, says Reid & Taylor was one of the most successful launches in recent times. "The brand came in from nowhere and became successful. They had good advertising and good products but faced challenges due to larger issues," Singhal says.