Arvind Fashions, Gap Inc terminate franchise business in India

Arvind Lifestyle Brands, a wholly-owned subsidiary of Arvind Fashions (AFL) and Gap Inc., have decided to mutually terminate their franchise business relationship in India.

Due to circumstances post the Covid-19 pandemic, both companies agreed that a mutual termination was in best interest. Both the companies will work out modalities regarding transition of the Gap business.

Arvind Lifestyle Brands has appointed an investment bank to find a buyer for the Gap business, which delivered revenues of Rs 182 crore (4.7% of AFL's consolidated turnover) with a PBT loss of Rs 34 crore in FY2020.

On a standalone basis, Arvind Fashions reported net loss of Rs 17.71 crore in Q1 June 2020 compared with net profit of Rs 0.79 crore in Q1 June 2019. Net sales tanked 82.7% to Rs 29.65 crore in Q1 June 2020 over Q1 June 2019.

Arvind Fashions is India's leading casual and denim player, a lifestyle powerhouse with a strong portfolio of fashion brands catering to consumers across sub-categories and price points.

Shares of Arvind Fashions were down 0.56% to Rs 123.95. The scrip has jumped 12.12% from its 52-week low of Rs 110.55 hit on 20 May 2020.

On the technical front, the stock's RSI (relative strength index) stood at 38.005. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

The stock was below its 50-day moving average (DMA) placed at 135.56 and its 200-day moving average (DMA) placed at 218.26.

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