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Walmart Flipkart deal will help Myntra and Jabong grow, says Ananth Narayanan

Walmart-Flipkart deal will help Myntra and Jabong grow, says Ananth Narayanan

Walmart-Flipkart deal will help Myntra and Jabong grow, says Ananth Narayanan
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By CNBC-TV18 May 12, 2018 3:30:04 PM IST (Updated)

Walmart will deal help accelerate Myntra and Jabong's journey, said Ananth Narayanan, CEO, Myntra and Jabong, and added the deal with Walmart was  historic milestone for the Flipkart group.

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Some of the company's brands could go global after the deal, he said. The company's brands include HRX by Hrithik Roshan, and Roadster,
Earlier this week, Walmart said it would buy a 77% stake in Flipkart for about $16 billion.
The deal is expected to close later this year.
Edited excerpts: 
Q: How will you use Walmart’s entry in terms of synergies for both Flipkart and Myntra?
A: It’s a historic deal for the Flipkart group. Walmart are our long-term investors. This is a major strategic investment for them. So on the Myntra-Jabong side they are very excited because it brings long-term capital.
It will hopefully help us accelerate our journey in terms of becoming the fashion destination in India. We are also into omnichannel and we have our own stores, so we also hope to benefit in terms of capabilities and learnings from the Walmart system.
So that will certainly be a benefit, but more than anything else it is just a long-term capital and an ability to think bigger and bolder for us which is what we are excited about.
Q: Since you spoke about capital, $2 billion is fresh issue and equity infusion that will be coming in. how much of that can we expect coming into Myntra and Jabong specifically or into the entire fashion segment portfolio?
A: I do not really know. The way we look at capital allocation is based on our overall business plan. At the current point we are well capitalized, we have our annual operating plan for 2019. As I have spoken to you guys before, we are aiming at about large numbers this time. So I do not think there is any change, I do not think there is any immediate capital allocation that is planned.
Q: Focus for Myntra has been to grow private labels. What kind of opportunity does this mean with Walmart coming on board? Walmart is very excited about the fashion segment per se, so what kind of opportunity does this throw up?
A: There are many opportunities both for short and mid-term. One, we can certainly benefit from learnings from Walmart around our global sourcing and how eventually it will help benefit of scale.
Second, some of our private labels perhaps could go global especially the Bollywood brands where there is Indian diaspora.
Q: You have brands like HRX, All About You, Dressberry, Roadster. Which of these brands are going to get global platform and are you saying most of the private labels are going to get the global platform with Walmart on board?
A: It’s too early to comment but I am hoping that a couple of brands especially the Bollywood ones, there will be a real opportunity especially when there is a large Indian diaspora outside globally.
So I think early days, don’t know yet but certainly excited about the possibility and its some of the things that we will be discussing.
Q: Walmart also has several private labels. Has there been any kind of discussion to bring Walmart’s private label like George for instance into the Indian market. Would that be part of the synergies?
A: We are thinking less in terms of synergy and more in terms of things where we can learn from each other and it is going to be very much of a pull model. So not yet but you never say never.
Q: In terms of revenue growth, what kind of incremental revenue do you expect to flow into most of these private labels purely from an outlook perspective with Walmart on board?
A: It’s too early to tell. I think in the next several months we will know a bit more about how we want to think about the next year. I think in the current year we are going to continue on our plan as is and we have ambitious plans which I have spoken about earlier, so that continues to be what we are going after.
Q: You had said earlier to us that you are expecting to breakeven in 6-12 months. So is that plan intact. Can that be sooner and what is the road to profitability looking like to you?
A: We are continuing to push to make sure that all the right investments are there for growth while the operating business continues to improve in profitability.
I think that journey we are continuing but we are starting new categories as I told you that personal care is something that we are now excited about.
Omnichannel is another area where we are making investments, we also opened as you know a small center in Palo Alto for data science. So we are also starting to make a bunch of investments for a long-term while continuing to grow the operating profits.
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