Launched in late 2013, HRX is a sports and lifestyle brand that is sold on Myntra and Flipkart. Apart from clothing and shoes, its products include belts, backpacks and wallets.
HRX will bring in sales of Rs.300 crore this financial year, up from Rs.100 crore last year, said Rajesh Narkar, vice-president, Myntra Fashion Brands observing that the deal would add an “attractive sportswear and lifestyle” brand in the on-line store's private brands collection.
Indians are looking to become healthier, more active and want more choice. Apart from a few international sports brands, there's a lack of choice for consumers in sportswear and lifestyle and there's massive scope to build a large brand in this segment. Buying an equity stake in HRX will align our vision with HRX's over the long term,” said Narkar.
HRX will become part of Myntra's growing portfolio of private brands. The company, which is owned by Flipkart, now owns 12 private brands, including HRX. Its largest private brand is Roadster, a casualwear offering.
Among online retailers, Myntra has by far been the most successful in building a large private brands' business ahead of its parent Flipkart and smaller rival Jabong. Increasing sales of private brands, which rope in higher margins than third-party brands, is one of the main drivers of Myntra's plan of achieving profitability over the next couple of years and more.
Myntra expects private brands to contribute up to 30% of its sales by March 2017, as against 20% at the beginning of the financial year. It is targeting gross sales (net of discounts but before product returns) of Rs.5,000 crore this year.
For HRX, selling a large stake to Myntra will mean getting access to analytics, data on customer preferences and more marketing power.
“What we bring is a deep understanding of the sportswear and lifestyle market, an understanding of the consumer and scale. When a brand launches on Myntra and Flipkart, it gets a nationwide scale immediately. We have detailed data on what consumers want and which areas a brand is popular in. This can help brands with their offline strategy, too,” said Narkar.
HRX plans to expand to offline stores in India this year, said Kamal Punwani, chief financial officer at Exceed Entertainment, which owns the rights to HRX along with Hritik Roshan. It also has plans to expand to countries in West Asia sometime this year.
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