At a time when India opened up the gates of FDI into multi-brand and single brand retail, there comes Esprit’s plan to exit the Indian market by the end of 2012.

It operates in India through a distribution agreement with Madura Fashion and Retail, Aditya Birla Group’s lifestyle retailer, since 2005.

Esprit had been incurring losses of around R20-25 Cr per annum.

In contrast Madura Fashion wanted to renew the seven-year old agreement, also with the intention to enter into a JV, but with a negative response from the MNC.

Esprit had shut down its stores at Bangalore, Mumbai and Delhi last year which were converted into outlets of Madura brands like Louis Philippe and Allen Solly.

This at a time when foreign retailers like Italian accessories firm Gruppo Coin and French clothing company Celio have begun talks with their Indian JV partners to buy out or up their stakes.

A host of brands have entered the Indian market such as Zara, Forever 21 and Vero Moda, trying to tap the rising middle-income urban spending in the country.

Esprit operates more than 770 retail stores worldwide and distributes products to more than 15,150 wholesale locations around the globe. It has more than 1.1 Mn sq. mts. of retail space in 40 countries.

Esprit was till now importing its goods and the current rise in rupee depreciation might have made it unviable for the company to operate as against manufacturing locally which requires procurement from local suppliers, a move potentially going against the company’s operating policy.

Also the selling of foreign apparel brands by e-commerce ventures like Myntra, snapdeal, yebhi and homeshop18 have increased the competition for physical store operators.

In the space, Arvind Lifestyle Brands recently acquired the business operations of British fashion retailers Debenhams, Next and American brand Nautica in India from Planet Retail.

British footwear retailer – Pavers was also planning to acquire stake in its franchise partner Triton Retail in India.

RIL controlled – Reliance Brands was planning to acquire 50% stake with management rights in the proposed JV with Italian fashion apparel maker - Grotto, which owns jeans brand GAS.

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