India’s top retailer, Reliance, will add 250 more Future Retail (FRETAIL) stores to its portfolio after the company failed to make lease payments for the outlets to Reliance, two people with direct knowledge of the matter told Reuters on Monday.
The plans – which sources said will be executed within weeks – come after Reliance took possession of and started rebranding about 200 of Future’s Big Bazaar supermarkets over the weekend, and is set to further hollow out Future, which has been at the centre of a pitched battle between Reliance and Amazon.com Inc (AMZN).
The move over the weekend led to suspension in online and offline supermarket operations for Future, the country’s second largest brick-and-mortar retailer.
Reliance’s move assumes significance as it follows failed efforts since 2020 to close a $3.4 billion deal to acquire the retail assets of Future.
Future’s partner Amazon has blocked the transaction by citing violation of contracts. Future denies any wrongdoing, but a Singapore arbitrator and Indian courts have backed Amazon’s stand so far.
Amazon is likely to challenge Future’s move of store transfers in Indian courts, a third source told Reuters.
Future, Amazon and Reliance did not respond to requests for comment. Future told stock exchanges on Saturday the company was “going through an acute financial crisis” and “scaling down its operations” to reduce losses.
Over the months, Reliance had transferred leases of some stores of the debt-laden Future to its name and sublet them to Future. It is now taking possession of the stores as Future did not make lease payments, sources have told Reuters.
After taking control of 200 of Future’s flagship Big Bazaar stores, Reliance now has plans to take over another 250 stores in coming weeks and rebrand them as Reliance outlets, said the sources, who declined to be named as the plan is not public.
One of the sources said this could include Future’s apparel outlets “Central” and “Brand Factory”.
With the latest move, Reliance will effectively take over operations of roughly a third of Future’s 1,500 outlets in India.
Despite the store transfers, Reliance has told Future, it will not change the terms of their 2020 proposed deal, said one of the sources.
12:42 Feb 28, 2022 Reuters