Friday 15 April 2016

Jabong narrows losses, still finds no takers

Leading fashion marketplace Jabong is searching high and low to find someone to buy its business, say reports. The company is finding it difficult to keep the sales up without the discounted model. This could be a reason why Rocket Internet and Kinnevik, Jabong’s main investors are trying to quit India.
“They just want to park the company somewhere, find a home for it,” says a person familiar with the proceedings.
The company has devalued itself from $1 billion to $100 million, but no one is biting. Recently Kishore Biyani’s Future Group purchased Rocket group’s FabFurnish, but declined to pick up Jabong as well. Rocket Internet wanted Future to take over Jabong as well, but Biyani did not oblige.

Losses fall, but sales fall too

The company was able to bring down its losses by roughly Rs. 112.8 crores after curbing its discounts. However, the rate of sales also dropped by 7%. Its GMV has also fallen, admitted the company in a statement to investors,
“Increased focus on gross profit margin, unit economics and overall profitability resulted in net revenue and GMV decline in Q4.”
CEO Sanjeev Mohanty says,
“Jabong is bringing in a very frugal culture and operating like how a good retail offline business should operate.”
These factors could be rendering Jabong an unattractive proposition to prospective investors. The company had talks with Amazon in 2014 to buy Jabong, valued at $1.2 billion, but it did not work out.
It also held discussions with Paytm and Snapdeal, none of which appear to have worked out.
Some experts are suggesting that Jabong bring down its asking price even more, or add to its bank balance. The prospects sound worrying, but if Rocket wants someone to adopt Jabong, it might have to end up pandering to the market demands.

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