Aditya Birla Fashion Prioritises Profitability Post-Demerger, Plans Aggressive Store Expansion

Following its recent demerger, Aditya Birla Fashion and Retail Ltd (ABFRL) is shifting focus towards profitability and margin growth, with Chairman Kumar Mangalam Birla outlining a strategy centered on sustainable expansion, stronger unit economics, and sharper brand positioning.

In ABFRL’s FY25 annual report, Birla said the company is targeting a 300 basis point improvement in EBITDA margins for its key retail format Pantaloons over the next five years, driven by operational efficiencies and network optimisation.

“We will prioritise profitability and strengthen overall network health. Our strategy is to align with major fashion consumption themes and evolving consumer behavior,” Birla told shareholders.

Post-demerger, ABFRL and the newly listed Aditya Birla Lifestyle Brands Ltd (ABLBL) will operate as dual growth engines. ABFRL continues to manage the ethnic and digital-first portfolio, including designer-led labels such as Sabyasachi, House of Masaba, Shantnu & Nikhil, and Tarun Tahiliani, as well as mass-appeal brands like Pantaloons, Style Up, and the TMRW digital brands.

Meanwhile, ABLBL manages legacy brands including Van Heusen, Louis Philippe, Allen Solly, Peter England, Reebok, and American Eagle, and was listed on the bourses in June 2025.

The demerger, Birla said, gives each business the flexibility to pursue tailored strategies. ABFRL is also being strengthened through a $490 million capital raise via a QIP and preferential issue to fund its next growth phase.

ABLBL is targeting double-digit revenue and EBITDA growth over the next five years, with 250 new stores set to open in FY26, split between company-owned and franchise models.

ABFRL plans to add 20–25 stores annually, with each store expected to become profitable within its first year and reach payback in about four years.

The value fashion vertical Style Up is focusing on improving sales-per-square-foot and profitability. Around 50 new Style Up stores are planned in FY26, with a goal of scaling the network to 200+ outlets by FY28.

“We aim to strengthen both premium and value segments, ensuring strong unit economics and scalable growth,” Birla said.

With strong consumer tailwinds and India’s expanding middle class, the group sees significant opportunity in both premium and mass-market fashion categories.

(Source: PTI)