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(Sharecast News) - Superdry said on Wednesday that it has struck a £40m partnership deal with India's Reliance Brands, sending shares in the struggling fashion retailer sharply higher.
The London-listed firm has agreed to sell Reliance its South Asian intellectual property for £40m, which is expected to generate gross cash proceeds of around £30.4m after a £9.6m investment in the joint venture.
Once the deal completes, Reliance - India's largest retailer - will own 76% of the venture and will oversee all brand operations in India, Sri Lanka and Bangladesh. Superdry will own the remaining 24%.
Superdry said the deal provided the best opportunity for future growth in the three countries, allowing it to focus on strengthening its brand in more established territories "where it has the strongest expertise".
Shareholders welcomed the deal, and by 0930 BST the stock was trading 26% higher at 54.3p.
Victoria Scholar, head of investment at Interactive Investor, said: "Shares in Superdrug are soaring, reflecting the cash proceeds of the deal that will help support its struggling balance sheet as well as the potential for brand growth in India.
"The boost is a welcome development, and comes after a rocky period for Superdry.
"[It] has been dealing with the backdrop of weak consumer spending amid rising interest rates and inflationary pressures as well as a rainy summer, which dampened demand for its spring/summer collection."
Last month Superdry reported a full-year adjusted loss of £21.7m on revenues of £622.5m. Founder and chief executive Julian Dunkerton also warned that the start to the new financial year had been "tough", largely because of the unseasonably warm weather.
