After two decades lull, Levi Strauss & Co has finally turned around its business in India. The American denim company has managed to report a net profit of Rs 49 crores for the fiscal through March 2014 against a Rs 161 crores loss the previous year, as per its latest filings with the Registrar of Companies (RoC). Revenues grew 24 percent over the fiscal year 2012/13.
The company was able to book profits riding on its flagship Levi's brands, R&D in terms of product innovation as well as consolidation of franchisees. Now the company expects the brand’s growth to accelerate in the country. Last year, Levi Strauss witnessed a sharp downfall in India revenues which declined 35 percent at Rs 484 crores after pulling off of its mass brand Denizen in the country. “Price rise coupled with low consumer sentiment impacted demand in the marketplace resulting in higher inventories. Additional costs had to be incurred on discounting during the end-of-season sale and on consumer promotions to stimulate demand, significantly impacting profitability of the company. Similar trends were observed across all key listed apparel brands,” the company had said in a filing with the RoC.
Levi's enjoyed leadership status with double the size of its nearest rival until a year before FY13. In FY12 it had reported sales of Rs 741 crores against Benetton's Rs 430 crores. However, when leading global brands are lining up to enter the lucrative Indian market, Levi’s pulled its shutters on many of its stores while also phasing out a few brands like Dockers, Sykes, Signature and Denizen in the country.
The US-based brand had accepted the slow business in the Indian market in its annual report last year. “In Asia, revenues declined due to stiff economic headwinds in the key markets of China and India, and the exit of the Denizen brand. We’ll continue to focus on key emerging markets, focusing on getting our business back on track in China and India,” the company said.