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Luxury brand retailers report loss in FY13 net profit

By Sujata Sachdeva

14 Nov 2014

Despite several studies indicating high prospects of luxury segment in India and even several luxury labels making a beeline to enter the country, domestic partners of foreign luxury labels in the country saw their net profit margins decline in the fiscal year 2013/2014.

Luxe brands count losses

Luxury Goods Retail, the joint venture of Gucci in India, saw its losses double to Rs 11.03 crores for the calendar year 2013, from Rs 5.3 crore a year-ago, according to a filing by the company on October 29, with the Registrar of Companies (RoC). Started by television actress-turned-entrepreneur, Reena Wadhwa, wife of investment banker Ashok Wadhwa, Luxury Goods Retail’s revenues increased 27.50 percent in calendar year 2013 to Rs 78.77 crores from Rs 61.78 crores a year-ago.

Similarly, the franchisee for Versace, Roberto Cavalli and Emilio Pucci (Pucci) in India, Infinite Luxury Brands saw its net profit drop 99.36 percent to Rs 92,373 in fiscal 2014 from Rs 1.44 crore a year ago. Profit dropped even as the company added new brands and stores to grow its business, which led to 119.36 percent increase in net sales to Rs 28.50 crores, according to the latest filing with the RoC.

On the contrary, brands a notch lower than luxury helped Reliance Brands, the retail brands division of Reliance Industries, to reduce its losses marginally. The net loss for Reliance Brands stood at Rs 46.53 crores in fiscal 2014 down from Rs 49.98 crores a year-ago. During the year, Reliance Brands, whose luxury portfolio includes brands such as Ermenegildo Zegna, Paul and Shark, Thomas Pink, and Brooks Brothers, added eight stores to its luxury portfolio, taking its total count of stores in the luxury portfolio to 34. The addition of new stores along with price increases helped revenues increase by 63.76 per cent to Rs 264.57 crores from Rs 161.55 crores a year-ago.

Low consumer sentiment last year coupled with fall of rupee against the dollar are some of the reasons being attributed to the poor performance of companies managing international luxury brands in India.