Levi's India Sales Rises To 12%

Levi Strauss & Co's Indian unit saw sales increase 12% but profit dipped due to higher payout to the parent company. The denims maker reported revenues of Rs842.4 crore during year to March 2017, according to its filing with the Registrar of Companies. A year ago, it had a higher sales growth at 19%, indicating increased pressure from newer rivals such as H&M and Gap as well as slowing consumer demand at brick-and-mortar stores during demonetisation.

Sanjeev Mohanty, Managing Director South Asia Operations at Levi Strauss & Co said “We have delivered strong and consistent growth in India over the last two years, with profitability in line with our growth strategy. With strong fundamentals in terms of brand, product portfolio and sales channel mix with a clear focus on direct to consumer business and omni-channel, India remains a critical scale market for Levi Strauss & Co.”

Net profit declined 27% to Rs57.8 crore, which the company attributed to excise duty on apparels since last year and payment to parent company, according to its annual report.

Unlike global apparel brands such as Zara and Hennes & Mauritz, that report retail sales in India, Levi's performance reflects sales to the wholesale channel. Hence, the actual retail sales of Levi's could be close to Rs1500 crore, say experts. In comparison, Spanish chain Zara, which opened its first store in India in 2010 had sales of Rs 1,023 crore during 2016-17 while H&M Rs 640 crore with a net profit of Rs 15 crore during 2016-17 through 15 stores, many of them barely a few months old then.

As the world’s second most-populated country, India is an attractive market for US and European brands, and has attracted some of the world’s largest private labels that are banking on young consumers increasingly embracing western-style clothing. E-commerce companies could have added to their sales as well, considering that apparel accounts for 25-35% of overall sales for Amazon, Flipkart and Snapdeal. Zara plans to launch its online store in India in October while H&M plans to enter the online market by 2018.