The firm hopes to get over its denim blues by selling more apparel. |
The Flying Machine, launched in 1980, was among the first Indian brands for jeans. But somehow, Arvind Mills' branded business never really took off. |
Now that making denim is no longer worth it even at a scale of 100 million metres a year""operating margins for the June 2007 quarter were down 560 basis points y-o-y"" the firm plans to revive itself by selling more apparel. The addressable opportunity: a Rs 8,000 crore market. |
Turning around the company's fortunes could take a while though: the Rs 1,845 crore Ahmedabad-based firm's revenues are tipped to fall in the current year and remain flat for a year thereafter before moving up again. |
But, it's clear that readymades are the way forward. Says Sanjay Lalbhai, managing director, "Our branded segment contributes about 14 per cent to our revenues but we're hoing to up this to about 30 per cent to sales by 2010." |
Last year, Arvind managed to scale up its apparel retail segment, growing it by 18 per cent y-o-y to Rs 330 crore, exluding the brands transferred to VF Corp( a joint venture based in the US, in which Arvind has only a 40 per cent stake). |
However, with the premium brands""Lee,Wrangler, Arrow, and Nautica- now housed in VF Corp, their turnover will not show up in the parent company. So Arvind's ramp up will be much slower. Also, Arvind is the smaller partner in its joint venture with the Italian apparel Diesel holding a stake of 49 per cent. |
That means it's mainly the 20 odd home grown brands that Arvind will be focussing on. Among its own brands are Excalibur, Newport, Flying Machine and Ruf & Tuf. A repositioning exercise was initiated about a year back whereby some of the brands such as Excalibur and Flying Machine were re-launched. |
"The identities of all the four brands have changed in the past one year. We wanted to ensure that we had covered all the segments from formal to casual," explains J Suresh, COO, Arvind Brands, which is the division that markets these brands. |
The repositioning was backed by new advertising campaigns. Model and actor Milind Soman was signed on for Excalibur while actor Dino Morea now endorses Flying Machine. |
Arvind's also investing more in distribution. It plans to spend Rs 20 crore expanding its discount store chain Megamart, adding 30 more stores to the existing 53. Last year, Megamart, of which there are both owned and franchisee stores, clocked revenues of Rs 100 crore. |
The Megamart stores stock seven of Arvind's low-cost private labels including the casual wear brand Ruggers, the formal wear brands Auburn Hill and Elitus and the denim brand Colt. Says Suresh,"This is a big expansion for us if you consider the fact that in the past 10 years we have opened just 53 stores." |
Arvind also wants to sell more through exclusive brand outlets. Till March 2006, brands like Excalibur, Flying Machine and Newport were sold only through multi-brand outlets. |
But last year Arvind changed tack and and now they're available in about 200 stand-alone outlets. More are on the way. Observes Suresh, "Fifty more exclusive stores will be opened and we're looking to spend about Rs 25-30 crore on these. By the end of FY08, we should have 250 exclusive stores." |
Arvind also plans to step up the focus on women's wear; next month the Excalibur brand will be extended to include women's wear in the range of Rs 500-1,095. The Arrow range of women's wear, will be relaunched later in the year, priced between Rs 599 and Rs 1,400. |
What's more, Suresh's hoping to hawk many of the brands overseas. Say he,"Excalibur is being sold in West Asia and Africa and Flying Machine is available in Dubai." With a bit of luck, this time round, Arvind's brands should fly off the shop shelves. |