Raymond Ltd continuing its programme of shutting down non-performing brands pulled the shutters down on its sole kidswear brand Zapp!, four years after it was launched. Zapp! was launched in 2006 to expand its apparel portfolio for children of 4-12 years and planned to open 12 stores.
The textile and apparel maker, which announced quarterly earnings, said termination costs eroded margins in the branded apparel business for the September quarter though retail analysts said the brand shutdown had been gradual.
The owner has been selectively closing down brands. In June, it shut home accessories brand Be: Home because of poor performance two years after it was launched. Last year, it wound up mass-segment brand Notting Hill in metros and large cities, and confined its sales through Raymond stores in smaller towns.
Before that, it withdrew from a 50:50 venture with Grotto SpA Group of Italy, under which it sold the denimwear brand GAS in India.
Rituraj Verma, national director, retail agency, Knight Frank India, said, “The high pricing of Zapp! didn’t go down well with Indian shoppers, who didn’t see any value in it, which is why the brand didn’t do well.” He said the average price for an item of clothing was Rs 2,000, high by Indian standards.
Another retail consultant, said, “If you notice, it’s the new brands that have not worked for Raymond, essentially seen as a menswear brand, either due to pricing or positioning issues.”
Raymond is focusing on brands such as Park Avenue and semi-formal brand ColorPlus, which contribute more than 60 per cent to its more than Rs.600 crore apparel business, while also expanding franchise formats such Neckties & More and Shirts & More. Raymond has 665 stores across the country occupying 1.4 million sq. ft. of space.
For the quarter ended 30 September, Raymond’s net profit grew 427 per cent to Rs.39 crore from Rs.7 crore in the year-ago period on a low base and increased demand in its textiles segment. Branded apparel sales increased 6 per cent to Rs.174 crore. Textile segment sales rose by an annual 14 per cent to Rs.393 crore on the back of higher volumes and better realisations in the domestic market.
Gautam Hari Singhania, chairman and managing director, Raymond, in a post-earnings statement said, “Our strong performance over the quarter and half-year ended September 2010 is a reflection of the various structural initiatives we undertook, including restructuring our loss-making denim business, closure of unviable operations and expansion of retail footprint in smaller towns.”
Last week, Raymond reached an agreement to free up its Thane factory land for the company’s maiden real estate venture. It will pay Rs.260 crore as compensation to 1,885 workers as part of the accord.