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Raymond to expand capacity, retail reach

Raymond to expand capacity, retail reach
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First Published: Wed, Aug 04 2010. 01 23 PM IST
Updated: Wed, Aug 04 2010. 01 23 PM IST
Mumbai: Textiles maker and retailer Raymond Ltd plans to add about 100 retail outlets this fiscal as domestic consumer sentiment turns buoyant, though demand from some developed economies have not matched expectations, a senior official said.
“Going forward, looking at the feedback we have received from the trade and our own internal studies, consumer sentiment will remain buoyant and this season is looking quite good,” chief financial officer H Sunder told Reuters on Wednesday.
“The winter season where we are taking in growth in excess of 17-18% in terms of bookings, we expect the optimism to continue,” Sunder said.
Raymond plans to open up to three-fourths of the new stores in non-metros and class IV and V towns through franchise, in line with its strategy of cementing its footing in India’s hinterland. Class IV and V towns typically have a population of 500,000 or less. Raymond, which currently occupies a retail space of around 1.4 million square feet, hopes to add 150,000-175,000 square feet through the new outlets.
Raymond also plans a Rs400 million expansion of its shirting fabrics joint venture with Italy’s Gruppo Zambaiti, boosting capacity by 10 million metres a year at its Kohlapur unit to 22 million metres.
India’s textiles and apparel industry is fast recovering after a near two-year slowdown that hit consumer sentiment and discretionary spending.
However developed markets particularly Europe and US have not yet overcome the slowdown.
“The demand pick-up is not as robust as expected except in denims, where we have been able to pass on price increases.”
Raymond, which sells brands such as Manzoni, Park Avenue, Parx and ColorPlus, closed several unprofitable stores last fiscal and in June folded up its home retail brand, Be:Home, after two years of operation.
Raymond swung to a standalone net profit of Rs25.06 crore in FY10 from a year-ago net loss of Rs270 crore, while its June-quarter net loss narrowed to Rs24.88 crore from Rs31.60 crore.
The firm is in the process of setting up a gas-based captive power plant at Vapi in Gujarat to reduce costs and increase profitability.
“We are hoping to have a much better performance than the previous 2 years.
Internally we are ready to deliver on expectations so hopefully we should turn the corner this year”.
However rising raw material costs, particularly cotton, remains a concern and the firm would look to pass on some of the price increases.
“We have started to pass on price increases. But there is always a time lag, so it does impact margins in the short run.”
At 1:30 p.m., Raymond shares were down 0.43% at Rs231 in a firm Mumbai market.
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First Published: Wed, Aug 04 2010. 01 23 PM IST
More Topics: Raymond India | Fabric | Retail | Yarns | Suitings |