The Indian licence-holder of sports and leisure apparel brand Lacoste, which suffered losses for most of its time here, plans significant investments over the next three years.
Now profitable, Sports and Leisure Apparel Ltd, a Turner Morrison Group company and Lacoste merchandiser, will close down some stores, set up new ones, increase capacity at its Noida unit and enhance its visibility through more print campaigns and events, managing director and chief executive Vikas Gupta said.
It’s a decision that was long overdue, an analyst said, adding that Lacoste as a brand—globally recognized by its alligator logo—hasn’t reached its potential in India, even as luxury brands clamour to enter. Lacoste SA of France came to India in 1993 through the franchise; it booked its first profits only in 2002.
“Today, we are in a situation where we can take a deeper plunge… Our ability to invest has increased,” Gupta said, though declining to release investment or revenues figures.
Lacoste posted worldwide sales of €1.5 billion (Rs8,400 crore) last year and has said it wants to hit €2 billion by 2008.
The investment involves setting up between eight and 10 “flagship stores”, each at least 5,000 sq. ft in area. Lacoste stores are no bigger than 1,000 sq. ft today. Gupta said these would be comparable to Lacoste’s premier outlets on Fifth Avenue in New York and the Champs Elysées in Paris, and each would cost between $1 million (over Rs4 crore) and $1.5 million (over Rs6 crore) to set up, excluding rent. The first two have already come up in Bangalore and Chennai, the remaining are scheduled over the next three years.
Gupta said many of the 38 smaller stores across the country have lost their “relevance” today; 14 were closed down in the last two years, while six new ones were opened. It is looking at opening more than 50 smaller Lacoste outlets in the next three years. The company is also enhancing its apparel production capacity by at least 30% at its Noida factory, one of Lacoste’s seven global manufacturing units. .
Retail analyst Purnendu Kumar, associate director at consulting firm Technopak Advisors Pvt. Ltd, agreed but was critical of its branding in India.
“Lacoste is a premium brand, people are aware of it, but it hasn’t reached the potential it has,” he said. “Maybe that’s why they are going for the flagship stores; it’s a marketing effort to strengthen a brand. This issue has to be addressed, one is not just looking at profitability.”
Kumar was sceptical of the investment claim. “A 5,000 sq. ft store can’t cost more than Rs2 crore even at a premium locale,” he said. Six flagship stores sounded like more than enough for customers, he said. Anything beyond that, he said, might send the alligator back into troubled waters.