Mumbai: Luxury brands Gucci, Versace, Roberto Cavalli and Emilio Pucci’s profits in India have dipped sharply on the back of increased costs due to a weaker rupee and slowing economic growth.

Luxury Goods Retail Pvt. Ltd, the joint venture of Gucci in India, saw its losses double to 11.03 crore for the calendar year 2013, from 5.3 crore a year-ago, according to a filing by the company on 29 October with the Registrar of Companies (RoC). Started by television actress-turned-entrepreneur, Reena Wadhwa, wife of investment banker Ashok Wadhwa, Luxury Goods Retail’s revenues increased 27.50% in calendar year 2013 to 78.77 crore from 61.78 crore a year-ago.

Emails sent to Luxury Goods Retail and Infinite Luxury Brands on Tuesday remained unanswered.

In contrast, tight control on costs and a portfolio spread across luxury and premium brands which are a notch lower than luxury helped Reliance Brands Ltd, the retail brands division of conglomerate Reliance Industries Ltd, to reduce its losses marginally. The net loss for Reliance Brands stood at 46.53 crore in fiscal 2014 down from 49.98 crore a year-ago.

During the year, Reliance Brands, whose luxury portfolio includes brands such as Ermenegildo Zegna, Paul and Shark, Thomas Pink, and Brooks Brothers, added eight stores to its luxury portfolio, taking its total count of stores in the luxury portfolio to 34. The addition of new stores along with price increases helped revenues increase by 63.76% to 264.57 crore from 161.55 crore a year-ago.

“Our like-to-like volume growth last year was marginal as there was a feel of doom and gloom which impacted sales," says Darshan Mehta, chief executive officer, Reliance Brands. Like-to-like sales, is industry parlance for measuring comparable sales growth from stores that have been in operation for over a year.

In 2013-14, India’s economy grew at less than 5% for the second year in a row causing consumer sentiment to dip. Meanwhile, a sharp fall in the rupee made luxury goods more expensive. The rupee touched an all time low of 68.85 against the US dollar on 28 August 2013.

According to experts, the luxury business was impacted by a number of factors—low consumer sentiment meant that people were not in a mood to spend; a weaker rupee led to prices going up here and consumers preferring to shop overseas; and overhead costs such as rentals remained high.

“It was a difficult year," says Charu Sachdev, founder and chief executive officer, TSG International Marketing Pvt. Ltd, the luxury retail company which runs the high-end Kitsch multi-brand stores that retails brands such as Alexander McQueen, Diane Von Furstenberg, Halston Heritage and Herve Leger in India.

TSG International Marketing is yet to submit its latest financials to the RoC. However, Sachdev admits that the company’s revenues did not grow last year, but profitability improved because of lower overhead costs. The company moved its store Kitsch out of the DLF Emporio mall in Delhi and opened on a high street instead. “Rentals were accounting for 40% of our overall revenues and we have now got this down to 10% of our revenues," said Sachdev, who now has two high street stores— one each in Mumbai and Delhi. She plans to open two more in the coming year.

To be sure, the luxury business is still small in India. “Opening new stores or even undertaking a single marketing activity, impacts profitability and then even the macroeconomic environment was tough," says Neelesh Hundekari, principal and head, luxury and lifestyle practice, India, AT Kearney, a management consulting firm.

The Indian luxury market is estimated to be worth $14 billion split across conventional luxury (30%), services(40%) and products such as cars, yachts and electronics (30%), according to a Boston Consulting Group October report.

Still, companies are hopeful of a better future.

“The directors are making efforts to generate more business for the company and are optimistic that better results can be achieved in future," said Luxury Goods Retail in its annual report.

The gloom in the economy seems to be lifting too, even though consumer spends are yet to pick up. “Next year, should be a better indicator of how the growth pans out," says Sachdev.

Even the rupee has rebounded 11.9% from its lows and is now trading at 61.51 to a dollar. In the last two seasons autumn/winter and spring/summer, prices were up on an average by 15-20%, which impacted new consumer acquisition and also saw existing consumers postpone their purchases, says Mehta of Reliance, who now plans to reduce prices by 7-10% in the coming season. “The feel good factor is beginning to return."