New Stitch: Will Lacoste Indias Gameplan Work This Time

New Delhi: | Updated: May 23 2003, 05:30am hrs
Sports and Leisure Apparel Ltd (Lacoste India) is trying to sew up a new plan in the marketplace. For starters, the apparel and lifestyle company, which has exclusive licence to manufacture and market Lacoste products in India, will get fresh equity infusion from its parent group Turner Morrison, which has invested in companies like Barista and Arcus.

Says Lacoste Indias new CEO Vikas Gupta:The company has presented multiple options across multiple time-horizons to have sharper alignment with the boards objectives. One of the options is to invest behind services and manage growth with an eye on the financial bottomline.

Says an industry observer: When Lacoste entered a decade ago, the Indian market was not ready for it. But now when the market is ready, the brands limited product range, limited retail access, higher price points and inadequate advertising make it a difficult marketing proposition as it faces strong competition from MNC as well as local brands.

Declining to share details on the paid-up capital, fresh equity infusion and the extent of losses, Mr Gupta says the company has started paying attention to the efficiences of process. Working captal management has improved with STR (stock turnover ratio) doubling in the last couple of months and receivables coming down to a sensible level.

Adds Mr Gupta: Projected cash flows will be in control because of certain equity infusion. There will be a sharper focus on creating a new international in-store and brand experience, ensuring information flow, removing systemic inefficiencies, and managing cost of goods (CoG) and supply chain.

Lacoste India is aiming at 20-25 per cent topline growth in the current fiscal. But it is in the area of profitability that the companys energies will be directed as the company suffered losses during the last two years.

Lacoste Indias new focus would, however, not result in price correction of garments downwards. Lacoste products, especially garments which account for 90 per cent of overall sales, are perceived as one of the most pricey products in the Indian market with shirts in the price bracket of Rs 1,100-Rs 2,200 and Polo T-shirts Rs 800-Rs 1,600.

Our retail prices have remained steady for quite sometime. We would like to enhance the value (connotation) through a three-pronged approach: reinforcing the brands French Connection; creating a new product-driven romance of colours and fashion theme (beginning with the Atlantique collection roll-out globally in March 2003, Lacoste will launch two-seven themes in a year for the first time); and focusing on international service standards, says Mr Gupta, rather than roll-back of prices.

But the company is clearly creating a new channellike factory outlets Lacoste Mega Martsto sell its slow-moving and perishable (seasonal) fashion products. But this comes with its attendant retail issues. In an industry where almost all premium (like Wills, Levis and Arrow) as well as mass garment retailers run seasonal sales to clear surplus inventories (besides factory discount outlets), Lacoste pursues a policy of no-discounting on its stores.

Now it will look at forging marketing programmes with premium brands and setting up a few stores this fiscal (a couple of months ago it opened factory outlets in Bangalore and Delhi) to address the issue of surplus stock.

Earlier we didnt have any stock liquidation plan. In the garment industry, for most brands discounting accounts for upwards of 30 per cent. We expect to liquidate around 10-20 per cent through this route, says Mr Gupta.