Putting Best Foot Forward

A couple of years back the footwear market experienced the depression on the sudden rise of rubber prices which affected the industry badly. Many rubber footwear manufacturers like Action, Paragon or Relaxo saw steep decline in their turnover in the range 45-50%. The result of the rise in rubber price led to rise in working capital and lesser profit margin. However, the drop in rubber price since the end of last year has restored back the positive sentiment in the market.

India occupies the second largest footwear producer in the world only after China, and accounts for 13% of global footwear production of 16 billion pairs.  Of this, majority is non-leather footwear (1056 million pairs), followed by leather footwear (909 million pairs) and leather shoe uppers (100 million pairs). The export from India accounts for about 115 million pairs.

Though, today, about 5% of the production is exported, in the last four decade the increase is remarkable. In 1981-82 it was US$ 119.72 million that rose to US$ 2077.27 during 201-12. Footwear export constitutes 42.67% of the total leather and leather products (Source: Council for Leather Exports).

Market is upbeat

Increase in discretionary spending has also contributed in boosting the market. The retailers are consolidating, either closing down the unprofitable stores or downsizing the store size to increase the sales per sq ft. The footwear retailers like Bata and Liberty is majorly shifting its focus to premium category.

Today, besides marketing the premium labels like Hush Puppies or Dr Scholls, Bata has also ventured into licensing such as the Angry Birds collection.

The net income during the quarter went up by 17.16% to `506.51 crore from `432.32 crore in the year-ago period, it added.

The total income during the period ending in June 2012 rose by 17.16% to `506.51 crore from `432.32 crore as against the previous quarter ended in June 2011.

Unlike apparel retailers, footwear retailers are upbeat about the market. Liberty Shoes has the planning to expand overseas presence by entering South Africa and Russia. The company currently operates in the countries like Dubai, Kuwait, Jordan, Saudi Arabia, Fiji and Singapore through franchisees, as reported in December last year.

Liberty Shoes net profit increased 82.20% to Rs. 2.15 crore in the quarter ended June 2012 as against Rs. 1.18 crore during the previous quarter ended June 2011. Sales rose 4.61% to Rs. 75.17 crore in the quarter ended June 2012 as against Rs. 71.86 crore during the previous quarter ended June 2011.

Relaxo has Salman Khan, Akshay Kumar and Katrina Kaif as the brand ambassadors and is eyeing enhanced brand visibility. They are also targeting premium market with higher profit margin. The strategy is to pass on the future cost increase to customers.

Relaxo Footwear net profit rose 39.57% to Rs 15.06 crore in the quarter ended June 2012 as against `10.79 crore during the previous quarter ended June 2011.