Liberty Shoes, the second-largest shoe company in India after Bata, has downscaled the expansion of its domestic retail network. According to an executive of the company, the group should end up with about 150 new Liberty stores throughout the country opened in the course of its current financial year, ending in March 2015.
About half of them will be directly managed and half franchised, building up to a total of more than 600 mono-brand stores in the country. The management had previously indicated plans for about 200 new stores this year. However, only 37 new exclusive stores were opened in the six months up to last Sept. 30.
The focus of the expansion remains on second- and third-tier cities. The company's single-brand stores are taking up 35 percent of the company's total production, which is averaging 60,000 pairs per day. Another 30 percent is sold to wholesalers who distribute Liberty's shoes to other stores. Institutional sales, including safety shoes and school and military procurement, represent about 30 percent of sales.
To help sustain its development at the retail level, Liberty has been considering the introduction of a second shift in its manufacturing apparatus, but it's not there yet. The management was forecasting a 25 percent sales increase for the current financial year, but the growth rate will be more like 10 to 15 percent, indicating a major slowdown from its previous performance. Profits are expected to remain more or less stable.
For the first half ended last Sept. 30, Liberty has reported net sales of 24,544 rupee lacs (€350m-$308m), up by 10.7 percent from the corresponding period of 2013. Net profit increased to 586.9 lacs (€8.4m-$7.4m). Sales actually declined in the first quarter because of a delay in the implementation of big military order, but they grew by almost 33 percent in the second quarter, with increases of more than 20 percent in its retail stores and 32 percent in exports to 2,720 lacs (€38.8m-$34.3m), thanks to contracts with new customers and the renewal of existing contracts on better terms.
For the financial year ended in March 2014, Liberty had reported a sharp increase in net profit on 32 percent higher sales.
Liberty's leather shoes are sold in more than 25 countries including France, Germany and Italy, but Expo Riva Schuh fair in Italy is the only foreign exhibition where it has a presence through a showroom in a hotel. Outside India, Liberty is mainly focusing on the Middle East. It recently opened a Liberty store in Sri Lanka. It already has one in Dubai and reopened one in Bangladesh.