VIP Industries , a leading luggage manufacturer, has reported a challenging first quarter for the fiscal year 2026, with notable declines in revenue and sales volume. The company's financial results, released on August 6, 2025, reveal the impact of market headwinds and operational challenges.

Revenue and Volume Performance

VIP Industries reported consolidated revenues of Rs. 561.00 crores for Q1 FY26, marking a 12% decline from Rs. 639.00 crores in Q1 FY25. The company experienced its first volume de-growth in five quarters, with sales dropping by 8% to 4,554,000 units.

Profitability and Margins

The company posted a consolidated loss before tax of Rs. 17.00 crores, compared to a profit of Rs. 4.00 crores in the previous year. The EBITDA margin dropped to 5.2% from 8% in Q1 FY25. However, when adjusted for one-time inventory provisions and other expenses totaling 5%, the normalized EBITDA margin would be 10.2%.

Gross Margin and Category Performance

The gross margin stood at 45%, but the normalized gross margin without inventory provision was 48%. Notably, the hard luggage category increased its share to 63% from 56%, indicating a shift in consumer preferences.

Channel-wise Performance

VIP Industries maintained its market position across various channels:

Bangladesh Operations

The company's Bangladesh operations showed improvement, reporting a profit of Rs. 8.00 crores versus a loss of Rs. 11.00 crores in the previous year.

Exceptional Items

The company reported an exceptional item in its consolidated results, including a net income of Rs. 1.93 crores. This comprises:

• A loss of Rs. 5.07 crores due to a fire at the company's regional warehouse in Guwahati on May 17, 2025
• An income of Rs. 7.00 crores from a partial insurance claim related to a fire incident at its Bangladesh subsidiary in January 2023

Stock Appreciation Rights

On August 6, 2025, the company granted 60,000 Employee Stock Appreciation Rights (ESARs) to eligible employees under its VIP Employees Stock Appreciation Rights Plan 2018.

Outlook

While VIP Industries faces challenges in the current market environment, the company's focus on hard luggage and improvements in its Bangladesh operations provide some positive indicators. The management will likely concentrate on adapting to changing consumer preferences and optimizing operations to navigate the current market conditions.

VIP Industries , a prominent player in the travel luggage sector, has received a favorable order from the Supreme Court of India in its ongoing trademark dispute with Carlton Shoes Ltd. The order allows VIP Industries to deal with its inventory of products under the Carlton trademark, subject to specific terms set by the court.

Supreme Court's Decision

The Supreme Court's order comes as a relief for VIP Industries following the Delhi High Court's earlier dismissal of the company's appeal against an interim order. The interim order had restricted VIP from conducting its travel luggage business under the Carlton trademark.

Key points of the Supreme Court's decision include:

• Disposal of VIP Industries' Special Leave Petition
• Permission for VIP to deal with existing Carlton-branded inventory, subject to specific conditions
• Direction for VIP to submit an undertaking to the Supreme Court
• Instruction to the Delhi High Court to expedite the resolution of civil suits between VIP Industries and Carlton Shoes Ltd.

Implications for VIP Industries

The company has stated that there are currently no expected financial implications beyond what has been mentioned in the court order. This development allows VIP Industries some breathing room to manage its existing Carlton-branded inventory while the broader trademark dispute continues in the lower courts.

Looking Ahead

The Supreme Court's directive to the Delhi High Court to expedite the resolution of the civil suits between VIP Industries and Carlton Shoes Ltd. suggests that a final resolution to this trademark dispute may be on the horizon. This could provide clarity for both companies and potentially impact the future of the Carlton brand in the Indian travel luggage market.

Upcoming Earnings Call

In a separate announcement, VIP Industries has scheduled its Q1 earnings call for August 7 at 3:30 PM. The call will discuss the company's performance for the quarter ended June 30 and may provide further insights into how the ongoing trademark dispute and recent court order have affected the company's operations and financial outlook.

As this legal battle unfolds, stakeholders will be keenly watching for any further developments that could impact VIP Industries' position in the competitive travel luggage industry.