Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 3.9% year-on-year in Q1 FY25.
- PAT growth of 4.3% year-on-year, indicating profitability.
- E-commerce channel saw a significant growth of 32% in Q1.
- Expansion of distribution network with over 104,696 MBOs, 1,395 exclusive brand stores, and 1,137 LFS outlets.
- Company remains debt-free, showcasing strong financial health.
Negative Points
- Overall sales volume growth was modest at 2.6% year-on-year.
- Operating margins were impacted by increased marketing expenses.
- Inventory levels remain high, with only a slight reduction in absolute terms.
- Challenges in achieving the previously set target of USD 1 billion revenue by FY26.
- Continued volatility in demand, making future projections uncertain.
Q & A Highlights
Q: Are you more optimistic about demand recovery now compared to the end of the fourth quarter?
A: Yes, we are more optimistic due to better footfalls and demand revival. Our efforts in improving inventory health, launching new products, and marketing are expected to pay off. (V. S. Ganesh, Managing Director)
Q: How do you expect the year to pan out, especially in the second half?
A: It is early days, but we are hopeful for a buoyant festive season and a good second half of the year. (V. S. Ganesh, Managing Director)
Q: What is the current state of dealer inventory in the athleisure space and discounting pressures in the industry?
A: Inventory levels have reduced by over 10 days for athleisure. Discounting pressures have decreased significantly compared to the first half of last year. (Karthik Yathindra, Chief Marketing Officer)
Q: Is there any need for price hikes given the current input cost environment?
A: Input costs, especially cotton prices, are stable and on the lower side. We do not foresee any need for price increases this financial year. (Deepanjan Bandyopadhyay, Chief Financial Officer)
Q: Can you speak about secondary demand trends and the timeline for secondary and primary sales to align?
A: Secondary and tertiary sales are ahead of primary sales, reflecting inventory holding in the value chain. It may take a couple of quarters for secondary and primary sales to align. (Deepanjan Bandyopadhyay, Chief Financial Officer)
Q: What are the growth expectations for Q2 and Q3 compared to Q1?
A: While it is early to predict, we are optimistic about growth in the coming quarters based on current demand trends. (V. S. Ganesh, Managing Director)
Q: How has the channel inventory changed for athleisure and other categories?
A: Inventory levels have reduced, especially for athleisure, but absolute inventory holding remains similar due to high Q1 contributions. (Karthik Yathindra, Chief Marketing Officer)
Q: What is the impact of e-commerce growth on margins compared to offline channels?
A: E-commerce margins are comparable to offline channels, though D2C margins are slightly lower due to higher marketing and delivery costs. (Deepanjan Bandyopadhyay, Chief Financial Officer)
Q: Are there any plans to increase exports in the coming years?
A: We are focusing on consolidating our international presence and exploring specific markets that align with our product offerings. (Karthik Yathindra, Chief Marketing Officer)
Q: What is the current status of manufacturing capacity and expansion plans?
A: We have a planned capacity of 200 million pieces, with no immediate plans for additional manufacturing facilities. The Odisha plant is nearing completion. (Deepanjan Bandyopadhyay, Chief Financial Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
