Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue from operations increased by 18.8% to INR273.2 crore.
- EBITDA grew by 28.7% YoY to INR49.7 crore, with an EBITDA margin of 17.8%.
- Profit after tax rose by 25.6% to INR22.8 crore.
- Successful launch of three new boutiques in Kochi, with plans to open five more in the second quarter.
- Introduction of new ERP system, enhancing tech integration, compliance, and decision-making capabilities.
Negative Points
- Extreme heat wave and national elections led to fewer customer walk-ins and impacted sales.
- Logistical challenges due to natural calamities in Switzerland affected committed sales.
- Deployment and testing of the new ERP system caused a three-day operational shutdown.
- Gross margins were impacted due to higher discounts offered during the quarter.
- Challenges in sourcing watches and training watchmakers limited the growth of the pre-owned watch segment.
Q & A Highlights
Highlights of Ethos Ltd (BOM:543532, Financial) Q1 FY25 Earnings Call
Q: Are you still sticking to the guidance of opening 25 new stores in FY25?
A: We are in line to open between 20 and 25 stores. Some delays are due to real estate not being finished on time, but we expect to have roughly 22 or 23 stores by March 31st.
Q: Can you explain the impact of the election restrictions on your sales?
A: The election restrictions prevented the movement of cash above INR50,000, which affected our cash sales. This impacted sales in the INR0.5 lakh to INR2 lakh range, but we saw healthy growth in sales above INR2.5 lakh.
Q: What is the status of your discussions with major lifestyle brands?
A: We are in discussions with several major lifestyle brands. These discussions take about 15 to 18 months. We aim to expand our Lifestyle division significantly, with brands like Remova and Mexico leading the way.
Q: How did the extreme heat wave and national elections affect your performance?
A: The extreme heat wave led to fewer walk-ins as customers spent more time outside India. The national elections imposed restrictions that impacted sales. Despite these challenges, we saw a strong recovery in July with approximately 28% growth.
Q: Can you provide details on the impact of foreign exchange rates on your business?
A: We did not see a major gain or loss due to foreign exchange rates. We aim to reduce our foreign exchange risk to less than one-fourth of our business over the next two years.
Q: What is the share of revenues from exclusive brands?
A: Approximately 30% of our total revenue comes from exclusive brands. We aim to grow this number. In terms of duty reductions, 90% of our exclusive brands will pass the entire benefit to us.
Q: What are your plans for the pre-owned watches segment?
A: We sold INR19.6 crore worth of pre-owned watches this quarter, representing a 32% growth YoY. We aim to expand this segment by opening a second service center in South India and training more watchmakers.
Q: How do you plan to manage operating cash flows given the high inventory costs?
A: We are investing in new brands to capture market growth. While this increases inventory costs now, we believe it will pay off in the long term. We aim to reduce inventory levels as the market matures.
Q: Can you provide the volume data for the number of watches sold in Q1 FY25 versus last year?
A: We sold 13,245 watches in Q1 FY25 compared to 14,070 watches in Q1 FY24. Sales above INR2.5 lakh grew by 9.5%, while sales above INR1 lakh grew by 2%.
Q: What is your margin guidance for FY25?
A: We are not providing specific margin guidance. However, we aim to increase margins through exclusive brand partnerships and reducing discounts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
