Release Date: January 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue from operations for Q3 FY24 grew by 0.6% to INR200.2 crores compared to INR199.1 crores in Q3 FY23.
- Gross profit for Q3 FY24 increased to INR86.7 crores from INR80.9 crores in Q3 FY23, with gross margins improving to 43.3%.
- EBITDA for Q3 FY24 grew by 15.8% to INR38.9 crores, with EBITDA margins expanding by 250 bps to 19.4%.
- PAT for Q3 FY24 grew by 23.4% to INR33.3 crores, with PAT margins expanding to 15.9%.
- The company declared a first interim dividend for FY24 at 20%, or INR2 per share, and added 72 new Killer brand EBOs, reaching a total of 483 stores.
Negative Points
- Winter wear segment saw slower pick-up due to the delayed onset of peak winter, affecting overall growth.
- Retail performance was down year-on-year by 8%, despite adding new stores.
- LFS channel performance pulled down overall retail performance due to inventory issues with winter wear.
- Winter wear category degrew this year, impacting overall revenue and margins.
- The company is still evaluating potential acquisitions, with no concrete updates or decisions made yet.
Q & A Highlights
Q: What was the impact of winter wear on overall revenue, and what percentage does it contribute to Q3 revenue?
A: The like-to-like growth in terms of tertiary sales of EBOs stood at 4% on a nine-month basis. Winter wear contributes more than 20% of the entire quarter during Q3 but averages out to single digits over the full year.
Q: What is the strategy for converting K-Lounge stores to single-brand stores?
A: There are currently 174 K-Lounge stores. The conversion will be done in phases over at least a year. The decision on which brand each store will convert to depends on the brand mix in that particular area. Some stores may be discontinued due to their age.
Q: Can you provide insights on the potential of Killer Junior and its expected revenue contribution?
A: It is too early to comment on Killer Junior's revenue contribution. We have received a good response from the order sheet structure, and we will evaluate the secondary numbers by the second quarter of the next year.
Q: What is the future strategy for winter products given the late onset of winter?
A: Winter wear as a category cannot be eliminated. The percentage mix may vary, and we will evaluate the carried forward stocks and sell-through rates to decide on the pricing and mix for the next season.
Q: What is the update on potential acquisitions?
A: The process of evaluating potential acquisitions is ongoing. We are still in the evaluation phase and will provide more details once things are finalized.
Q: What are the growth expectations for Q4 and the next fiscal year?
A: We expect 15% to 18% revenue growth in Q4 FY24 and aim for 15% to 20% top-line growth in FY25. EBITDA margins are expected to be maintained at around 18% to 20%.
Q: How are the brands Killer, Lawman, and Integriti positioned in the marketplace?
A: Killer caters to the premium price point, Lawman focuses on fashion and party wear, and Integriti targets the premium mass market. Each brand has different segments, price points, and categories.
Q: What is the impact of Zudio on your mass brands?
A: Zudio operates in a different price point and retail chain format. There has been no significant impact on our sales from Zudio.
Q: What is the strategy for store additions and distribution?
A: We plan to add 80 to 100 EBOs annually. MBOs have also been growing along with the company. We are on track with our retail expansion targets.
Q: What is the impact of winter wear on margins, and how do you plan to manage inventory?
A: Winter wear is a higher ASP product but has degrown this year. Adequate provisions have been made for the remaining inventory. We will evaluate the pricing and marketing strategies based on competitor actions and market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
