Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Brand Concepts Ltd (BOM:543442, Financial) reported a robust growth of nearly 20% over the previous quarter and the same quarter last year.
- The company is expanding its footprint across the country, adding new brands and locations.
- Margins have improved from the previous quarter, despite being subdued compared to the same quarter last year.
- The acquisition of Juicy Couture is seen as a strategic addition, targeting the super premium to luxury segment.
- The new hard luggage plant is on schedule and expected to be commissioned by the end of FY25, with a seasoned industry professional set to lead the plant.
Negative Points
- Same-store sales growth has been subdued, with lower walk-ins attributed to a severe heat wave affecting retail performance.
- There is margin pressure due to higher expenses not being matched by sales, and higher royalty costs impacting profitability.
- Institutional business has seen a decline, with its share dropping from 22% to 15% of the top line.
- The CSD channel, while showing good traction, has lower net realization and gross margins due to pre-COVID pricing.
- The company's reliance on Tommy Hilfiger remains high, contributing around 80% of sales, which may pose a risk if market conditions change.
Q & A Highlights
Highlights of Brand Concepts Ltd (BOM:543442) Q1 FY25 Earnings Call
Q: Can you share what is the term of our license with Juicy Couture, and what can be the contribution of handbags to our overall top line in the next two to three years?
A: For confidentiality reasons, we can't disclose the exact terms, but we have a 10+5 year license with an auto-renewal clause. We expect women handbags to contribute 15% to 20% of our portfolio in the next couple of years. (Abhinav Kumar, CFO & Whole-time Director)
Q: What is the update on the CSD business?
A: The CSD business has shown a very good response. We have created shop-in-shops in premium counters and are seeing excellent traction. Although margins are currently lower due to pre-COVID pricing, we expect improvements once we can adjust prices after a year. (Abhinav Kumar, CFO & Whole-time Director)
Q: Can you explain the impact of IndAS on your profitability?
A: The non-cash impact of IndAS is around INR 1 crore. Without these impacts, our PBT would be INR 3.43 crore instead of INR 2.42 crore. This includes lease rentals for new stores and warehouses. (Abhinav Kumar, CFO & Whole-time Director)
Q: What are the key growth drivers to reach the INR 599 crore target revenue?
A: Key growth drivers include expanding our footprint across various channels, adding new brands, and tapping into white space categories. Rising consumerism in India will also play a significant role. (Abhinav Kumar, CFO & Whole-time Director)
Q: How is the progress on your new hard luggage plant and the IFF Overseas integration?
A: The hard luggage plant is ahead of schedule and should start production by the end of FY25. The IFF Overseas merger is progressing well, with the shareholders' meeting expected by the end of September. (Abhinav Kumar, CFO & Whole-time Director)
Q: What is the status of store additions and your guidance for H1?
A: We have added six stores so far and expect to open another two to three stores in August. We are on target to meet our H1 guidance of adding about 10 stores. (Abhinav Kumar, CFO & Whole-time Director)
Q: What are your plans for marketing expenses in the upcoming quarters?
A: We have already reduced marketing expenses from Q4 to Q1 and will continue to fine-tune them. Our long-term target is to maintain marketing expenses between 4% to 5% of revenue. (Abhinav Kumar, CFO & Whole-time Director)
Q: How do you see the competition landscape, especially with new players entering the market?
A: Competition is from both listed and unlisted players. However, our differentiation lies in being a brand play rather than just a category play, which sets us apart from many competitors. (Abhinav Kumar, CFO & Whole-time Director)
Q: What are your thoughts on the potential impact of the Bangladesh situation on your competitors?
A: Many big-ticket players source from Bangladesh, and the current situation there could impact them. This might be advantageous for us. (Abhinav Kumar, CFO & Whole-time Director)
Q: How do you plan to capitalize on the Bagline channel to sell other brands and allied products?
A: While Bagline retail will focus on our brands, Bagline.com could potentially become a curated marketplace for premium brands. We are exploring technological infrastructure to support this model. (Abhinav Kumar, CFO & Whole-time Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
