Release Date: June 03, 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 40% growth in revenue from the previous year, indicating strong business performance.
- The company successfully launched new collections and trade activities, including a fashion show and a distributor dealer event.
- Two new brands signed by the company have started to gain traction, with UCB showing particularly encouraging consumer response.
- The merger with IIF Overseas has received board and regulatory approvals, with the process expected to be completed within the year.
- Construction of the new hard luggage plant is on schedule, with trial runs expected to start in Q4 of this year.
Negative Points
- Net earnings have decreased due to pre-operative expenses and investments in infrastructure, resources, and marketing activities.
- Overall retail performance has been slow, with a drop in walk-ins at malls and large format stores, leading to single-digit like-to-like sales growth.
- Inventory levels have increased significantly, from INR31 crores to INR51 crores, primarily due to new brands.
- Payable days have decreased, indicating potential changes in terms with creditors or increased pressure on cash flow.
- The company faces competition from new VC-funded luggage startups, which could impact market share and pricing strategies.
Q & A Highlights
Brand Concepts Ltd (BOM:543442) Q4 and FY24 Earnings Call Highlights
Q: What are the plans for the next two years regarding store expansion and profitability?
A: We aim to grow every channel and increase our store count to 100 within the next 2-2.5 years, primarily through franchising. We plan to maintain a PAT of around 5-6% and EBITDA of 11-12%, reinvesting earnings into the company for future growth. (Abhinav Kumar, CEO)
Q: How do you plan to manage debt levels with the expansion?
A: We currently have a manageable debt level of around INR38 crores. We will maintain a healthy mix of debt and equity, avoiding high levels of debt. (Abhinav Kumar, CEO)
Q: Are there plans to tie up with corporates for gifting solutions?
A: We already have a corporate sales department, and our sales from corporate clients have been growing over the years. (Abhinav Kumar, CEO)
Q: Are you looking to add more brands or new categories?
A: We are focusing on optimizing our current categories and brands. However, we are in talks to add more brands and aim to become a house of brands in the future. (Abhinav Kumar, CEO)
Q: How is the online B2C channel performing?
A: Our B2C sales have grown significantly, now contributing 40% of our overall e-commerce sales. We are investing in localized warehouses to improve delivery times. (Abhinav Kumar, CEO)
Q: How are UCB and Aeropostale performing?
A: UCB has shown encouraging results, especially in small leather goods. Aeropostale's growth has been slower, primarily focused on e-commerce, and we are working on improving the product. (Abhinav Kumar, CEO)
Q: How do you view the competition from new luggage startups?
A: Competition is positive as it expands the market. We are also planning to launch our own brand, but we will avoid the burn-and-earn strategy. (Abhinav Kumar, CEO)
Q: What is the status of the merger with IIF Overseas?
A: The merger has received board and regulatory approvals. We expect it to be effective by April 1, 2024. (Abhinav Kumar, CEO)
Q: How do you plan to expand in the southern territory?
A: We are aggressively expanding our distribution and looking to open 15-20 new stores in the South over the next two years. (Abhinav Kumar, CEO)
Q: What is the strategy for managing logistics costs with the expansion?
A: Logistics costs will remain a percentage of sales, around 4-6%. We plan to maintain a mix of COCO and FOFO stores, with 40-50% being COCO. (Abhinav Kumar, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
