Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue from operations increased by 26.3% in Q2 FY25 compared to Q2 FY24, reaching INR297.1 crores.
- EBITDA grew by 16.1% year-on-year to INR48.2 crores in Q2 FY25.
- PAT increased by 14% to INR21.2 crores in Q2 FY25.
- The company opened 12 new stores from April 2024 to the present, with plans to add 13 more by the end of FY25.
- Ethos Ltd signed exclusive agreements with three new luxury watch brands, enhancing its product offerings.
Negative Points
- EBITDA margin slightly decreased to 15.9% in Q2 FY25 due to additional costs from ForEx fluctuations and new store expenses.
- The company faced challenges such as extreme weather conditions, slower cash movements due to elections, and fewer walk-ins.
- Foreign exchange fluctuations resulted in a ForEx loss of approximately INR4.65 crores.
- The ÅrÄddha period affected business activities, occurring in Q2 instead of Q3.
- Concerns about a potential GST increase could impact pricing and demand elasticity in the luxury watch market.
Q & A Highlights
Q: What is the expected impact of a potential GST increase on pricing and demand elasticity for luxury watches in India?
A: Pranav Saboo, CEO, explained that if the GST increases, the revenue-neutral price increase would be around 8%. However, brands may not take the full increase, and adjustments could be made through discounts or brand contributions. The elasticity of demand for luxury products is well-known, and the company is in discussions with government representatives to advocate for a lower tax rate.
Q: How is Ethos Ltd planning to expand its store network, and what is the strategy behind new store openings?
A: Pranav Saboo, CEO, stated that Ethos plans to open 20 new stores by FY25, with 12 already opened. The expansion aligns with their growth strategy, focusing on market potential and consumer demand. The company is also working on adding 13 more stores before the end of FY25.
Q: Can you explain the impact of foreign exchange fluctuations on Ethos Ltd's financial results?
A: Pranav Saboo, CEO, noted that significant fluctuations in foreign exchange, particularly with the INR against the CHF, resulted in a ForEx loss of approximately INR4.65 crores. This impacted the cost of goods and vendor margins.
Q: What is the outlook for Ethos Ltd's luxury lifestyle retailing segment, including brands like RIMOWA and Messika?
A: Pranav Saboo, CEO, mentioned that RIMOWA has been a successful venture, and they plan to expand this business significantly over the next five years. For Messika, a full boutique launch is planned for February, with expectations to open 8 to 10 more boutiques in the next five years.
Q: How does Ethos Ltd plan to maintain service quality as it expands into Tier 2 cities?
A: Mukul Khanna, COO, explained that all stores are run by company personnel who undergo a 15-day intensive training program. There are standardized templates for store look and feel, and central teams manage customer service to ensure a consistent experience across locations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
