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• Revenue Growth: 8.5% increase in revenue.

• EBITDA Growth: 19% growth in EBITDA.

• EBITDA Margin Expansion: 110 basis points increase.

• Retail Like-to-Like Growth: 4.6% growth in retail channel.

• Online Channel Growth: Approximately 20% growth.

• Store Expansion: Increased retail square footage by 81,000 square feet with 56 new stores.

• Inventory Turns: Improved to more than four times.

• Gross Profit Margin: Stable at 50.4%.

• Advertising Spend: Increased by 50 basis points.

• Working Capital Days: Gross working capital stable at around 140 days; net working capital at 60 days.

• Return on Capital Employed (ROCE): Movement towards 20%.

• Warning! GuruFocus has detected 4 Warning Sign with BOM:542484.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Arvind Fashions Ltd (BOM:542484) achieved its highest sales and EBITDA despite a muted demand environment, with sales growing by 8.5% and EBITDA by 18%.

• The company reported a healthy 4.6% like-to-like growth in its retail channel and around 20% growth in the online channel.

• Arvind Fashions Ltd (BOM:542484) focused on profitable growth, resulting in improved balance sheet and cash flow metrics, with inventory turns improving to more than four times.

• Significant investments in brand marketing and advertising led to new customer acquisition and market share gains.

• The company increased its retail square footage by 81,000 square feet in H1, adding 56 new stores, and plans to continue expanding its footprint by 15% annually.

Negative Points

• The wholesale channel experienced tepid growth, attributed to muted market conditions and pruning of low-margin distribution points.

• Despite improvements in channel margins, the gross margin remained flat at 50.4% due to a change in channel mix, with a higher share of lower-margin online B2B sales.

• The company faced challenges in maintaining profitability for certain brands, such as Arrow and Flying Machine, which are currently at lower profit trajectories.

• There was a slight increase in receivables due to higher billing in the wholesale channel during the festive season.

• The company is still in the early stages of investment and growth for its Flying Machine brand, requiring further efforts to enhance its market position and profitability.

Q & A Highlights

Q: Can you clarify the performance of Tommy Hilfiger and Calvin Klein, given the flat non-controlling interest profits? A: Kulin Lalbhai, Non-Executive Vice Chairman, explained that the strong performance of Tommy Hilfiger and Calvin Klein was offset by increased advertising investments in Flying Machine, which affected the non-controlling interest profits.