In This Article:
Release Date: May 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Arvind Fashions Ltd (BOM:542484) achieved a revenue growth of 8.5% for FY25, indicating strong performance despite a challenging demand environment.
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The company reported an improvement in EBITDA margins by 100 basis points, driven by cost optimization efforts.
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Return on capital employed crossed the milestone of 20%, showcasing efficient capital utilization.
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The company has successfully expanded its retail network, contributing to a like-to-like growth of more than 5%.
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Significant growth was observed in key brands like US Polo Association, Tommy Hilfiger, and Calvin Klein, with double-digit revenue increases.
Negative Points
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The demand environment remains sluggish, impacting overall growth potential.
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Footwear segment faced issues with BIS compliance, affecting inventory and growth.
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There is a need for continued investment in marketing to maintain brand visibility and market share.
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The wholesale channel recorded low single-digit growth, indicating challenges in that segment.
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Despite improvements, some brands like Arrow and Flying Machine are still in the process of achieving desired profitability levels.
Q & A Highlights
Q: Could you elaborate on the profitability profiles of adjacent categories like footwear, women's, kids, and innerwear compared to your core apparel business? Are any of these categories operating at significantly lower margins? A: (CEO) All adjacent categories are profitable and not margin-dilutive. Footwear is even more profitable than the apparel business. Innerwear has seen a significant turnaround in profitability over the last two years, and women's wear, which was relaunched, remains profitable. We ensure that growth in these categories is achieved at comparable margins to our core apparel business.
Q: What is the current store count for new formats like Club A, Stride, and Megamart, and what percentage of your planned 15% net square footage addition will come from these formats? A: (CFO) Club A has around 5 stores, Megamart has about 50, and Stride has around 15. While these formats are smaller in scale, they are expanding rapidly. The majority of our square footage addition will come from our core brands, with new formats contributing about 10-15% of the expansion.
Q: Can you provide a breakdown of brand-wise store additions and closures over the last two years? A: (CEO) We added 120 stores and closed about 70, resulting in a net addition of 50 stores and 1.22 lakh square feet this year. The closures were mainly smaller, non-strategic stores, while the new openings are larger, more profitable stores. We plan to increase our square footage by 1.5 lakh square feet next year.