Key highlights from Arvind Fashions Ltd (ARVINDFASN) Q3 FY22 Earnings Concall
Management Update:
- ARVINDFASN stated that 3Q22 was a landmark quarter where the business achieved profitability after many years and saw robust performance across the brand portfolio.
- Highlight of the online business was the strong growth of the footwear business that grew 55% YonY.
- ARVINDFASN said it’s well on track to achieve INR1,000 crore business run rate on exiting the year.
Q&A Highlights:
- Sagar Parekh of Deep Financial Consultants asked about the growth and absolute revenue number for U.S Polo. Kulin Lalbhai Non-ED answered that U.S Polo grew by 40% and as for revenue, the company doesn’t give exact number, but the run rate was at INR125 crore per month.
- Nishit Rathi from CWC Advisors asked about the channel breakup between retail, MBO, digital and LFS. Kulin Lalbhai Non-ED said that the biggest gain in the Diwali festival season was from retail and its contribution went up to 44%; online is above 25%; MVO grew 50%. In department store, the company said it hasn’t recovered fully yet.
- Mythili Balakrishnan from Alchemy Capital enquired that in online, how much effect is coming from own site versus marketplace. Shailesh Chaturvedi MD replied that the way the company looks at its business is how much of its online business is servicing consumer directly, where there is a full control on experience.
- Mythili Balakrishnan from Alchemy Capital also asked about the market response for Arrow brand. Shailesh Chaturvedi MD replied that the product received very good response. The growth also, over the last year, has been good. However, the company expects it to reach its logical conclusion of mid-single-digit EBITDA in the next financial year.
- Pritesh Chheda from Lucky Investments asked about the position of Flying Machine brand after its brand encashment. Shailesh Chaturvedi MD said that after strategic deal with Flipkart Group, it opened a lot of doors for the online world. Flying Machine is doing really well. It’s a leading rank-up brand on Flipkart Group portal in the online world.
- Pritesh Chheda from Lucky Investments also asked that amongst the brands that the company owns, where does it have less than 100% ownership now. Shailesh Chaturvedi MD replied that the company has an equal JV with Phillips-Van Heusen. And then the relationship with Flipkart Group for Flying Machine.
- Vaishnavi Mandhaniya from Anand Rathi enquired what kind of investments should the company see in inventory going forward. Shailesh Chaturvedi MD answered that LFS business is trending well now and it’s the right time to open the tap more wholeheartedly. The company is in the stock turns of higher than four and has a stated objective of ensuring the turns remain close to or above four in the near future.
- Aliasgar Shakir with Motilal Oswal asked about what would be the size of footwear in the overall portfolio. Shailesh Chaturvedi MD replied it’s contributing well to the store and has very good share in ARVINDFASN stores. And also online, the revenues are very good. It’s a leading brand.