Key highlights from Titan Company Ltd (TITAN) Q3 FY24 Earnings Concall
- Jewelry Business
- Tanishq sales growth slowed in Q3 due to timing of Shradh festival between Q2 and Q3 this year vs last year.
- Gold price increase in December 2022 led to hesitancy in customer purchases.
- Margin declined 80 bps in Q3 due to lower studded jewelry sales mix and increased marketing investments.
- Offered promotions like exchange programs amid high competition to maintain market share.
- Opened 36 new Tanishq stores in India this fiscal by seizing opportunities; will continue expanding into new towns/markets.
- Opened fewer CaratLane stores this year after opening 90 last fiscal; more stores planned based on opportunities.
- Demand in sub-INR100,000 segment stable at portfolio level across Tanishq, CaratLane, Mia.
- Softness in same-store growth for Tanishq in this segment due to economic challenges for consumers.
- Watch/Eyewear Segment
- Higher marketing expenses for festive season impacted margins in Q3 in watches.
- Grew wearables sales to over INR500 cr last year, seeing 70-80% growth this year.
- Gained market share from 5-6% to 8-9% on styling, quality and marketing campaigns.
- Wearables mix resulting in lower 11-12% margins vs 13% earlier guidance for next few quarters.
- In eyewear, growth muted due to industry-wide slowdown Sep-Nov; saw better growth in Dec.
- Continuing calibrated store expansion by opening 60+ stores while rationalizing underperforming ones.
- Focusing on making existing 300+ stores profitable after rapid expansion.
- CaratLane and Tanishq
- CaratLane and Tanishq serve different segments so not directly comparable.
- Tanishq benefited from gold sales while CaratLane is mainly sub-50k studded.
- CaratLane added many new stores last year, so some normalization expected.
- Watch Segment Outlook
- Earlier 18% margin target was ambitious dream based on doubling sales.
- Revised more realistic target closer to 15-16% margin in next 2 years.
- Reaching higher sales and margin targets requires significant investments.
- Store Expansion Plans
- Currently present in 265 towns; see potential to reach 300 towns in next few years.
- Identifying new catchment areas in existing towns and entering newer towns.
- Don’t have specific store number target for 3-5 years; will share longer term plans in future.
- Indian Ethnic Wear Growth
- Overall ethnic wear growth 61% in Q3, 70% YTD with store expansion to 75 by year-end.
- However, like-for-like growth slower, in line with muted industry trend of negative like-for-like.
- Apparel industry saw slow like-for-like growth over last 4-5 quarters.
- International Customer Trends
- Average 2 lakh customers per international store, higher in US than GCC.
- Returning customer base in international markets leading to some ticket size increases.
- Bringing Indian franchise partners to international markets like Dubai and Singapore.
- Demand Outlook
- Titan serves higher income segments less impacted by slowdown.
- Seeing continued strong growth in jewelry, watches, perfumes, international.
- Quarterly blips don’t change positive medium-term outlook till FY25-26.
- CaratLane and Mia Positioning
- Both brands are growing profitably in evolving value segment.
- Serve different target groups with distinct product mix and branding.
- Overlap between brands likely small; getting new customers for portfolio.
- No plans to consolidate the brands given profitable growth.
- Franchise Store Expansion
- Not dialing up L3 stores; prefer more L2 stores.
- L3 suited for certain remote markets; L2 more profitable.
- Expect franchise store mix to remain stable going forward.
- Balance sheet strong, incremental expansion not constrained.
- Jewelry Growth Outlook
- Confident of delivering 20% CAGR growth target for jewelry segment.
- Growth so far in line with target despite exceeding it last year.
- Don’t see headwinds to achieving FY27 guidance shared earlier.