Bengaluru-based apparel maker Arvind Fashions (AFL) is confident of achieving its guidance of a 12-15% growth in revenue with margin improvement of 100-150 basis points (bps) in the next financial year (FY25). This is despite a slower than expected growth during the third quarter of the current financial year (Q3FY24).
“Right now, our growth is 10% plus in all our channels except business-to-business (B2B) wholesale. And in the medium term, when the market improves a bit, we are committed that 12 to 15% guidance will be valid and we are hopeful that we will continue to grow at that,” said Shailesh Chaturvedi, MD & CEO of the company.
A bulk of the growth is expected to be driven by 'power brands', which comprises brands like Arrow, US Polo (USPA), Calvin Klein, Tommy Hilfiger, and Flying Machine.
In an interview with CNBC-TV18, Chaturvedi said the company is investing in the growth of these power brands through store expansion, and strengthening of other adjacent product categories like footwear and innerwear within these brands.
The adjacent category constitutes over 15% of the brand revenues, both for USPA and Tommy Hilfiger. These categories will continue to grow faster than the industry, faster than the overall brand, and could soon cross 20% of the brands' revenues.
In Q3FY24, Arvind Fashions' revenue rose 5% year-on-year (YoY) to ₹1,125 crore. The EBITDA margin improved to 12.7% from 10.4% last year while net profit (from continued operations) rose to ₹30 crore from ₹26 crore last year.
Chaturvedi pointed out that the company's offline channels, which are retail, multi-brand outlets (MBOs), and department store have grown at 11% and same-store growth was positive at 2%.
Chaturvedi also highlighted that despite an increase in the marketing spend on its brands, the EBITDA has expanded. "Our marketing spend has gone up by 130 basis points. Otherwise, the EBITDA would have grown at close to 280 basis points. Our brands are very salient; they are top of the mind and getting market share," he noted.
During this quarter, AFL successfully divested its Sephora business to Reliance Retail, resulting in a gain of ₹94.28 crore. Sephora is known for its wide-ranging collection of beauty and cosmetic labels.
Also Read
In Q3FY25, the company expanded its network by establishing approximately 31 exclusive brand outlets.
The stock price of this Indian textile manufacturer, which serves as the flagship entity of the Lalbhai Group, has surged by over 61% over the past year, resulting in a market capitalisation of ₹6,214.12 crore.
Watch the interview in the accompanying video
(Edited by : Shweta Mungre)
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Punjab Lok Sabha elections: Check full list of AAP candidates and constituencies
May 18, 2024 12:59 PM
PM Modi, Rahul Gandhi election rallies in Delhi today: Here are the routes to avoid
May 18, 2024 11:28 AM