– Value Pickr - Page 1200

May 2024 Concall Notes

Management Views on Business

Management optimistic about company’s growth and strategic focus
Company aims to open additional store capacity of close to 90,000 square feet mainly in Tamil Nadu
Belief in selling experiences and expanding retail footprint in ethnic retail market in India, particularly in Tamil Nadu
Focus on improving cash flow conversions by reducing liabilities and negotiating better cash discounts in markets

Financial Performance:

Revenue for Q4 FY’24 was INR 359.6 crores, compared to INR 323 crores in the previous year.
Gross margin improved to 40.97% from 39.77%.
PAT for the quarter stood at 28.73, a growth of 41.95% compared to the previous year.
Full year PAT was 100.87, a growth of 3.36% compared to the previous year.
Inventory write-off around 1% annually.
Planning to declare inventory write-off as a separate line item.
Store closures not mentioned.
Revenue contribution: Varamahalakshmi (42%), KLM (38%), Kalamandir (16%), Mandir (4%).
Store level margins: Varamahalakshmi (33-34%), KLM (24-25%).

Operational Highlights:

Added three new stores in Q4, totaling 22,750 square feet of retail area.
Upgraded one store from Kalamandir format to Varamahalakshmi format.
Planning to open additional store capacity of around 90,000 square feet in the current financial year.
Active customer base stands at 6.5 million with a focus on expanding in Tamil Nadu.
Completed integration of Salesforce with the ERP system for digital marketing campaigns.

Cash Flow Management:

Negative operating cash flow in the current year due to a focus on improving the balance sheet by reducing liabilities.
Reduction in creditors’ levels to improve margins in the coming years.
Utilizing IPO funds for investing activities in the current and next year.

Expansion and Growth Strategies

Opening 13 Varamahalakshmi stores this year with larger store sizes in cash-rich centers
Targeting positive Same Store Sales Growth (SSSG) of 2-3% and improving EBITDA margin
Expansion into Tamil Nadu market with Varamahalakshmi stores
Majority of customers purchasing for weddings, with a younger generation increasing in Indian census data

Marketing and Sales Strategies

Increasing digital platform usage for marketing, including influencer collaborations on social media and e-commerce
Doubling digital ad spends while reducing offline spends on newspapers and television
Store inaugurations blend offline and online marketing efforts with influencers, celebrities, and social media content creation

Inventory and Operations

High inventory levels due to industry’s requirement for high throughput
Efficiencies in inventory management pursued through sarees and cluster inventory management
Expectation of improved inventory turnaround in the coming quarters

SSG Growth

Customer Behavior

Repeat purchase is tracked over a trailing 12-month period using a unique phone number for each customer.
Customer profiling is done to understand purchase behavior and preferences.
Customers often purchase sarees in groups for various events, not just weddings.

Product Mix:

70% revenue from sarees.
Pure silk sarees contribute over 25%.
Other products include women’s lehengas, kurta, kurtis, men’s occasion wear, kids occasion wear, and accessories.
Men and kids wear contribute around 15-18% of revenue.

Future Outlook:

Optimistic about the company’s growth potential.
Strategic store expansion to capture market share.
Focus on improving inventory management and reducing costs.
Utilizing technology for targeted marketing and customer engagement.
Confident in the long-term relevance of saree wearing, especially in South India for weddings and occasions.
Prepared to adapt the product mix and marketing strategies as the market evolves, including a focus on digital platforms and influencer marketing.

Posts in category Value Pickr