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Disclosure Details • Date of disclosure: August 14, 2024 • Compliance with SEBI Regulation 30 • Transcript available on the company's website • Signed by Archana Maini, General Counsel and Company Secretary
Earnings Highlights • CEO Nikhil Aggarwal's Remarks: • Resilience in a challenging market • 3% year-on-year volume growth (5.8 million pairs) • Stable gross margins at 53.3% • Introduction of 78 new designs and expansion to 23,100 outlets • CFO Sanjay Chhabra's Financials: • Operational revenues: INR 339.2 crores • EBITDA: INR 54 crores • PAT: INR 25.4 crores • Anticipation of demand growth post-monsoon and during festive season
Key Inquiries and Management Responses • Average Selling Price (ASP) Changes: • No significant ASP increase expected for FY25 • Demand fluctuations attributed to seasonal factors • Shift towards more economical offerings (products below ₹1000)
• Growth in Sports and Athleisure: • Fastest-growing segment with expected lower double-digit growth in FY25 • Confidence in gaining market share as demand normalizes
• Channel Inventory and Employee Costs: • Inventory levels normalized to 60-80 days • 21% increase in employee costs due to headcount and inflation • Focus on performance marketing and expanding in underrepresented markets
Financial Guidance and Compliance • No specific guidance on EBITDA or gross margins for the year • Compliance with Bureau of Indian Standards (BIS) regulations effective August 1, 2023 • Minimal cost impact expected; smaller players may face challenges • Anticipation of normalized margins of 17-18% in the future
Market Performance and Strategy • Strong demand for open footwear attributed to agile supply chain • Trade channel contribution expected to stabilize around 50-51% • Gross margins for open footwear remained flat year-over-year • Significant 120% growth in the sneakers category • Plans to penetrate the southern market through online and offline channels
Future Outlook • Gradual growth expected in new LFS accounts over three to four quarters • Exploration of accessories; apparel expansion will take more time • Positive responses in the open footwear segment noted in Q1
Conclusion • The call concluded with no further questions from participants.
Campus Activewear Limited Q4 and FY24 Earnings Call Summary
Earnings Call Overview • Date: May 28, 2024 • Participants: CEO Nikhil Agarwal, CFO Sanjay Chhabra • Compliance: SEBI regulations
Company Performance Highlights • Recovery in FY24: Strong recovery noted in the second half. • Store Openings: 66 new stores launched. • Debt Status: Achieved net debt-free status by repaying Rs. 156.5 crores. • Cash Flow: Record net operating cash flow of Rs. 264.5 crores. • Revenue: Slight decline in operational revenue to Rs. 1,448 crores; decrease in pairs sold but increase in average selling price.
Regional Growth Insights • Year-on-Year Growth: 10% growth in North and West regions; significant improvements in UP (20%), Bihar (14%), and Maharashtra (10%). • Focus on Premiumization: Shift towards enhancing economical product range for volume growth. • Distribution Network: Consolidated from 425 to 300 distributors; retail reach increased from 20,000 to 23,000.
Financial and Operational Strategies • Gross Margin Compression: Attributed to lower online commissions and a one-time NRV hit of Rs. 1.6 crores. • Channel Strategy: Aiming for a 50:50 mix between trade distribution and D2C sales. • Advertising Spend: Consistent spending projected at 6-7%.
Future Outlook • Store Openings: Plans to cautiously increase openings to 80-100 new stores annually, focusing on FOFO models. • Margin Maintenance: Targeting EBITDA levels between 17% to 19%. • Market Confidence: Strong brand positioning and supply chain advantages noted.
Market Conditions and Challenges • Delayed BIS Implementation: Potential short-term inventory surplus anticipated; confidence in managing inventory before June 2025 deadline. • D2C Performance: 50% reduction in D2C days sales outstanding (DSO) due to improved collections.
Advertising and Sales Trends • Digital Marketing Budget: Rs. 60 crore allocated for FY24. • Online Sales Decline: Significant drop from Rs. 300 crores in FY23 to Rs. 160 crores in FY24.
Conclusion • The call concluded with an invitation for further inquiries, emphasizing optimism for double-digit growth contingent on stable macroeconomic conditions.
Campus Activewear Limited Q3 FY24 Earnings Call Summary
Earnings Call Overview • Date: February 10, 2024 • Compliance: SEBI regulations • Participants: CEO Nikhil Aggarwal, CFO Sanjay Chhabra
Financial Performance • Revenue: Stagnant at INR 472 crores in Q3 FY24 • Growth: Positive quarter-on-quarter growth due to increased consumer spending and online sales • Gross Margins: Improved to 38.3% from lower material costs • Debt Reduction: Decreased by INR 112.6 crores • Working Capital: Improved from 150 to 68 days
Marketing and Advertising • Current Ad Spend: Approximately 10%, higher than the normalized range of 5% to 7% • Brand-Level Marketing: Around 6% • Concerns: Flat online B2C revenues despite major sales events; ongoing recovery from previous sales channels
Margin Competitiveness • EBITDA Margins: Decline attributed to increased advertising expenses and market demand slowdown • Future Guidance: Expected normalization of EBITDA margins to 15% to 18%
Market Dynamics • Regional Performance: Significant growth in the North; decline in the West • Competition: Losses in Uttar Pradesh and Bihar; gaining share in other areas • Premium Product Mix: Increased but not significantly improving gross margins
Compliance and Inventory Management • BIS Regulations: Delays in clearance of imported goods; full compliance with Type One standards • Inventory Provision: Approximately INR 400 crores; proactive measures to reduce aged inventory
Future Aspirations • Long-term EBITDA Margins: Aim to return to previous levels achieved 2-3 years ago • Store Expansion: Maintaining a rate of approximately 100 new stores per year • Transition Goals: Full transition expected by FY25
Conclusion • The call concluded with an invitation for further inquiries to the investor relations team.
Campus Activewear Limited Q2 and H1 FY24 Earnings Call Summary
Earnings Call Overview • Date: November 10, 2023 • Disclosure: Transcript released on November 17, 2023, per SEBI regulations • Key Executives: Chairman H. K. Agarwal, CEO Nikhil Aggarwal
Financial Performance • Q2 FY24 Revenue: INR 259 crores • Impacted by declining volumes and exit of Udaan and AJIO • Healthy gross margins maintained at 54.3% • Focus on inventory correction to adapt to demand fluctuations
Management Insights • H. K. Agarwal: • Inventory correction allows focus on new product sales • Nikhil Aggarwal: • Successful distributor meet led to significant pre-orders • Optimism for normalized growth starting Q3 FY24 • Market share on Flipkart increased from 5% to 8.5% • Strong position in footwear segment, especially in Uttar Pradesh
Q&A Highlights • Sales Performance Concerns: • Akshen Thakkar (Fidelity Investors) raised questions about sales decline and distribution challenges. • Nikhil Aggarwal emphasized brand building over deep discounting.
• Value Brand Strategy: • Decision to pause value brand strategy to maintain premium brand image.
• Online Sales Channels: • O2O revenue being substituted by marketplace growth. • New Exclusive Brand Outlets (EBOs) confirmed.
• Inventory Corrections: • Attributed to distribution channel issues and low consumer demand.
• Geographical Expansion: • Focus on urban, semi-urban, and rural markets without expanding into athleisure garments.
Future Outlook • Anticipation of stable and positive performance moving forward. • Plans to increase advertising and marketing spending to 5-6% of sales. • Manufacturing strategy includes a mix of in-house and third-party production, with plans for full BIS certification by early December.
Conclusion • Management expressed optimism for future performance despite recent challenges, with a clear strategy to navigate the competitive landscape and enhance market share.
Campus Activewear Q1 FY24 Earnings Call Summary
Earnings Overview • Date of Call: August 11, 2023 • Revenue Growth: 4.8% year-on-year to ₹353.8 crores • Units Sold: 5.6 million pairs • Average Selling Price (ASP): Increased by 4.1% to ₹629 • Sales Channels: • Online sales: Up 10% • Offline sales: Up 82% • EBITDA Margin: Stable at 18.8% • Net Debt: Reduced, indicating a strong balance sheet
Management Insights • Focus Areas: • Premiumization • Expanding retail presence in new markets • Long-term Goals: Aim to be the top-of-mind brand in India with marketing investments at 6% of revenue
Investor Q&A Highlights • Expectations for Revenue Recovery: • EBITDA margins expected to return to pre-IPO levels with improving macroeconomic conditions • Challenger Brand: Testing brand aimed at sub-Rs. 1000 market segment, but focus remains on Campus brand • Gross Margins and Pricing: • Recent improvements due to better channel/product mixes and sourcing efficiencies • No unreasonable price increases anticipated • Direct-to-Consumer (D2C) Growth: On track after previous issues
Market and Strategic Outlook • Trade Distribution: 5% decline, but recovery noted in core markets • D2C Offline Channel: Rapid growth, preference for 70:30 ratio of franchise to company-owned stores • BIS Regulations: Expected to enhance quality and benefit domestic brands
Additional Considerations • Marketplace Commissions: Slight increase offset by higher net realizations • ASP Growth: 6-7% growth over the past decade, with future opportunities in the Rs. 1,000 to Rs. 3,000 range • Commitment from Promoter Family: No stake reduction since IPO
Closing Remarks • Confidence in Future: Optimism for the second half of the year due to favorable external factors • Invitation for Further Inquiries: Open for questions to the Investor Relations team
Campus Activewear Limited Q4 FY23 Earnings Call Summary
Earnings Call Overview • Date: June 3, 2023 • Compliance: SEBI regulations • Key Executives: CEO Nikhil Aggarwal, CFO Raman Chawla
Financial Performance • FY23 Revenue Growth: 24% year-on-year • Net Income: INR 1,484 crores • Q4 Revenue: INR 348 crores (slight decline from INR 352 crores) • Q4 Net Profit: INR 23 crores • Footwear Sales: Over 23.5 million pairs (22% volumetric growth) • Net Debt Reduction: From INR 174 crores to INR 157 crores
Leadership Changes • CFO Transition: Raman Chawla stepped down; Sanjay Chhabra appointed • COO Promotion: Piyush Singh promoted to COO
Strategic Focus • Distribution Channels: Emphasis on D2C and exclusive brand outlets (EBO) • Inventory Management: Addressing working capital efficiency • Future Growth Strategies: New product offerings and expansion into lower price points
Market Challenges • Inflationary Pressures: Impacting discretionary spending • Northern Region Performance: Decline attributed to macroeconomic factors
Quality Control Standards • New BIS Regulations: Expected to benefit organized players and deter low-quality imports
Distributor Strategy • Consolidation of Retail Touchpoints: Focus on existing distributor base • Flexibility for Distributors: Ability to sell non-competing products
Revenue Distribution • Geographical Insights: North and Central India contributed 55% of revenue • E-commerce Trends: Reflect similar revenue patterns
Market Share and Margins • Market Share Growth: Company likely gained share despite industry declines • Margin Guidance: Stable material margins; EBITDA margins expected to recover to 18-20%
Direct-to-Consumer Growth • D2C Growth: Slight dip in Q4, expected rebound with mid-to-high teen growth rates
Organized vs. Unorganized Market • Market Split: Roughly equal between organized and unorganized players • Margin Variations: 17-18% EBITDA for distribution, 20-30% for D2C online, 24-25% for EBOs
Challenger Brand Strategy • Market Positioning: Targeting INR 699 to 999 segment with a 20% market share • Focus on Volume Growth: Challenger brand as a market filler while maintaining premiumization
Conclusion • Management expressed confidence in future growth and margin recovery as macro conditions improve. Further inquiries directed to the investor relations team.
Campus Activewear Limited Q3 FY23 Earnings Call Summary
Earnings Performance • Date of Call: February 14, 2023 • Revenue Growth: 7.5% year-over-year to INR 466 crores • Footwear Sales: Over 7 million pairs sold • Direct-to-Consumer Growth: 46% increase • Average Selling Price: Increased by 1.5% • EBITDA Margin: 19.9%, slightly down from the previous year
Market Challenges and Management Insights • Current Challenges: Inflation and demand contraction in rural areas • Long-term Outlook: Optimistic despite market challenges • Market Share: Likely gained despite overall market contraction
Consumer Sentiment and Sales Dynamics • Athleisure Segment: Resilient, particularly in footwear • Sales Fluctuations: Attributed to seasonal factors • Q4 Expectations: Optimism for a rebound in sales
Raw Material and Inventory Management • Raw Material Prices: Some stabilization noted; slight margin contraction due to higher costs • Inventory Levels: Reduced by over 50 crores in Q3 • Packaging Material Prices: Fluctuations expected to stabilize in upcoming quarters
Sales Channels and Demographics • D2C Sales Growth: 46% year-over-year; 75% increase in offline D2C sales • E-commerce Performance: Revenue increased to 181 crores • Target Demographic: Primarily aged 18-34, focusing on college students and first-time job holders
Margin Stability and Product Diversification • Margin Changes: Slight decrease from 21.5% to 20% due to sales mix and increased advertising costs • Product Portfolio Diversification: Expanding beyond men's footwear to include women's, kids', and casual footwear • Market Growth Potential: Anticipated growth trajectory similar to China's athleisure market
Conclusion • Management Commitment: Focused on maintaining growth and enhancing brand perception despite current challenges.