Ethos Limited (ETHOSLTD)

Summary Links:

* Summaries created by AI. Please verify by checking the actual call transcript.

Summary from May 2024

Ethos Limited Q4 and FY '24 Earnings Conference Call Summary

Communication Details • Date of communication: May 16, 2024 • Recipients: BSE Limited and National Stock Exchange of India • Transcript availability: Company website, compliant with SEBI regulations • Key executives present: Pranav Saboo (MD & CEO), Munish Gupta (CFO), Mukul Khanna (COO)

Financial Performance Highlights • Q4 revenue: INR 252.5 crores (21.7% increase) • FY '24 revenue: INR 999 crores (26.7% increase) • Growth driven by high-end and pre-owned watch segments • Significant year-over-year increases in EBITDA and PAT

Strategic Initiatives • Positive impact of EFTA agreement on customs duties for Swiss watches • Plans to expand physical and digital presence • Investment in AI and focus on exclusive brands • Goals to enhance brand value and expand lifestyle/service divisions

Long-term Focus • Shift from short-term guidance to long-term growth strategies • Aim for substantial growth over the next decade

Investor Inquiries and ResponsesRavi Naredi (Naredi Investment): Questions on net profit margins, boutique expansion, and QIP funding. • Focus on improving profitability and operational leverage. • Plans to open 25 new boutiques, long-term goal of 150.

Khush Gosrani (InCred Asset Management): Pricing strategies and unit economics. • Pricing controlled by the company; new boutiques expected to be profitable from year one.

Ankush Agarwal (Surge Capital): Stake dilution, gross margin concerns, and import duty impacts. • Clarified rationale for stake transfer and expectations for margin improvements.

Smitesh Seth (Redean Securities): Opening schedule for new boutiques. • Specific openings planned in Kochi, Pune, Bangalore, and other locations.

Devanshu Bansal (Emkay Global): Questions on inventory, employee expenses, and same-store growth. • Confirmed 10% SSG; rising employee costs due to new store openings.

Bhavya Sonawala (Samaasa Capital): New store openings and airport store plans. • Two new RIMOWA stores planned at airports.

Onkar Ghugardare (Shree Investments): Concerns about a 50% drop in online visitors. • Decline attributed to removal of lower-priced brands, focusing on luxury watches.

Prerana Amana (PNA Capital): Planned store openings and potential demand headwinds. • Anticipated strong performance post-elections.

Kunal Sharma (SP Capital): Payback period for new stores. • Target of 20% return on capital in the first year.

Additional Insights • Successful pilot project for Messika at Jio World Drive, Mumbai. • Focus on increasing exclusive brand representation from 30% to 50%. • Pre-owned watch business generated INR 66 crores in the previous financial year.

Conclusion • The call concluded with an invitation for further inquiries from investors.

Summary from February 2024

Ethos Limited Q3 FY24 Earnings Conference Call Summary

Key HighlightsDate of Call: February 14, 2024 • Revenue Growth: • Q3 FY24 revenue increased by 22.4% year-on-year to INR 281.2 crores. • Nine-month revenue up by 28.5% to INR 746.5 crores. • EBITDA: • Rose by 28.5% to INR 50.8 crores, with a margin of 17.7%. • Profit After Tax: Increased by 32.4% to INR 62.3 crores.

Future PlansExpansion: • Plans to open 25 new boutiques by March 2024. • Launch of a customer app. • Revenue Target: Aiming for a 25% CAGR over the next decade. • New Entity: Establishment of RF Brands Private Limited for exclusive brand distribution.

Free Trade Agreement InsightsIndia-Swiss FTA: • Potential benefits discussed, including duty reductions that could enhance margins. • Margin benefits expected to be shared between brands and retailers.

Growth ProjectionsMarket Share: • Current luxury segment market share at 21%, targeting 40-45% in the next decade. • Store Performance: • Positive results from the Rimowa store; Favre Leuba in preoperative stage.

Financial PerformanceCPO Revenue: • Clarified that CPO revenue increased by 35% year-over-year. • Aiming for a 50-60% increase in CPO revenue next year. • Sales Volumes: • 19% growth in sales of watches priced above INR 1 lakh.

Competitive StrategyExclusive Brand Partnerships: • Reduces discounting pressures and allows for increased marketing investment. • Market Expansion: • Plans to open more stores in metro areas to meet demand.

Challenges and ConsiderationsRed Sea Crisis: • Delayed some store openings but did not significantly impact sales. • Margin Pressures: • Fluctuations in the Swiss franc affecting pricing and profitability.

Pricing StrategyPrice Increases: • Implementing price increases with expectations to maintain INR 95 over the next two quarters. • Market Share Ambitions: • Focus on successful examples in Southeast Asia for growth strategies.

Conclusion • Management expressed confidence in demand and growth potential despite economic concerns, encouraging further inquiries through their investor relations team.

Summary from November 2023

Ethos Limited Q2 and H1 FY2024 Earnings Conference Call Summary

Key Financial HighlightsQ2 FY2024 Performance: • Revenue: Rs. 235.2 Crores (32.4% increase) • EBITDA: Rs. 41.5 Crores (39.8% increase) • PAT: Rs. 18.6 Crores (37.1% year-on-year growth)

H1 FY2024 Performance: • Revenue: Rs. 465.2 Crores (32.4% increase) • PAT: Rs. 36.7 Crores (39.4% increase)

Strategic DevelopmentsMarket Growth: • Focus on the growing luxury market in India. • Addition of four exclusive brands.

Capital Enhancement: • Successful completion of a Rs. 175 Crores Qualified Institutional Placement (QIP).

Q&A Session InsightsAverage Selling Price (ASP) and Volume Growth: • ASP increase expected to stabilize; volume growth anticipated to improve.

Financing Preferences: • Prudent approach to debt financing; equity financing considered.

Store Expansion Strategy: • Focus on Tier-2 and Tier-3 cities; aim for 140-150 stores in four years.

Operational PerformanceStore Openings: • 12 new stores opened in non-metro areas, all profitable.

Cost Management: • Operating leverage expected despite rising costs with new openings.

Market Share: • Estimated over 21% market share in the luxury watch segment.

Future OutlookJewelry Segment: • Significant potential for growth; margins expected to be similar or better than watches.

Cash Flow and Profitability: • Confidence in soon generating cash flow as margins improve.

Brand Partnerships: • Ongoing strategic focus on expanding brand portfolio and market presence.

Conclusion • Ethos Limited remains optimistic about future growth, capitalizing on market opportunities, and enhancing its brand portfolio while addressing operational challenges.

Summary from May 2023

Ethos Limited Q4 FY '23 Earnings Conference Call Summary

Date and CommunicationDate of Call: May 15, 2023 • Transcript Released: May 19, 2023 • Platforms: BSE and NSE

Financial PerformanceQ4 FY '23 Revenue: INR 208 crores (30.8% increase) • Profit After Tax: INR 13.3 crores (69.4% increase) • FY '23 Total Revenue: INR 788.5 crores (36.6% year-on-year growth) • EBITDA: INR 128.9 crores (61.7% increase) • Future Revenue Growth Target: 25-30% for FY '24

Market Insights and StrategiesLuxury Watch Market: Growth potential among younger consumers • Expansion Plans: Increase store footprint and explore jewelry market • Jewelry Sector: Learning phase with expected traction from Messika brand

Supply Chain and Economic FactorsSupply Constraints: Easing in the watch industry, but challenges remain for high-demand models • Impact of Currency Fluctuations: Indian Rupee depreciation affects pricing and margins, but consumer sentiment remains stable

Store Performance and Growth MetricsSame-Store Growth (SSG): 30% for FY '23, with a long-term target of 12-15% • Exclusive Brands Contribution: 27% of business • New Store Profitability: Expected to break even within the first year

Brand and Product DevelopmentRimowa and Messika Brands: Anticipated margins similar to watch business; Rimowa boutique opening soon • Pre-Owned Watch Market: Over 60% growth last year; challenges due to skilled labor shortages

Customer Engagement and Sales StrategyRepeat Customers: 46% of sales from repeat customers • Price Increases: Ranged from 6% to 9% in FY '23, with an effective pricing impact of 2% to 3%

Future OutlookStore Size and Brand Presence: Critical for driving customer behavior and sales • Investment in Haute-Rive: CHF 125,000 for insights into high-end watchmaking • Focus on Retailing: Ethos aims to remain a retailer, with potential future brand ownership

ConclusionQ&A Session: Addressed various inquiries about growth, margins, and market dynamics, inviting further questions offline.

Summary from February 2023

Ethos Limited Q3 FY2023 Earnings Call Summary

Key Financial HighlightsRevenue Growth: 18% increase to Rs. 229.7 Crores compared to Q3 FY2022. • Profit After Tax: 71% rise to Rs. 20.7 Crores. • Market Demand: Strong demand in premium and luxury watch segments.

Strategic DevelopmentsRetail Expansion: Plans to open 40 new stores over the next two years. • Brand Partnerships: Exclusive agreements with four luxury watch brands. • Omnichannel Strategy: Focus on enhancing retail presence.

Management InsightsSupply Chain Challenges: Disruptions due to COVID-related lockdowns in China affecting shipments. • Growth Projections: Anticipated strong performance in upcoming quarters despite supply issues. • Store Performance: Most new stores expected to break even within the first year.

Certified Pre-Owned SegmentGrowth Forecast: Single-digit growth currently, with expectations of 70% year-over-year growth next quarter. • Sales Model Shift: Transition to a consignment sales model to improve returns.

Margin and Pricing InsightsSustainable Margins: Expected increase in margins due to higher sales of exclusive brands and operational efficiencies. • Average Selling Prices (ASP): Increase attributed to product mix changes and inflation.

New Store ViabilityEconomic Viability: New stores expected to be profitable quickly, with no pressure on margins. • ROC Confidence: High confidence in return on capital from new stores in smaller towns.

Inventory and Cash FlowInventory Levels: Slight reduction to 153 days; stable levels expected in Q4. • Positive Cash Flow: Reported cash flow and inventory of Rs. 322 Crores as of December.

New Segment RolloutsJewelry and Luggage: Early stages of launching new segments; expected to contribute to long-term growth. • Brand Curation: Emphasis on understanding local consumer preferences for new brand partnerships.

Exclusive Brand Collaborations20 Exclusive Brands: Ethos to feature products specifically designed for them. • Customer Engagement: Aim to be the preferred choice for customers researching watches online.

ConclusionOptimistic Outlook: Management remains focused on aggressive growth plans, targeting over Rs. 1,000 Crores in revenue while maintaining strong inventory levels.