V2 Retail Limited Q1 FY 2024-25 Earnings Conference Call Summary
Key Highlights
• Date of Call: July 31, 2024
• Record Performance:
• 162% increase in profit after tax (PAT) year-on-year.
• 57% increase in revenue.
• Gross margin: 29%, EBITDA margin: 13.4%.
• Store Expansion:
• 10 new stores opened, total now 127.
• Plans to add 50-60 more stores in FY25.
Strategic Focus
• Financial Metrics:
• Targeting pre-IndAS EBITDA margin of 9%.
• Aiming for 20%-22% Return on Equity (ROE) and 10% same-store sales growth.
• Profitability vs. Growth:
• All current stores are EBITDA positive.
• Emphasis on maintaining profitability while expanding.
Demand and Sales Growth
• Strong Demand:
• 37% same-store sales growth (SSG) reported.
• Positive customer feedback on pricing and products.
• Seasonal Patterns:
• Q1 and Q3 identified as peak sales periods.
Working Capital and Inventory Management
• Current Metrics:
• Inventory days: 81, Payable days: 40.
• Consolidated inventory: 439 crores, Payables: 251 crores.
• Aging inventory reduced from 23% to 7%.
Marketing and Store Expansion
• Marketing Expenses:
• Less than 1% of total sales, focus on product quality.
• Store Locations:
• New stores primarily in existing clusters.
• Fixed rental costs at Rs. 54 per square foot.
Competitive Positioning
• Market Strategy:
• Differentiation from online retailers through pricing and product offerings.
• Seasonal sales fluctuations, highest in Q3 due to festivals.
• In-house Production:
• Increased in-house designed goods from 5% to 30%-35%, targeting 80%.
Operational Efficiency
• SAP HANA Implementation:
• Improved data reporting and operational efficiency.
• Omnichannel Exploration:
• Considering leveraging store inventory for e-commerce.
Future Outlook
• Sales Projections:
• Conservative SSG projection of 10% for the next year.
• Targeting inventory turnover of 90-100 days.
Conclusion
• Overall Strategy:
• Focused on growth despite competitive pressures, particularly from brands like Reliance.
• Future Investments:
• Planned investment of approximately 110 crores for new stores over the next nine months.