Thanks.
ABFRL Innerwear - Current sales are only Rs2800mn or Rs280 cr and the business is loss making. In their 2017, analyst they had promised to make it profitable by 2020 but have failed to do so until now.
The one potential Achilles heel is that ABFRL is outsourcing manufacturing unlike Page; the latter claims in-house manufacturing to be their key competitive advantage. Quality issues matter a lot in premium innerwear and don’t show up early on. But these can weigh on a brand over time. We won’t know for sure if ABFRL can further scale up innerwear like Page.
On Pantaloons, agree they have stopped the losses and made it profitable. However , it still scores substantially lower than peers VMART and TRENT on most metrics.
Note above how Vmart and Trent make similar ROCEs to Pantaloons despite much superior margins. This is because they have higher working capital as they pay their suppliers within 10 days. Counter intuitive as it may seem, the very best retailers such as DMART, VMART and Trent do this to 1) keep suppliers happy 2) make them loyal and inculcate reliability 3) push for discounts which can be passed on the customers. Pantaloons does not do this right now.