Good set of questions again.
- Why does Page Ind run at such low AR/DSO?
This was the ace in the pack for Page Ind compared to all other competitors, till 18 months ago. At the inventory level there wasn’t much of a difference across players but Page Ind was running at AR of 30-35 days while the rest were at 100+ days. Why could this be? Some thoughts here - Page industries - #680 by zygo23554
Jockey has tremendous brand pull in the urban areas, the store owner does not have to do too much localized marketing at all. Consumers know what they want, they walk in and sales happen. This way, inventory turns for the store owner are high, hence they are willing to pay Page Ind upfront/much earlier compared to competitor channel. This was the reason why all other companies were at D/E of close to 1 while Page Ind was zero debt and was starting to payout a high % of profits as dividends.
Post March 2020, the entire industry has become leaner on working capital since credit to channel has been slashed. All serious players have reduced through the past 12 months with Lux even becoming a net cash company now. Low AR and minimal debt is no longer a strength that Page Ind alone enjoys, this aspect is obviously very important for investors.
- Jockey is a US brand which already has a premium association. It is much cheaper to hire a bunch of good looking Caucasian models than to hire a Bollywood celebrity, Page Ind has this part nailed down very well. Look at the other brand names in India within garments - Allen Solly, Louise Philippe, Van Heusen etc. History tells us that “gora” sounding garment names sell in India, all of these names are made by Indian garment houses. When it comes to ethnic wear, it is a different story. We Indians are a convoluted bunch of folks!
Jockey, Hanes, CK are all genuinely “gora” brands, hence they automatically command a premium association in the minds of Indians. In my China trip 5 years ago I saw the same thing there too. One of the premium shopping streets in Beijing (Wangfujing street in Dongcheng area) has brand names in English whereas the rest of the city has boards mostly in Chinese. One of their local coffee chains was far better on all counts compared to Starbucks and even sold at 70% of the price point, yet had 50% less crowd than any Starbucks store. The Chinese look up to the West and to South Korea when it comes to lifestyle decisions, they don’t care too much about other nations. For some reason, this is how the Asian mindset works.
Hope this answers to some extent.
Disclosure: Invested for self and customers, I am a SEBI registered IA. Transactions in the past 30 days