Intro
Stanley Lifestyles - Makers of bespoke leather products and luxury furnishings. FROM a bootsrapped startup by a first-gen entrepreneur 25 years ago TO raising 200 Cr through IPO, it’s a long journey. A unique home grown super premium luxury consumer brand based out of Bangalore and now moving to other cities.
Products
Sofas, Recliners, Chairs, Tables, Dining Chairs etc (70%)
Mattress, Beds, Pillows, Cushions etc (5%)
Kitchen and cabinetry, Wardrobes, Bar units, Prayer units etc (6%)
Rest of the Sales comes from Automotive interiors and contract manufacturing.
Revenue Contribution by Store Category
COCO : 59% - 42 Stores
FOFO : 14% - 27 Stores
Contract Manufacturing & B2B : 27%
Store Format
Stanley Level Next : Ultra Luxury - Ticket Size 5 Lakhs & Above | Company Owned 8 & Franchise 3 Stores
Stanley Botique : Luxury - Ticket Size 3-5 Lakhs | Company Owned 11 & Franchise 4 Stores
Sofas & More by Stanley : Super Premium - Ticket size 1.5-3 Lakhs | Company Owned 22 & Franchise 20 Stores
Maximum Stores in Bengaluru ; Few in Hyderabad, Chennai, Cochin, Coimbatore, Mumbai, Delhi, Pune, Kolkata, etc
The company added 4 new stores in Q3fy25 - 2 under the Stanley Level Next brand and 2 under Stanley Sofas & More brand.
Q3fy25 Financial Performance
Revenues 109.7 v/s 107.3 Cr up 2.2% | 9M flat at 313 Cr
Gross Profit margin improved to 58.1% from 54.7% YoY.
Operating Profit Margin 18.6% v/s 19.2%
PAT up 39.4% from 6.4 to 8.9 Cr
COCO Retail Business grew 10% & B2B grew 21% YoY.
Q3 Concall Notes (I have copy pasted verbatim the points I felt interesting)
On Subdued growth:
Store footfals reduced due to unusually heavy rainfall and subdued market conditions in key retail markets and the shift in one of business verticals from credit to cash and carry model.
“So we realized that the B2B2C, the credit was getting piled up. Post-IPO, we decided that we have to move it to cash and carry because the collections were becoming long overdue. And
due to the stress in the market, the tendency is the B2B2C, the dealers normally do not make the payment and delay the payments. From our perspective, while we have lost a significant number in terms of value of business, but we were able to safeguard our recoveries. revenue loss was roughly around INR 12 crores due to converting from a credit to cash and carry in that particular vertical. we are correcting it, and we are very sure that we will bounce back to our previous business probably by Q2 of next financial year. As of now, we have cleared all the old issues of credit and now we are we are assessing the credit worthiness, and then we will start that cycle with a more measured way going forward.”
One more reason for Subdued growth:
“Delays in inventory handovers from the developer side. builders are not handing over on time. we are very bullish about the next couple of years coming forward because there is a lot of already sold inventory yet to come to the market.”
“From the time the apartments are sold to the handover is between 24 month to 48 month period. So for us, the customers come to us when the handover is about to start. So we are very excited because when you look at the last 36 months period, there is a huge amount of inventory that has been sold. And in various stages going forward, they are going to come for a handover. So, from a sale date to furniture date is almost 24 months to 36 months.”
Growth Drivers
Sales of apartments priced between INR 1 crores to INR 10 crores increased by 46% in 2024 and have grown nearly 500% for the past 5 years. Apartments priced at INR 2 crores to INR 5 crores have registered a significant 400% growth in the past 5 years. This trend is particularly strong in key urban markets such as Mumbai, Bangalore, Delhi-NCR, Pune and Hyderabad. As the handover of luxury homes is expected to surge in the coming years, Stanley Lifestyles is well-positioned to cater to this growing demand in this segment.
B2C is where we are expecting good growth because we have now signed up a lot more new stores that are coming up in areas we were not present. And we hope that we will definitely deliver 20% growth as explained in the past in the coming year too, quarter-on-quarter. This is how we are planning.
What really happens in our furniture business is that the stores normally take between 12 to 18 months to come to what you can call as minimum business scale. So it takes time to kind of build up to that level. Usually, the first year, the store offers you about 50% to 60% of its potential. Second year, about 70% to 80%. And third year is when it goes to come to maturity.
In the next 3 years, almost 80% of our stores would have come to maturity levels. At this point in time, less than 50% of stores are in the maturity level.
So at this point in time, we are more comfortable to expand a little more in cluster-wise. We are more or less 80% - 85% completed in our home market. Next expansion is coming up majorly
in Hyderabad. Chennai also, we are more or less coming to 70% of expansion completion.
Mumbai!, due to nonavailability of suitable real estate, our hands are tied. We are constantly trying for suitable real estate. We would like to expand more in Mumbai. And then finally, Delhi. Pune is another city we have taken over now, and there we are expanding. We remain a bit opportunistic because also in terms of getting the right real estate is something that is the biggest challenge for our business. So we are not committed to continuously grow in 1 city. If the real estate is not viable or not suitable, we try to have the flexibility of expanding in other cities. So that is how we have demonstrated our success in the past 8, 10 years, and we continue to do the same going forward.
Gross Margin & Localization
“We had targeted close to 35% of our leather purchase to be localized this year, and We are at about 33% right now. And my target is to get to about 45% end of next year. in the long term, our vision will be to get to almost 80% localization probably in 24 to 36 months.”
“We have invested in new equipment and machinery that will give us a lot more margins as we go forward. We do not put the machinery throughout our journey. We wait for the scale to come. And when we realize the ROI is between 24 and 36 months, then is when we actually backward integrate. Capacity 70% utilization that is coming from 1 shift basis. We can increase it to almost 2 if not 3.”
“We are also expecting a lot of benefits in terms of cost saving from purchased raw material. And our target remains very clear that we would like to be a INR 1,000 crores company with a 15% PAT in the next 3 Years. That’s our target.”
From the budget perspective, we are excited because the import duty on raw leather, which was basically 25% on crust and 12% on wet blue has been completely taken off. So, we are excited
that we will be able to access better raw material from Europe and other countries, and we can localize at a cheaper cost in India. That is one thing. Secondly, we are aware that BIS certification has been implemented on fabrics and boards, which are basically parts of furniture. And the government has assured that they will also have the BIS on fully made furniture, completely built furniture like they have done for footwear and toys. If that comes into play, I think, we will have a much better market condition because 90% of our competition remains imported furniture itself.
Disclosure: Invested from IPO and have been adding little bits on every decline below Rs. 300/-
