Notes from Q2 concall -
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Q2 saw sustained recovery vs Q1 despite severely impacted July. Q2 revenues up 2.5X of Q1 revenues. Q2 Offline sales at 75 pc of pre Covid sales. Online business continues to see significant growth on an already substantial base. **As on date ( ie 12 Nov 21 ) revenues are tracking near pre covid levels ** Gunning for business to hit pre Covid levels and go beyond in H2 FY 22. ( Pre covid FY 18-19 Sales and PAT were - 591 cr and 70 cr )
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Key focus areas for Q2 -
(a) Online business - continues to do well across own website and marketplaces. Omni channel stores fulfilment which was launched last Qtr scaling up well to cover most large demand centers and is now contributing to 5 pc of sales.
(b) Store expansion - Aim to add 60+ EBOs this year. Will open a store every third day in H2. This will take store count to above 600 + for the first time.
(c) Project Rise - Upgrading presence in key markets ( in up-mkt areas like CP showcasing the complete range of products ). Opened 5 large stores, clocking 1.5X pre COVID sales. Should help the brand to grow can consumer’s mind in a big way.
(d) Cash conversion and cost control - Q2 has been cash accretive. Last 3 out of 4 Qtrs have been cash accretive taking total cash to 160 vs 110 cr YoY. Reduced rent commitments by 20 pc. Continue to invest in ppl, infra and processes.
(e) Swifter thought to shelf - improved inventory management, consolidation of warehouse ops, express replenishment mechanisms and design incubation - fully on track.
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Have built a differentiated footwear range, finding good acceptance. Footwear already contributing in double digits in EBO stores. Complete roll out of footwear range in second half of current FY.
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Fusion Folk wear- being tested through 20 W stores. Seeing good traction here, will roll them out to 90 W stores now.
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Aim to open 15 exclusive ‘Eleven’ branded stores in second half. This can be scaled massively if the pilot project is successful.
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Over time, aim to make W a complete lifestyle brand. Piloting beauty products in EBOs and Online channels under the W brand. Getting good response here as well. Aim to make W a complete top to toe brand.
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Qtly sales at 239 cr, up 66 pc yoy. Gross margins at 63pc vs 52 pc last yr. EBITDA at 45 cr vs 7 cr loss last yr. PAT at 11 cr vs loss of 27 cr last yr. Opened 17 new stores and closed 9 stores during the Qtr taking the total count to 557 EBOs.
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Overall blended gross margins across clothes, footwear, cosmetics should settle around the current gross margins profile of the company. Sale of cosmetics and footwear in the Rise stores ( large format stores ) has been very encouraging.
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Currently 37 pc stores are franchisee led and rest are company owned. Company chooses franchisee partners very carefully. Most stores in Tier 1 and 2 cities are company owned. Franchisee stores are in Tier-3,4 cities.
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B2C in online is now at 50 pc. Rest 50 pc comes from other channel partners.
Disc : not invested. May take up a tracking position.