Aditya Birla Fashion and Retail Limited

Jagadish Bajaj

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Let me give you an update on Reebok transfer

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Let me give you an update on Reebok transfer

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Let me give you an update on Reebok transfer

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Let me give you an update on Reebok transfer

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Let me give you an update on Reebok transfer

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Nihal Jham

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Tejas Shah

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Tejas Shah

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Tejas Shah

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There was, of course, the impact of casualization, which significantly helped us.

— Vishak Kumar

And do we see any pockets of regions which are weak for us or could be any concern?

— Aliasgar Shakir

As far as our business is concerned, while there is a higher growth at the premium end the market, I don't think the growth is a challenge even at the bottom to middle of the market as of now for us.

— Ashish Dikshit

My concern or maybe the question was to understand if the wholesale mix sort of goes down, will the margin trajectory for Lifestyle segment improve or decline.

— Devanshu Bansal

So, is it fair to assume getting into quarter 2 and quarter 3, our investments into advertising businesses would only increase and that could put some pressure on the margins given that the benefits of the investments would again be slightly delayed?

— Ankit Kedia

Q

Thank you. Good evening, and welcome to the Earnings Call for our Company. The first quarter of FY '23 has been a disruption-free first quarter after a gap of 3 years. The quarter has seen strong demand and has followed the trajectory of the last 2 quarters. Since the Q1 of both FY '21 and '22 was severely affected by COVID, I will compare the performance of this quarter with Q1 FY '20, which is a comparable quarter to give investors a comparable perspective of our performance. Now let me take you through the performance of Q1 FY '23: ABFRL did its best ever Q1 Performance in terms of both sal

Let me give you an update on Reebok transfer

Reebok India operations will transfer to us with effect from 1st October 2022. And for the interim phase, that is from 1st April 2022 to 30th September 2022, ABFRL is entitled for the net economic benefits from the Reebok India operations. Now Pantaloon business. Pantaloon has recorded another quarter with Rs. 1,000 crore plus revenue and continued to generate strong EBITDA. Revenue in Q1 grew by 15% over pre-COVID to reach Rs. 1,027 crore. EBITDA for the quarter grew by 33% of pre-COVID to reach to Rs. 218 crore with noticeable expansion of 270 basis points in EBITDA margins. E-commerce chann

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Three questions from my side, starting off with Madura. So, in Madura's case, if I look at our revenue per store, even if I compare it to pre-COVID, there has been a significant improvement and whether it is even in the like-to-like number that you have disclosed. What I wanted to understand, Vishak, was other than the casual portfolio that we've added, are there any other incremental changes that have happened in the Madura portfolio, which has led to this significant improvement? I'm assuming there would be a slight mix element, but we would believe that wouldn't have too much of an impact i

Vishak Kumar

Do you want ask all your 3 questions or you want to go one by one? I would go one by one if that is fine. All right. Okay. So, I think you're right, it's many things. There was, of course, the impact of casualization, which significantly helped us. There were other factors also at play, including a very strong consumer movement of back-to-office, physical offices. Wedding season also was quite strong for us during the quarter. I think many of our other initiatives on assortment, et cetera, also paid a lot of dividends. And of course, the fact that market was good. All these together may have c

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A couple of questions. First on Lifestyle Brand. If I see there is a very interesting interplay between the different channels, whereas wholesale has a 3-year CAGR basis kind of de-growth, but other 2 channels have done phenomenally well. So, any insights if you can share, is it deliberate or is this how consumers are also or footfalls are also changing?

Vishak Kumar

Tejas, first thing is first. Yes, we are scaling up our retail business much faster with kind of expansion that we're having, as well as throughput improvements in retail. Multiple initiatives going on to constantly keep strengthening the retail network and expanding it. On the wholesale, however, I think the wholesale business actually has been quite strong. Two things have impacted specifically the quarter 1 performance, one being the lack of business with Central during the quarter. Central, as you know, is a fair large trading partner for us. We have not been able to do any business with t

Q

A couple of questions. First, a bit on the macro. So, I mean, I hear the commentary very positive, and we've seen very good performance across the vertical. Some of the channel checks we do indicate that a lot of the rural markets and also, in fact, a lot of companies indicate rural market Tier-2, Tier-3 are not doing very well. So, if you can just share some color in terms of how have we delivered across multiple regions? And do we see any pockets of regions which are weak for us or could be any concern? Or I mean, how is the outlook here?

Ashish Dikshit

So, Ali, I don't think there are very strong discernible and statistically valid data that we can pull out and say 1 region is doing much worse particularly and so on. I think not just this quarter, but if you look at our performance, previous quarter and quarter before that, there is all around sort of buoyancy in the market. There is definitely greater resilience as you go up the price point. Our higher-priced products, brands which are more premium, have shown much faster growth, reflecting clearly a resilience in the premium end of the market. The challenges as you come down the price poin

Q

My first question is with regards to again Pantaloons. I mean, if we see in terms of the margins for Pantaloons, that have been very wavy. I mean, while we understand that there have been elements of COVID also in between impacting the brick in format stores. But according to you, what would be a steady-state margin for this format now with the assumption that the things would be normal going ahead?

Ashish Dikshit

So, unfortunately, we have operated in some form of COVID impact for most of last 2.5 years, except perhaps Q3 of FY '22 and Q1 this year. So, if you remove those quarters and go back to even go as far back as Sangeeta was saying FY '20 for 3 quarters which you see, you would get a fairly good sense of margins, which are stable margins for Pantaloons. We continue to improve on that, just as we have done in previous 4, 5 years of Pantaloons journey. I think a lot of variation, there is intrinsic seasonal variation that fashion business has. And therefore, whether it's Madura, Pantaloon, any oth

Q

Congratulations for continued strong execution in Q1. Sir, with Lifestyle moving towards B2C, what is the growth trajectory expected for wholesale channel within this segment? And related to this, how is the EBITDA margin performance profile for wholesale segment versus the other 2 segments?

Ashish Dikshit

Vishak, do you want to comment? Look, I don't want to put a number for wholesale growth. All I want to tell you is that it's an important part of our business. We will continue to build that. Like I said, as and when the Central business comes back, that will prepare the overall wholesale business further. We are also looking forward to a strong festive, especially with the early bookings for Onam are looking very strong. Puja, also the indications are very strong. So, usually when Onam and Puja do well, the Diwali business is strong. So, we are looking at a strong wholesale, I don't want to p

Q

Two questions from my end. Firstly, on Pantaloons, just trying to correlate our margins with net store additions. Because when I look at the net store additions over the last 3, 3.5 years, it has been very underwhelming and much lower than what we had guided for or as well what competition has been able to achieve during this period. Because we were close to 310-odd stores, and now we have the 375 over this period. So, is it just because we were short of capital or maybe it was because we have kept closing a lot of stores leading to such a low number of net store additions? And also if we have

Ashish Dikshit

So, I think, over the last 2, 2.5 years, we are trying to restructure the balance in terms of rentals and fairly tough conversations over this period. Wherever we felt that the meaningful benefits that we are seeking were not possible, even if the store was marginally or recently profitable, we've taken a call to sort of set an example and shut some of those stores. So, I think past 2, 2.5 years are reflective of the underlying dynamics that retailers and the landlords have gone through. Clearly, our addition of 70, 75, which you mentioned, we have done over this period, perhaps we have done a

Q

Sir, 3 questions from my side. Firstly, in our segmental EBITDA, there is other section, which is the Rs. 8 crore loss we have reported. Bas that got to do with the new B2C subsidiary we have created? And should we annualize the number as a onetime loss?

Ashish Dikshit

So, these are small expenses, which, of course, include B2C and other experimental ventures that we do. Please remember that these kind of things take a long time to come to fruition. Specifically, B2C, we have just started the business, but we have been working for it for the last 6 to 9 months, where expenses of research, analyzing companies, looking at attractive customer segments to enter, and therefore, various other expenses. While you can annualize the cost, please remember there will be revenue that will follow because that's the whole purpose of this entity. And to that extent, there

Q

I have a query on this Lifestyle Brands EBITDA margin. Sir, if you look at the EBITDA margin, actually, it was down by 150 basis points to 17.5%. We have had a robust growth, but the benefit of operating leverage is somehow not visible. Any specific reason over here, sir?

Ashish Dikshit

So, there is a channel mix issue, which while 1 side of the business has done very well, the wholesale has not fully recovered. Vishak explained some of the reasons that existed at that from this time. Obviously, there is also an element of higher growth in e-commerce, which today generates less profit compared to the retail channel growth. So, these are the channel mix issues, which are actually driving the shift in margin. And sir, 1 question on this Reebok stores. Like how does the investment and CapEx happen over there? Will this be basically on a franchise basis or how this model will wor

Q

So, my question is basically for Pantaloons and on the non-apparel segment actually. So, I wanted to understand our focus on that segment. So, if you see that the footwear is a fast-growing industry and many peers are focusing on this segment now. And globally, also footwear is very important for retailers. So, what is our plan for footwear in the Pantaloons business and what is it contributing currently?

Sangeeta Pendurkar

Priyanka. So, this segment actually includes multiple categories. The largest ones, of course, are footwear, bags. We'll do some bit of jewelry, a new category that we launched was home. And a lot of these category focus areas that we define were pre-COVID, and we've continued to kind of invest in them as we've seen recovery in the market. I think accessorization is a very important trend. And therefore, with our strategy of wanting to complete the (Inaudible) 57:50 for the lady, the women consumer or for the man for that matter with accessories, I think, has been our stated strategy. And ther

Q

A couple of follow-ups. Sir, anecdotally, it seems based on our channel check that we would have gained market share in Lifestyle Brands versus pre-COVID period. So, any insights or there could be buyers, but I just wanted to know if you are also getting some sense validated by numbers?

Vishak Kumar

One indicator of this is our performance in malls vis-a-vis other brands, et cetera, which seems to be suggesting what you're saying. The other is our rankings in department stores, which have also been very, very strong, which also suggests that we've had some gain in share. But as you know, there is no Nielsen or no clear numbers to say what is your share, so we can't confirm that. But I think broadly, the kind of growth that we've had should have resulted in an increased market share, Tejas. Perfect. And last one, you spoke about Reebok being early to comment on capital deployment and other