Credo Brands Marketing Limited - Q3 & 9M FY24 Financial & Business Performance

Credo Brands Marketing Limited (MUFTI), one of the prominent players in the men's casual wear providing a meaningful wardrobe solution for multiple occasions in a customer's life, with product offerings ranging from shirts to t-shirts to jeans to chinos, which caters to all year-round clothing has announced its Unaudited Financial Results for the Quarter and Nine Months ended 31st December 2023.

Key Financial Highlights:

Total Revenue: Credo Brands recorded a total revenue of Rs 150.1 crore in Q3 FY24, marking a 15% increase from Rs 130.5 crore in Q3 FY23. This growth indicates the company's ability to expand its top-line performance through effective sales and marketing strategies.

Gross Profit: The gross profit for Q3 FY24 stood at Rs 89.8 crore, reflecting a 19% increase compared to Rs 75.4 crore in Q3 FY23. This positive growth demonstrates the company's success in managing its cost of goods sold and improving operational efficiency.

EBITDA: The EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for Q3 FY24 was reported at Rs 42.5 crore, showing a marginal decline of 1% from Rs 42.9 crore in Q3 FY23. While the EBITDA margin remains healthy at 28.3%, the slight dip indicates potential challenges in managing operating expenses.

Profitability: Credo Brands witnessed a decrease in both profit before tax (PBT) and net profit after tax (PAT) for Q3 FY24 compared to the same period last year. The PBT declined by 20% to Rs 20.7 crore, and the net PAT also decreased by 20% to Rs 15.6 crore. The PAT margin stood at 10.4%, down from 14.9% in Q3 FY23.

- Since the Company turned 25 this year, there has been a one-time ex-gratia payment to employees to the tune of Rs. 1.7 crores

- In Q3 FY24, Branding & Advertising spends amounted to Rs. 12.8 crores as compared to Rs. 4.5 crores in Q3 FY23, an increase of Rs. 8.3 crores. In 9M FY24, Branding & Advertising spends have increased to Rs. 23.7 crores as compared to Rs. 12.2 crores in 9M FY23

- Outsourced Manpower costs have increased by Rs. 2.6 crores in Q3 FY24 & by Rs. 7.3 crores in 9M FY24 on account of additionalstaff for the larger warehouse at Bangalore

KEY BUSINESS UPDATES

- No. of EBOs added during 9M FY24 are 40 Stores on a Net Basis
- Total EBOs as on 31st December 2023 stood at 413 stores
- Sales Mix for 9M FY24
- EBO : 55.7%; MBO : 23.8%; LFS : 2.9%; Online : 14.0%; Others : 3.6%
- Product Mix for 9M FY24
- Shirts : 37.6%; T-shirts : 13.0%; Bottomwear : 38.2%; Outerwear : 8.1%; Others : 3.1%
- Same Store Sales Growth (SSSG) for EBOs stood at 1.4% for Q3 FY24 as compared to Q3 FY23 and stood at 0.5% for 9M FY24 as compared to 9M FY23
- Working Capital Days as on 31st December 2023 stands at 142 days.
- RoCE stood at 32.1%; RoE stood at 20.8% for 9M FY24 (On annualized basis)

Commenting on the Result, Mr. Kamal Khushlani, Chairman & MD, Credo Brands Marketing Limited said "The company has remained steadfast in its growth trajectory, despite persistent challenges at the industry level, placing significant emphasis on operational efficiency. Throughout the third quarter of FY24, the retail sector in India experienced subdued demand, which extended into the festive period.

Revenue for Q3 FY24 grew by 15% YoY to Rs. 150.1 crores, with Gross Margins at 59.8%. EBITDA for the quarter stood at Rs. 42.5 crores as compared to Rs. 42.9 crores in Q3 FY23, a de-growth of 1% Y-o-Y. Our EBITDA margin stood at 28.3%. This is mainly due to increased advertising expenses to the tune of Rs. 8.3 crores. This was done with the objective of communicating the brand in its new avtar to the consumers. The marketing spend has helped the company grow the revenues by 19% in 9M FY24, despite muted demand in industry. Excluding this expense, our EBITDA in Q3 FY24 would have grown by 18% YoY.

To enhance brand awareness and strengthen brand recall for our brand, we utilize targeted marketing campaigns, through digital and social media, billboards, multiplex cinemas, and live events. In keeping with the above, we have released our ad-films across cinemas in the country, driving a strong brand recall with our consumers. We have developed a strong brand identity through effective brand advertising and multiple marketing campaigns for our brand.

In order to adapt to an ever-changing retail landscape, we conducted an internal assessment in 2019 and put the learnings to reinvent the brand philosophy. As part of this brand reinvention, we developed, 1) a new Brand Identity; 2) a new merchandise architecture for increasing our share of customer's wallet by providing designs suited for specific occasions in our customer's life ranging from relaxed holiday casuals, authentic daily casuals to urban casuals, party wear and also athleisure; 3) a new Retail Identity. Since we made the above changes, the brand has gained in salience and the same is reflected in the performance of the Company.

We plan to expand our store network in existing and new cities. We have identified several markets as having potential for opening further EBOs. This offers the potential for market share gains, increased brand recognition and economies of scale. We are also looking to capitalize on the increasing e-commerce demand in Indian retail and grow our share of sales from own website and e-commerce partners.

We want to leverage technology to improve supply chain management and enhance customer experience. We intend to further invest in IT infrastructure to improve productivity and increase operating efficiency and customize buying experience of customers, both in-store as well as online.

Our sector's resilience, coupled with our adeptness in responding to evolving market dynamics and our commitments to technological advancements and product innovations, positions us favorably for attaining enduring growth. With focused expansion of our product portfolio. we intend to evolve brand Mufti as a 360° men's lifestyle brand.

Shares of Credo Brands Marketing Limited was last trading in BSE at Rs. 244.50 as compared to the previous close of Rs. 238.50. The total number of shares traded during the day was 28578 in over 1099 trades.

The stock hit an intraday high of Rs. 246.00 and intraday low of 230.10. The net turnover during the day was Rs. 6944929.00.

Source : Equity Bulls

Keywords

CredoBrandsMarketing MUFTI INE220Q01020 SpecialityRetail Q3FY24 9MFY24 ResultUpdate