Arvind Fashions (ARVINDFASN) Q1 24/25 earnings summary

Executive summary

• Achieved double-digit revenue growth in Q1 FY25, with consolidated revenue at ₹955 crore and EBITDA at ₹123 crore, reflecting a 20% year-over-year EBITDA increase despite challenging market conditions such as elections, heatwave, and fewer wedding dates.

• PAT turned positive at ₹13.92 crore, compared to a net loss in Q1 FY24, with profitability driven by premiumization, adjacent categories, and robust online sales.

• Like-for-like growth was 1.5%, outperforming industry peers, attributed to store renovations, product freshness, and controlled discounting.

• Growth was broad-based across brands and channels, with Tommy Hilfiger, U.S. Polo Assn., and Calvin Klein delivering strong results.

• Ongoing restructuring and brand rationalization, including sale of subsidiaries and discontinuation of certain brands.

Financial highlights

• Revenue from operations rose to ₹955 crore from ₹867 crore year-over-year, with gross profit margin improving by 80 basis points to 55.2%.

• EBITDA increased to ₹123 crore from ₹103 crore, with margin at 12.9% versus 11.9% last year.

• Net debt stood at INR 225 crore at quarter-end, with expectations to remain stable or reduce as free cash flow is generated.

• Working capital days remained stable, with inventory days reduced by 3 and stock turns at 4.

• CAPEX for FY25 is projected at INR 100 crore, up from INR 85 crore last year, mainly for store expansion and renovations.

Outlook and guidance

• Maintains guidance of double-digit revenue growth and 100 basis points EBITDA margin expansion for FY25, with medium-term growth targeted at 12%-15%.

• Focus remains on profitable growth, not just top-line expansion, with continued investment in retail, online, and adjacent categories.

• Emphasis on profitability improvement through operating leverage and cost optimization.

• Working capital control and free cash flow generation to drive higher ROCE.

• Ongoing restructuring and brand focus highlighted, with branded apparel as the core business.