Arvind Fashions (ARVINDFASN) Q4 17/18 earnings summary

Executive summary

• FY18 comparable revenue increased 14% and EBITDA rose 44%, driven by power brands, specialty retail, margin improvement and cost control. Reported consolidated revenue was ₹3,794 crore; periods are not comparable because Tommy Hilfiger and Calvin Klein were consolidated from April 2017.

• The business entered FY19 as an independent fashion platform spanning premium and value brands, with management focused on quality growth, working-capital control and digital capabilities.

Financial highlights

• Consolidated FY18 revenue was ₹3,794 crore; EBITDA excluding other income was ₹227 crore, or 6.0% of revenue, versus ₹75 crore and 5.8% in the shorter, non-comparable prior period.

• Consolidated PBT was ₹11.6 crore and PAT ₹12.9 crore; basic EPS was ₹1.27 and diluted EPS ₹1.24. Prior-year PAT was ₹15.0 crore and EPS ₹2.98 basic, ₹2.82 diluted.

• Consolidated finance cost was ₹91.3 crore, 2.4% of revenue; total debt was ₹745 crore at March 31, 2018.

• Comparable revenue grew 14% in FY18, while reported consolidated revenue increased from ₹1,292 crore to ₹3,794 crore; reported figures are not comparable due to consolidation changes.

• Consolidated comprehensive income included ₹90.2 crore of net FVOCI gains; this is distinct from ₹12.9 crore PAT.

Outlook and guidance

• Management targeted profitable growth through distribution and category expansion for power brands, faster Unlimited expansion, and new Sephora products and stores, including Tier 2 cities.

• Innerwear priorities include revamping distribution and product strategy; footwear expansion is planned across casual, semi-formal and formal categories.

• Working-capital initiatives include faster supply-chain turnaround, analytics-led buying, faster stock returns, online account reconciliation and customer financing options.

• Digital priorities include strengthening NNNOW omnichannel capabilities, improving employee productivity and enabling faster decisions and customer experiences.