Arvind Fashions (ARVINDFASN) Q4 19/20 earnings summary

Executive summary

• FY20 was a reset year: exits, store closures, trade inventory correction and withdrawal from long-credit customers weighed on reported growth and profitability.

• Revenue was ₹3,866 crore; comparable EBITDA excluding Ind AS 116 was a loss of ₹117 crore. COVID-19 further disrupted Q4 and increased near-term uncertainty.

• The focus shifted to seven core brands, cash generation, lower costs and stronger digital and omni-channel execution.

Financial highlights

• Consolidated revenue was ₹3,866 crore vs ₹4,644 crore in FY19; strategic actions and COVID-19 reduced sales, while exited brands contributed negligible FY20 revenue vs ₹190 crore in FY19.

• Reported EBITDA was ₹231 crore; comparable EBITDA excluding Ind AS 116 was a loss of ₹117 crore, vs ₹288 crore reported and ₹(117) crore comparable in FY19, respectively.

• Consolidated net loss was ₹399.36 crore vs net profit of ₹21.48 crore in FY19; basic EPS was ₹(68.37) vs ₹2.87.

• Finance costs were ₹289 crore reported and ₹179 crore comparable, vs ₹126 crore in FY19; reported depreciation was ₹438 crore vs ₹153 crore in FY19.

• COVID-related exceptional provisions totaled ₹60.69 crore, covering sales returns, inventory dormancy, doubtful debtors, and schemes and discounts.

Outlook and guidance

• April 2020 sales were nil; month-on-month recovery began with May reopening and was expected to strengthen in H2 FY21, with operations potentially normalizing in FY22, barring a second wave or other unforeseen events.

• Growth plans prioritize seven leading brands, casualwear, denim, kidswear, innerwear, prestige beauty, and scaling omni-channel and e-commerce.

• Structural cost reductions and more agile, closer-to-market buying are intended to improve profitability and release cash through lower inventory as sales recover.