In Conversation With Cantabil Retail's Shivendra Nigam
Transcript
00:00Well, welcome back and Tantabill Retail is in focus today.
00:13If you see company came out with its Q1 FY25 numbers wherein revenue was up at 128 crore
00:20versus 112 crore last year which was up 14 percent while if you see margins, margins
00:26were flat at 31 percent and net profit was down around 8 percent or this was led by higher
00:33depreciation and higher tax outgo compared to last year.
00:36Well, to discuss the results I am here joined by Mr. Shivendra Nigam who is CFO at Tantabill.
00:43Welcome to the show.
00:44Well, Mr. Nigam, the same store sales growth if you see was around 1.2 percent while volume
00:54growth was at 18 percent so I am assuming the volume growth that you have seen is on
00:59the back of new stores that you have added?
01:10Let's look at the stock till then.
01:12Let's look at the stock till then if you see the stock is actually buzzing today, it's
01:16up almost 4 percent and so actually good set of numbers when it comes to on the back of
01:23revenue and EBITDA but margins were flat at 31 percent but net profit was down now
01:30maybe the company is going into CAPEX and this is the reason we are seeing high depreciation
01:36but there was also higher tax outgo compared to the last year and company is actually going
01:43for opening of new stores and company has also entered into footwear and also volume
01:50guidance if you see the volume, volume growth has been good at 18 percent and the same store
01:56sales growth is not good it's almost 1.2 percent now the one reason may be the first quarter
02:02is actually very weak for the company and Q2 may be muted for the company but from Q3
02:08onwards because of the wedding season we may see you know good uptick in numbers that's
02:14how the history has been of course we need to check out how company will foray or increase
02:21its presence into women's wear because almost 86 percent of the revenue comes from the men's
02:28wear now company is actually entering or rather increasing its presence into women's wear
02:35which was 9 percent last year, 7 to 8 percent last year versus 10 percent this year also
02:41company is entering into footwear we would want to know how company is going to expand
02:47into this business well Mr. Nigam so I was actually speaking about the same store sales
02:52growth which is at 1.2 percent while volume growth was 18 percent now I am assuming this
02:58volume growth is on the back of new stores that you have added yeah total volume growth
03:05is 18.5 percent on the basis of new stores however the same store volume growth is also
03:113.6 percent and my overall value growth from same store sales growth is 1.2 percent so
03:16it's quite pretty a satisfying number considering the current muted market demand so can you
03:22if you can guide us about the volume growth for the next year what are we expecting on
03:28the volume side so overall same store sales growth we are expecting approximately in value
03:354 to 5 percent so we have seen a trend in first quarter itself despite muted demand
03:40so overall we are targeting to grow approximately 15 to 8 percent in terms of overall sales
03:47growth if I talk about the same volume is also going in approximately 15 to 18 percent
03:52Mr. Nigam I am expecting the Q2 will be muted and you can see an uptick in growth in Q3
04:01considering the wedding season perfectly yeah so Q2 July was good for us July was also
04:10on a positive side in terms of same store sales growth August is slightly on a flatter
04:14side September so overall marginal in Q2 also we are expecting some marginal growth in some
04:20sort of same store sales growth but definitely Q3 and Q4 is going to be a great one so overall
04:25target for the company is same as of now 4 to 5 percent same store sales growth and 15
04:30to 18 percent overall revenue growth so you did talk about revenue growth of 15 to 18
04:35percent but what about margins we are we are targeting the same margin even in Q1 we have
04:41improved our gross margin which was earlier last year 65 percent this is 66 percent because
04:46we always said for us gross margin is very important same thing gross margin is being
04:51maintained approximately on annual business 55 56 percent and EBITDA margin we will be
04:55back on track approximately pre-India 17 to 18 percent and post India 27 28 percent
05:00we are expecting so this direction is so also let's talk better please go yeah please go
05:05ahead yeah yeah sorry yeah so let's talk about your segmental breakup so how do you see this
05:11woman accessories contributing and say you know two years from now because your contribution
05:16from all these categories is actually increasing so how do you see this panning out over the
05:21next two years anything last year we chose men's wear 83 percent women's wear has shown
05:27a growth of 1 percent from 9 to 10 percent and kids have also an accessory this now is
05:32operating approximately 4 to 5 percent so going forward since we are opening separate
05:37women's and kids store as well now we are having operating approximately 40 plus numbers
05:41in terms of exclusive women's and kids store so going forward this number we are expecting
05:46to increase one or two percent on an annual basis so down the line two to three years
05:51this 10 percent category of women's wear as of now should settle somewhere around 14 to
05:5615 percent okay and and where are the margins higher because I assume please correct me
06:02if I'm wrong women's category and kids category have a higher margin so considering you going
06:07into you increasing your presence into women's category won't that lead uptick in margins
06:12no no I think margins are almost same women's and category also having the same margin what
06:19the men's category so when I'm talking on annual basis for overall 55 percent margin
06:23almost margin in all the categories are same whether it's a men's men's is slightly on
06:28a couple of percent higher side than women and kids and approximately on an annual basis
06:33they are operating on a same margin okay then let's talk about the on the geographical front
06:38so I think mostly you are present in the North India upper side of the India so in
06:43coming time are we looking to expand in South India so as of now yes we have been present
06:52mostly in North India and Western India also a very strong bearer so we are now expanding
06:57apart from these two big regions we are expanding on Central India like MP MP we have been aggressive
07:03now so course out we are not looking as of now for next couple of year you can say then
07:09after the proper when these are new territories will be required when I am talking when we
07:13are clearing that more than thousand crore revenue by FY 27 then we are looking for the
07:17South India as well also recently added footwear into your portfolio now I would like to know
07:24how is the response how many stores do we have currently and what is the future plan
07:29when it comes to footwear section so the sell through I can say as per our expectation
07:36it is picking up now definitely now it's one year business now six seven eight one year
07:41business now so we have been put it initially in the 50 stores existing now we are opening
07:46the larger stores now as I in our earlier commentary as I said we are opening the larger
07:51store so most of the larger store when I am talking about 1400 1500 plus size of a store
07:56footwear is there so approximately 100 stores are serving right now and going forward we
08:01are looking very good we are expecting good numbers from footwear itself it's doing good
08:05time and so coming to your your store so what would be the target at the end of the financial
08:12year in terms of stores count and how many stores do you plan to open this year so as
08:18of now by the end of June we are having approximately 545 store 544 to be precise so same number
08:2570 to 80 stores on an annual basis we have been adding so last year we closed at 533
08:30store if I add 70 to 80 store to 600 plus 610 615 somewhere around by the end of this
08:36financial year and going forward saying approximately 70 80 store approximately we are opening year
08:41on year basis also now as a management where do you aspire to be because I mean do you
08:47want to be on the value retail chain aspect or you know into premium category where do
08:53you see cantable retail standing between these two when it comes to you know maybe
08:58two three years down the line so if you know our average selling price is approximately
09:031000 rupees you know 1000 plus so when you are talking about value where 400 500 rupees
09:07of ASP we are not there and a very premium brand where we are taking 2000 rupees plus
09:12of the average selling price we are not there so we are finally very balanced positioning
09:17and positioning ourselves as a mid premium segment obviously there is a value segment
09:21and there is a super premium or a premium segment so we are positioning ourselves as
09:25a mid premium segment also when I see your revenue per square feet that has fallen significantly
09:32over the last two years and that is actually you know hurting your margins as well your
09:38plan when it comes to you know arrest this decline so one thing I would like to clear
09:44there is no decline in terms of margin because of the per square feet sale is being increasing
09:50as we said last year we are opening the bigger stores now last year my average size was 1200
09:56plus square feet and last year we opened the size of a 1600 plus square feet because as
10:01explained earlier as well we are when 1000 square feet the properties available it's
10:05a men's store when it is approximately 1000 to 1500 it's a men's and ladies and when it
10:10is going beyond 1500 plus a store plus a square foot of the size we are opening the family
10:15store so obvious when the sizes are increasing theoretically per square feet sale is coming
10:20down at the same time per square feet operational cost is coming down because rental is my big
10:25saving till last year my average rental cost for 120 rupees square feet now last year it
10:31is 122 rupees per square feet my salary percentage was so on theoretically yes per square feet
10:36sale is coming down but we are pretty okay because we are opening the bigger stores which
10:40is giving the much better number so overall per square feet and per square feet cost is
10:45being coming down but company level EBITDA and margins are not being eroded because of
10:49this well got that well thank you so much Mr. Nigam for answering our questions thank
10:56you thank you so much well that was management of canticle with that it's a wrap on the small
11:02and mid-cap show lots of news on the other side keep watching entity profit
11:10entity profit