Jain, who took charge of the company in August, told analysts during the quarterly earnings call on Tuesday the footwear category grew by over 25% year-on-year (yoy) in the July-September quarter driven by the settlement of the disruption caused by the BIS certification changes in 2023 and 2024 for leather and rubber products.
The company, which sells Arrow, Calvin Klein and US Polo among others, has also undertaken the changes in pricing last quarter due to GST rate changes to pass on the benefits to the consumers. “These reforms will lead to a higher disposable income in the hands of the consumers, and we expect to have a positive impact on demand,” said Jain.
Bureau of Indian Standards (BIS) bought footwear under Quality Control Order whereby sourcing from factories need to be mandatorily certified by BIS, be it in India or overseas. This impacted a lot of manufacturers including those who were heavily dependent on imports, especially from China, as BIS was reluctant to certify overseas plants whereby stocks evaporated from stores.
Arvind Fashion has flagged in earlier management commentary that its footwear business was severely impacted and the company ran out of stocks. The settlement of that is finally visible now with shoes sales recovering last quarter.
In case of GST, the government reduced GST to 5% from earlier 12% for apparel priced between Rs 1,000-2,500 and 18% for products abover Rs2,500. The reduction of GST for that price bracket had a positive impact on a lot of premium apparel brands in the country. Speaking about the core apparel business of the company, Jain said US Polo continues to post upwards of 20% growth, so is Tommy Hilfiger and Calvin Klein maintaining a growth momentum which she expects will continue.“As the consumer is trading up, we are seeing that, these two brands are extremely strong from a brand positioning and offering point of view, and we expect to see a trend of growth over there,” she said.
The standalone net profit of Arvind Fashions declined by 41% yoy to touch Rs 36 crore in the September quarter while the standalone revenue for the quarter grew by 3% yoy at Rs 230.6 crore. The direct channels of the company delivered 8.3% growth on a like to like basis, and 50% growth in the online B2C channel.
“There is a clear focus and strategy behind what we are doing, as you know that we have been talking about driving our direct channel strategy, and what we have seen is a strong focus towards that,” Jain said.
The contribution of online B2C channels grew from 8% to 12% on a year on year basis last quarter. The total number of exclusive brand outlets of the company were 998 as of September.