Khadim India Limited , a prominent footwear retailer, reported a subdued performance for the first quarter, reflecting the challenges posed by a soft demand environment and unpredictable weather conditions.

Financial Highlights

The company reported revenue from operations of Rs. 957.00 million for Q1, with a profit after tax (PAT) of Rs. 8.60 million, translating to a PAT margin of 0.9%. The gross margin stood at 47.7%, while the EBITDA margin was 12.9%.

Factors Affecting Performance

The company's performance was impacted by muted demand, particularly in Tier 2 and Tier 3 cities. Unpredictable weather and global factors affecting consumer sentiment contributed to the soft demand environment. Khadim faced margin pressure due to increased promotional discounting, with discount sales rising from 18% to 33% year-over-year.

Strategic Initiatives

Despite the challenging quarter, Khadim India Limited has undertaken several strategic initiatives:

1. Skechers Partnership: The company entered a strategic partnership with Skechers, offering their footwear at selected Khadim stores.

2. Athleisure Segment: Khadim launched a new athleisure segment, marking an important step in product diversification.

3. Sub-brand Focus: The company plans to scale its sub-brands, British Walkers and Sharon, which have shown encouraging growth trends.

4. True Franchised Model: Khadim is expanding through the True Franchised Model (TFM), having opened 12-13 new TFM outlets, contributing around Rs. 5.00 crores of additional turnover.

Retail Footprint and E-commerce

As of Q1, Khadim's retail footprint comprised 884 stores, including 207 company-owned outlets and 677 franchisee stores. E-commerce sales contributed 1.34% of total revenue for the quarter.

Management Commentary

Rittick Roy Burman, Managing Director of Khadim India Limited, expressed optimism about the upcoming festive season, which is arriving earlier this year. The company anticipates a pick-up in consumer demand and is preparing to capitalize on this opportunity.

Outlook

Looking ahead, Khadim remains confident in its strategy and proactive approach. The company is committed to building on its brand equity, optimizing its retail network, and innovating across product categories to meet evolving consumer preferences.

As the festive season approaches, Khadim expects demand to increase and plans to reduce discounting to protect margins. The company is also focusing on expanding its presence in the Eastern and Southern parts of the country, where brand recognition is strong and new stores can reach profitability more quickly.

With its strategic partnerships, focus on sub-brands, and expansion of the True Franchised Model, Khadim India Limited is positioning itself to navigate the current challenges and capitalize on future growth opportunities in the Indian footwear market.

Khadim India Limited , one of India's leading footwear retailers, has unveiled its strategic growth plans centered on premiumisation and geographic expansion, alongside its financial results for the first quarter.

Strategic Growth Initiatives

Khadim India is actively pursuing a growth strategy focused on premiumisation and expanding its presence in the southern and western markets of India. The company has forged a strategic partnership with Skechers, enabling the availability of Skechers footwear at select Khadim stores. This move is expected to enhance the company's premium offerings and attract a wider customer base.

Expansion and Market Presence

With a robust network of 884 'Khadim's' branded retail stores, the company has established a pan-India presence across 24 states and 4 union territories. Khadim India operates through an asset-light franchise model, with 76% of its retail presence managed through franchises. This approach allows for rapid expansion while minimizing capital expenditure.

Q1 Financial Highlights

For the quarter ended June 30, Khadim India reported the following financial results:

The company's revenue for the quarter was impacted primarily by a decline in franchise sales. The gross margin was influenced by promotional discounts offered during the period.

Market Positioning and Product Range

Khadim India positions itself as the second-largest footwear retailer in India, with a particularly strong presence in East India and a growing foothold in South India. The company's extensive product range caters to various market segments, from economy to premium, allowing it to address approximately 85% of the total Indian footwear market potential.

Future Outlook

As part of its next growth phase, Khadim India has successfully completed the demerger of its distribution business and manufacturing segment into KSR Footwear Limited. This strategic move is expected to streamline operations and focus on core competencies.

The company continues to expand its retail footprint, with a particular emphasis on markets across South India, West India, and Uttar Pradesh in North India. Khadim India's strategy involves entering new markets through company-owned company-operated (COCO) stores and subsequently augmenting its presence through franchisees.

With its focus on premiumisation, strategic partnerships, and an asset-light expansion model, Khadim India aims to capitalize on the growing footwear market in India while maintaining its position as a leading player in the industry.