Relaxo Footwears , India's largest footwear manufacturer, reported a 15% year-on-year decline in net profit to ₹170.33 crores, down from ₹200.47 crores in the previous year. The company's revenue from operations also decreased by 4.3% to ₹2,789.61 crores compared to ₹2,914.06 crores in the previous fiscal year.

Financial Performance

• Net Profit: ₹170.33 crores (15% decline)
• Revenue: ₹2,789.61 crores (4.3% decrease)
• EBITDA: ₹382.00 crores (down from ₹406.59 crores)
• EBITDA Margin: 13.69% (compared to 13.95%)
• Footwear Sales: 17.75 crore pairs (down from 19.49 crore pairs)

The company cited challenging macroeconomic conditions, weak consumer sentiment, and muted discretionary spending as factors affecting its performance.

Dividend

Despite the challenging year, the Board of Directors has recommended a final dividend of ₹3 per equity share (300%), subject to shareholders' approval.

Operational Highlights

• Launched over 275 new footwear designs
• Successfully deployed and scaled up the 'Relaxo Parivaar' App, onboarding over 70,000 retailers
• Expanded distribution network by adding new distributors
• Supported 25,000+ multi-brand retail outlets with in-shop branding and point-of-sale materials
• Grew retail presence to 418 Exclusive Brand Outlets

Manufacturing and Efficiency Initiatives

Relaxo implemented several measures to enhance manufacturing efficiency and reduce costs:

• Introduced advanced textile cutting and pattern-stitching machines
• Upgraded testing capabilities at its Innovation Centre
• Undertook energy conservation initiatives

Exports

• Presence in over 30 countries across six continents
• Awarded the No. 1 Exporter Award in the Non-Leather Footwear category by the Council for Leather Exports

Outlook

While acknowledging near-term challenges, Relaxo remains cautiously optimistic about gradual recovery in consumer demand. The company plans to focus on innovation, premium products, and strengthening its distribution network to drive growth.

Ramesh Kumar Dua, Chairman & Managing Director, commented: "This was a year of consolidation for Relaxo. While our top line was impacted by muted demand in the mid-range footwear segment and internal restructuring of our distribution model, we have undertaken strategic interventions aimed at setting the business on a stronger, more agile footing for long-term growth."

Relaxo Footwears , India's largest footwear manufacturing company, has released its unaudited financial results for the first quarter, showcasing a mixed performance amid challenging market conditions. The company reported a 10.2% year-on-year increase in profit after tax (PAT) despite a 12.5% decline in revenue, highlighting its focus on operational efficiency and margin improvement.

Financial Highlights

• Revenue from operations stood at ₹654.49 crore, down from ₹748.19 crore in the same quarter last year
• EBITDA remained stable at ₹99.45 crore, with the EBITDA margin expanding by 198 basis points to 15.2%
• Profit After Tax increased to ₹48.90 crore, up from ₹44.37 crore in the same quarter last year
• PAT margin improved to 7.5%, compared to 5.9% in the corresponding quarter

Margin-Driven Recovery Strategy

Relaxo Footwear is implementing a margin-driven recovery strategy while facing demand softness in the market. The company is focusing on three key areas for long-term scalable growth:

1. Leveraging brand resilience
2. Strengthening retail operations
3. Improving cost efficiency

Management Commentary

Ramesh Kumar Dua, Chairman and Managing Director of Relaxo Footwear, commented on the results: "As we reflect on this quarter, it was a quarter that came with its share of challenges. Consumer demand remained muted, particularly in the mass and mid-market segments, while regional competition in general trade intensified from smaller players who have gained ground since the GST increase from 5% to 12% in 2022."

He further added, "Even as these pressures strained our ecosystem, we consciously avoided short-term tactics such as deep discounting while staying steadfast in our commitment to protect overall profitability. At the same time, we remained focused on our sales transformation journey and the expansion of our distribution network, steps that will place the business on a stronger footing in the future."

Operational Efficiency and Cost Management

The company's improved operating margins during the quarter were attributed to enhanced operational efficiencies, disciplined cost management, and streamlined backend processes. These productivity measures are expected to build a strong foundation for improved financial performance in the future.

Market Challenges and Future Outlook

Relaxo Footwear acknowledged the ongoing challenges in the market, including:

• Muted consumer sentiment, especially in the mass and mid-market segments
• Intense regional competition in the general distribution channel
• Continued impact of the GST increase from 5% to 12% implemented in 2022

Despite these challenges, the company remains optimistic about its long-term prospects. Mr. Dua stated, "While it will take some time for the topline to stabilize and improve, our long-term priority remains sustainable, profitable growth. The groundwork we are laying today gives us confidence in delivering stronger results in the quarters to come."

Conclusion

Relaxo Footwear's quarterly results demonstrate the company's ability to maintain profitability and improve margins in a challenging market environment. By focusing on operational efficiency, cost management, and strategic initiatives to strengthen its market position, Relaxo is positioning itself for sustainable growth in the long term. As the company continues to navigate market headwinds, investors and industry observers will be watching closely to see how its margin-driven recovery strategy unfolds in the coming quarters.