(Reuters) -Indian retailer Arvind Fashions posted a 26.5% rise in second-quarter profit on Monday, aided by steady demand for premium clothing brands and an early local festive season this year.
The company, which sells clothing from brands including Arrow, Calvin Klein and Tommy Hilfiger, reported consolidated net profit of 374.6 million rupees, up from 296 million rupees a year ago.
Revenue from operations rose 11.4% to 14.18 billion rupees, aided by growth of 20% in adjacent categories such as footwear, belts, wallets and backpacks. Arvind Fashions shares are up 6% after reporting results.
For further results highlights, click [here]
KEY CONTEXT:
Spending on beauty and premium fashion typically surges during India’s October–December festive season, a crucial period that drives most retailers’ annual sales. Arvind Fashions says it hopes to strengthen its connection with consumers to accelerate retail expansion and drive premiumisation.
Peers such as Trent are yet to report earnings while Shoppers Stop posted a marginally narrower second quarter loss from a year ago, but expects demand to have risen during festivals in the third quarter that ends in December.
Spending on premium products by India’s affluent classes has held up despite the high cost of living. Recent goods and services tax changes have reduced levies on garments costing less than 2,500 rupees to 5%, but items priced above that figure now face a higher tax rate of 18%, from 12% earlier.
PEER COMPARISON:
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth (%) growth (%) rating* analyst price yield
s target** (%)
Arvind Fashions 32.43 9.93 12.76 162.26 Strong 5 0.70 0.32
Buy
Trent 72.58 40.04 22.41 25.55 Buy 14 0.80 0.11
Shoppers Stop 133.0 9.98 10.33 150.54 Hold 5 0.86 NULL
4
Aditya Birla NULL 13.05 -19.10 NULL Hold 15 0.62 NULL
Fashion and Retail
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
(Reporting by Urvi Dugar in Bengaluru; Editing by Ronojoy Mazumdar)
