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Branded apparel makers post steady growth in profit margins

Data compiled by global consultancy reval, Wazir Advisors, branded apparel makers reported a steady increase in their profit margins in the December quarter on the back of increased sales in the festive season.

Aditya Birla Fashion & Lifestyle reported a 2.2 per cent increase in its earnings before interest, taxes, depreciation and amortization (EBITDA) margins for the quarter ended December 2018 as against 1.2 per cent posted in the previous quarter. The company had posted negative EBIDTA margins of 1.2 per cent for the quarter ended June 2018. Similarly, Gokaldas Export and Page Industries reported 4.3 per cent and 21.5 per cent of EBITDA margins for the quarter ended December 2018 versus 2.2 per cent and 20 per cent in the September quarter of 2018.

Kewal Kiran Clothing, which produces leading denim brands like Killer, Lawman pg3, Integriti, K-Lounge and Additions, has a high return on capital employed (ROCE) of more than 60 per cent which is highest in the industry. The brand has outlined a plan to invest Rs 150 crore in the next two years in expanding its capacities, in both denims and branded shirts and T-shirts. The company also plans to increase its store count by opening 36 - 40 stores every year, and also double the number of distributors.

The December quarter is always good for brands due to festivals like Dussera, the Diwali and the Christmas and the New Year which increase sales. Also, many wholesalers build their stocks during the quarter. Most importantly, no discounts are offered during the December quarter as it is the peak seasonal demand season.

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