Bata India

Bata India reported a challenging Q4 FY25 with revenue from operations at INR 788 crores, marking a 1.2% year-on-year decline. Gross margin stood at INR 455 crores, experiencing an erosion of 230 basis points compared to the previous year. The reported EBITDA margin was 25.5%, down 14 basis points year-on-year, though the like-to-like EBITDA margin (adjusted for an accounting change related to licensed brands) was 23.5%. Net Profit After Tax (PAT) was INR 46 crores, a decline of 215 basis points year-on-year.

The company has significantly scaled up its Zero Base Merchandising (ZBM) initiative, now implemented in 146 stores, up from less than 40 last quarter. This program aims to make stores more inviting and clutter-free, reducing the number of lines by almost 40% and overall inventories by about 25%. ZBM stores have shown positive outcomes, including a 300 basis points increase in availability of size sets and articles, and a reduced retrieval time of 45 seconds (compared to over 1.5 minutes elsewhere). The company targets to expand ZBM to approximately 300 stores by December end, covering 45-50% of its retail turnover.

Bata India is actively driving its value proposition across the network, particularly with ladies' core essentials and the new Power Move+ collection, which offers attractive price points and cutting-edge designs. The Floatz portfolio continues its strong growth trajectory, expanding across stores with a growth rate of over 40% plus, and is projected to achieve approximately INR 200 crores in revenue this year. Premiumization efforts continue with the expansion of Hush Puppies through franchise and COCO models, and new technologies like EasySlide (scaled to 1,200 doors) and Stamina+ (launched in 400 doors) within the Power portfolio.

Significant progress has been made in inventory agility, with overall inventory dropping by 16% and aged inventory reduced by 30-35% year-on-year. This is driven by faster reaction to slow-moving products, improved ordering processes using technology like Blue Yonder, and a more choiceful approach to new product introductions. The objective is to reduce redundant inventory and ensure sharp collections, leading to better efficiency and lower markdown intensity after a lag.

The company's distribution network includes approximately 625 franchise stores and an expanded multi-brand outlet (MBO) program reaching about 1,400 outlets. The channel mix for the year saw retail (COCO) contributing about 70%, franchise about 7.5%, e-commerce about 10%, and multi-brand distribution (IND) about 12-13%. Management expects store additions to be higher next year, maintaining an 80-20 ratio between franchise and COCO models, and is actively mapping potential trade areas for future expansion.

Regarding the BIS (Bureau of Indian Standards) norms, management confirmed that Bata India is 100% localized and had a seamless changeover, with minimal impact from niche licensed brands now resolved. The company views this as an opportunity from an export perspective, working to create a structure within Bata India to cater to Bata globally, expecting this opportunity to ramp up over time. Clarity on government schemes like PLI is still awaited, which could further impetus this initiative.

Bata India is pursuing a dual strategy, focusing on volume-driven revenue growth by catering to the large consumer cohort seeking value propositions, while simultaneously continuing its premiumization efforts. Initiatives like Floatz, Power's technology-driven offerings, and Hush Puppies' expansion contribute to premiumization. The company aims for a volume-driven revenue growth trajectory over the next 2 to 5 years, ensuring a balanced approach that addresses both value and premium segments of the market.