Detailed Narrative
Q1 FY26 Performance Overview
Campus Activewear reported a revenue of INR 343.3 crores for Q1 FY26, marking a 1.4% year-on-year growth. This was achieved despite a challenging macro environment and significant internal transitions. The company's volume declined by 11.6% year-on-year, selling approximately 5.1 million pairs of footwear. However, the Average Selling Price (ASP) increased by 14.7% to Rs. 671, largely offsetting the volume decline.
Impact of Internal Transitions and Online Sales
The quarter was affected by two major internal transitions: stabilizing a new raw material warehouse and implementing SAP. The warehouse consolidation, which merged three facilities into one, took longer than anticipated, causing a 15-20 day disruption in supply. This particularly impacted online channel sales, leading to an 8% de-growth and sales loss during the first fortnight. Management noted that the blackout period for SAP was shorter than expected, allowing normal business operations to resume by the second week of April 2025.
Premiumization Strategy and Sneaker Growth
Campus Activewear's premiumization strategy yielded positive results, with gross margins expanding by 210 basis points to 55.4% (from 53.3% in Q1 FY25). This was driven by a disproportionate focus on the sneaker category, which achieved a remarkable 150% growth, selling 550,000 pairs compared to 220,000 last year. The company also consciously scaled down lower-margin products like DIP school shoes, slippers, and sandals, further contributing to margin improvement.
Distribution Channel Performance and Market Initiatives
The distribution channel demonstrated strong performance, growing by 8%, while large format stores saw a 20% growth. The company hosted its largest-ever distributors meet, SHOECASE 2025, and is conducting numerous retailer meets across the country. These initiatives, coupled with a curated portfolio of new styles and a new digital campaign 'Aye Bro, Capsule Pro', are enhancing growth visibility and demand recovery.
BIS Regulation and Future Outlook
Management indicated that the benefits from the BIS regulation are just beginning to materialize, with the bulk expected to accrue as non-BIS inventory clears from the market by June 2026. The company remains optimistic about achieving double-digit revenue growth for FY26 and aspires to reach an EBITDA margin of 17-19%. Recovery is expected from Q2 FY26, with July sales already showing positive momentum.
Manufacturing Capacity Augmentation
To bolster manufacturing efficiency and meet peak demand, Campus Activewear commenced production of uppers at its Paonta Sahib facility in Himachal Pradesh starting August 1, 2025. This strategic move is expected to further support the company's growth trajectory.