Campus Activewe.

Campus Activewear reported its highest ever quarterly revenues of ₹514.8 crores in Q3 FY25, marking a 9.1% year-on-year growth. This performance was largely driven by an aggressive distribution strategy and strong online sales, benefiting from the festive season. The company sold approximately 7.6 million pairs, a 10% increase year-on-year, with an average selling price of ₹675 per pair, down 1% year-on-year, while footwear ASP remained flat at ₹683 per pair.

The gross margin for the quarter stood at 51.2%, a marginal decrease of 20 basis points compared to Q3 FY24, primarily due to raw material price inflation and an adverse product mix. However, the EBITDA margin expanded significantly by 440 basis points year-on-year to 16.6%, reaching ₹85.9 crore. This expansion was attributed to improved debtor and inventory health, leading to lower provisioning and better working capital management. PAT grew by 86.7% year-on-year to ₹46.5 crore, with PAT margins expanding by 370 basis points to 9%.

The company's strategic focus on multiple initiatives, including reach expansion in key markets and a multimedia marketing campaign featuring brand ambassador Vicky Kaushal, contributed to market share gains. The sneaker category demonstrated exceptional growth of 116% year-on-year. Campus Activewear also strengthened its product portfolio by launching 69 new articles and new SKUs for women, catering to diverse consumer needs and improving the product mix.

Campus Activewear completed the CAPEX for its sole manufacturing unit at Gannaur in Q3 FY25. Furthermore, the Haridwar facility, dedicated to manufacturing state-of-the-art uppers, is expected to be completed in Q4 FY25, with commercial production projected to commence from March 2025. This expansion will add approximately 2.4 million pairs of sneaker capacity, supporting the company's growth aspirations in this category.

The company continued its distribution drive, achieving a 9% growth in distribution and an 11% growth in online sales. Six new Exclusive Brand Outlets (EBOs) were added during the quarter, bringing the total count to 290. The company also expanded its presence on Zepto, a quick commerce platform, to enhance prompt delivery convenience for customers. Management noted that distribution inventories are healthy, around 80-90 days pan-India, with no significant push sales.

Management reiterated its aspiration for 17-19% EBITDA margins for the full year, emphasizing continuous quarter-on-quarter improvement. While prior guidance for mid-teen revenue growth and flat ASP was not explicitly for FY25, the company aims to achieve these targets through premiumization, especially with the growing sneaker portfolio. Advertising and promotion (A&P) spends are expected to trend at 7-7.5% of sales for the year, with no absolute increase. The majority of non-BIS inventory is expected to be liquidated by March end, and no significant additions to employee headcount are anticipated.

Management believes the competitive intensity peaked last year and sees some normalization, though the macro environment remains challenging. Demand is not yet 'absolutely normal' compared to two to three years ago, but it has shown improvement year-on-year. The company has taken selective price increases of 7-10% in less price-sensitive categories to mitigate raw material inflation. Campus Activewear has outperformed in key states across North, West, Central, and East regions, indicating market share gains.