Relaxo Footwears slides as Q2 PAT declines 17% YoY to Rs 37 cr

Relaxo Footwears fell 3.83% to Rs 739.90 after the company's net profit decreased 16.88% to Rs 36.73 crore on 5.02% fall in revenue from operations to Rs 679.37 crore in Q2 FY25 over Q2 FY24.

Profit before tax was at Rs 49.57 crore in the second quarter of FY25, down 17.90% as against Rs 60.38 crore in Q2 FY24.

Total expenses fell 4.36% YoY to Rs 636.44 crore in September 2024 quarter. Cost of material consumed, including packing material was at Rs 282.84 crore (down 2.98% YoY) and employee benefits expenses stood at Rs 106.21 crore (up 10.92% YoY) during the quarter.

 

EBITDA declined by 4.34% to Rs 88 crore in Q2 FY25 from Rs 92 crore recorded in Q2 FY24. The company maintained its EBITDA margin at 12.9% during the quarter as compared to 12.8% in Q2 FY24, despite subdued demand.

On half year basis, the companys net profit declined 19.31% to Rs 81.10 crore on 1.82% fell in revenue from operations to Rs 1,427.56 crore in H1 FY25 over H1 FY24.

Ramesh Kumar Dua, chairman and MD said, the company reported a decline in revenues during the quarter as the overall demand remained subdued. During the quarter, the industry witnessed an increase in lower priced unorganized competition, which led to downtrading by consumers in a high inflation environment. Margin pressure was also high from organized trade channels. The company took a call to not dilute pricing and margins to unsustainable levels due to which we were able to maintain our operating margins during the quarter. However, higher depreciation in the quarter has impacted the net profit of the company.

The company has been sanctioned a grant of Rs 10.00 Crores, which is 50% of total expenses i.e., Rs. 20.00 Crores for Design Studio, under Indian Footwear and Leather Development Programme (IFLDP) that will boost our focus on best-in-class technological upgradation and advanced level of designs.

The company is in the process of adding new distributors to our network, to ensure Relaxos presence in each district of the country. To improve our reach and market penetration, we launched a retailer connect initiative through Relaxo Parivaar mobile application. This has shown an encouraging response with reach of over 70,000 retail outlets and has been driving consistent month on month improvement in secondary sales.

To drive premiumization, we have collaborated with global brands viz. Disney and Marvel, launching a new collection featuring Disney and Marvel themes. Further, in line with our continued focus on cost efficiencies, we are working on optimizing our backend operations, which would enable the company to deliver a sustainable performance in future.

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