Campus Activewear tanks 10%; hits new low on weak Q2 results

The company experienced subdued performance amid reduced sales volumes during the quarter due to a difficult macro-economic environment and some channel inventory correction, the management said.

Shares of Campus Activewear hit a new low of Rs 237.70, as they slipped 10 per cent on the BSE in Friday’s intra-day trade after the company reported a sharp 97.8 per cent decline in its profit after tax at Rs 0.30 crore in September 2023 (Q2FY24), due to weak operational performance. The footwear company had posted a net profit of Rs 14.5 crore in a year ago quarter.

With today’s decline, the stock now quotes at 19 per cent discount when compared with its issue price of Rs 292 per share. The stock has tanked 63 per cent from its record high of Rs 640 touched on October 19, 2022.  Campus Activewear made its stock market debut on May 9, 2022.
 

The company’s revenue from operations was subdued during the quarter and stood at Rs 258.7 crore as compared to Rs 333.2 crore in Q2FY23, owing to tepid consumer sentiments coupled with challenging macro environment.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) declined 43.6 per cent to Rs 24.9 crore’ margins contracted 370 bps to 9.6 per cent from 13.3 per cent in a year ago quarter.

Campus Activewear experienced subdued performance amid reduced sales volumes during the quarter due to a difficult macro-economic environment and some channel inventory correction, the management said.

The company will continue to drive its long-term business objectives & strengthen execution strategies, in key geographies of North & Central India. The company will also, focus on making further inroads into the key Western and Southern states in India, the management said.

Campus Activewear is amongst a few established national brands enjoying ~17 per cent market share in the Indian branded sports and athleisure footwear industry which is predominated by international brands.

The Campus group has positioned itself in the affordable to mid-luxury footwear segment, where it has to compete with established brands, such as Bata, Liberty, Lancer and Relaxo, and several unorganised players.

Furthermore, the business risk profile is constrained by price sensitivity of the target segment, which limits the ability to pass on any sharp increase in raw material prices to customers. The group remains exposed to the risk of competitive designs, changes in customer preferences and growing presence of international brands. This forces the group to continuously develop new designs to stay ahead of competition, according to analysts.