Vedant Fashions: Going through a rough phase

15 Feb 2024 , 02:21 PM

Analysts of IIFL Capital Services hosted the senior management of Vedant Fashions (Manyavar) at IIFL’s Investor Conference in Mumbai. While the recent performance has been subdued, mostly attributable to a weak macro environment, management reiterated its store addition guidance of 15-16% and aspiration to clock a good single digit SSS growth in the medium term. The company is continuing to fine tune its strategy around Mohey and is also working on adding future growth drivers in non-wedding segments within Manyavar, Manthan and new categories such as kids, footwear, perfumes, among others. 

Current soft performance is more due to external factors: 

Large part of organized competition has opened stores in tier 1 towns, which is relatively less affected in terms of SSS performance. Major decline in same store sales is being witnessed in tier 2 / 3 towns. Also, while most KPIs such as conversion, average bill value, etc. are tracking positive, footfalls have declined which also suggests that it is the broad macro factors which are impacting current performance. Like to like ASP increase is broadly inline with historic run-rate of 3-4%. 

Re-iterate retail area addition Cagr of 15-16%: 

The company aspires to clock a good single digit SSS growth in the medium term. It is on track to grow retail area by 15-16% with store openings broadly mapped for the next twelve months. Bulk of the store addition will continue to happen in the Manyavar brand. Despite tier 2/3 towns witnessing a subdued performance currently, the store addition would continue to be broad based in terms of town tiers, similar to the past strategy. 

Building future growth drivers: 

Management is confident that it has figured out the supply chain aspect in Mohey and the focus is now on going deep in select categories such as sarees and lehengas and also marketing in this brand. There are plans to expand / introduce more categories such as kids, footwear, perfumes in the near future – categories which are easy to get into, have a higher margin and have low space requirements. Non wedding segment within Manyavar as well as Manthan (value brand) are medium term projects. The company is also rolling out a pilot in partnership with lending firms to explore financing options for high ticket purchases.