Arvind Fashions Ltd. · NSE:ARVINDFASN
Arvind Fashions — Investor Presentation (August 2021)
33 slides from Arvind Fashions's investor presentation, Aug 7, 2021
Slide 1: Arvind Fashions Limited Corporate Presentation
7 /August, 2021 www.arvindfashions.com Arvind Fashions Limited Corporate Presentation www.arvindfashions.com 1
Slide 2: Agenda
AFL Overview AFL 1.0 : Hits & Misses Agenda The Reset AFL 2.0 : Reimagining the journey ahead Financials 2
Slide 3: About Arvind Fashions
About Arvind Fashions India’s leading casual wear player with a strong portfolio of casual & denim wear brands with market leadership positions Integrated player with a rich legacy and strong design, product development and sourcing credentials Strong multi-channel distribution expertise suppo
Slide 4: Brand Portfolio
Brand Portfolio USPA Tommy Hilfiger Calvin Klein • #2 International Premium Casual Wear • #1 Casual wear brand • #1 International Premium Casual wear brand brand • Classic American Styling and features • Founded in 1968, Calvin Klein is one of authentic preppy and updated looks • One of the world’s
Slide 5: Brand Portfolio
Brand Portfolio Flying Machine Arrow Sephora • #3 Denim Brand in the country. • #1 Prestige beauty retailer • The Brand : The Authority in dressing Gentlemen since 1851 • India's first homegrown denim brand and • World’s most loved beauty one of the coolest youth apparel brands in community, offerin
Slide 6: AFL Strengths
AFL Strengths A lifestyle platform with immense brands and distribution strengths; strong potential to add high growth adjacencies Strong Brand Portfolio Lifestyle platform with Multi channel Leadership in omni- Superior capabilities in with leadership positions presence across distribution network
Slide 7: Agenda
AFL Overview AFL 1.0 : Hits & Misses Agenda The Reset AFL 2.0 : Reimagining the journey ahead Financials 7
Slide 8: US Polo: The iconic power brand, built with immense strengths of AFL
US Polo : The iconic power brand, built with immense strengths of AFL • USPA is the market leader in men’s casual wear across India. Its logo of the double horse man has strong consumer affinity across consumer groups • US Polo has scaled up to a Rs 1,000+ Cr topline, presence across 350+ EBOs, 150+
Slide 9: Flying Machine: Transformation to an Online Focused, Youth Brand
Flying Machine: Transformation to an Online Focused, Youth Brand • The brand has a digital first mind set and its online business more than doubled in Q4 FY21 with strategic partnership with Flipkart Group • Strong focus on using analytic tools for consumer targeting and development of right product
Slide 10: Tommy Hilfiger: Uniquely Profitable Scale-Up of an International Brand in India
Tommy Hilfiger: Uniquely Profitable Scale-Up of an International Brand in India • TH is the only international brand in India that has scaled up presence across 60 towns with high retail standards • One of the highest retail sales density through consistent like-to-like same store revenue growth Ret
Slide 11: AFL's focus brands have delivered strong and consistent revenue and EBIDTA growth
AFL’s 6 focus brands have delivered strong and consistent revenue and EBIDTA growth NSV Strong growth in the retail network through both healthy same store sales growth as well as network expansion 3023 2838 2175 2488 1877 Successful extension of power brands into adjacent categories like 1561 inner
Slide 12: Business initiatives to accelerate growth and Covid impacted AFL
Business initiatives to accelerate growth and Covid impacted AFL Internal Factors NSV (in Cr) • Simultaneous launch of several new brands 4,644 4,219 and their underperformance created a drag 3,614 3,279 on profitability and return ratios 2,201 • Underperformance of Unlimited 1,670 • Suboptimal fore
Slide 13: Agenda
AFL Overview AFL 1.0 : Hits & Misses Agenda The Reset AFL 2.0 : Reimagining the journey ahead Financials 13
Slide 14: Business Reset Initiatives Undertaken in FY20 and FY21
Business Reset Initiatives Undertaken in FY20 and FY21 • Absolute focus on core brands that are large, profitable and • Sharply focused portfolio with high potential for have high potential – USPA, Arrow, Flying Machine, Tommy profitable growth Portfolio Hilfiger, CK & Sephora 1. • Capital employed
Slide 15: Portfolio rationalisation
1. Portfolio rationalisation Exit Brands Focus resources towards 6 strong brands with market leadership positions 1. USPA : US Polo Association 2. FM : Flying Machine 3. Arrow 4. Tommy Hilfiger 5. Calvin Klein 6. Sephora ~Rs 170 Cr Capital released 15
Slide 16: Working Capital Optimization
2. Working Capital Optimization Inventory (in Cr) Receivables (in Cr) 1,367 915 1,191 781 969 655 FY19 FY20 FY21 ** FY19 FY20 FY21 ** Days on hand* 94 138 104 Days on hand* 72 79 71 Inventory 1,191 1,367 969 Receivables 915 781 655 • Moved to 2+ buying cycles per year in most brands. Unlimited moved
Slide 17: Cost optimization - Fixed cost reduction
3. Cost optimization - Fixed cost reduction - ~Rs 100+ Cr structural cost saving Rent (in Cr) 361 345 • Non-performing stores shut down, thereby permanently cutting down losses 175 • Consolidated B2B warehouses from 11 to 4 bringing in a 30% cost saving FY19 FY20 FY21 Employee Emoluments (in Cr) • H
Slide 18: Recapitalised the balance sheet
4. Recapitalised the balance sheet Debt (Rs Cr) 1,244 860 Cr* Equity 943* 791 260 Cr 600 Cr strategic rights issue transaction • Net debt reduced by Rs 300+ Cr in FY21 FY19 FY20 FY21 Note: *INR 96 Crs of final call money of Rights Issue received in Q1 FY22 18
Slide 19: Under performing brands – Turnaround of Arrow
5. Under performing brands – Turnaround of Arrow Arrow | Brand Refreshed Glamorous Brand Appeal Infused glamour back into Arrow with new tie up with Hrithik Roshan as brand ambassador Working Capital Optimization Product line improvement 01 Energised the brand through design for Arrow Reduced
Slide 20: Under performing brands - Exit of Unlimited
5. Under performing brands - Exit of Unlimited Unlimited | Stopped the bleed, reduced capital employed and agreed to exit Key business reset initiatives to turnaround the business Agreement with V-Mart Retail to sell the assets Shut unprofitable stores and reduced geographic expanse – Agreed to
Slide 21: Agenda
AFL Overview AFL 1.0 : Hits & Misses Agenda The Reset AFL 2.0 : Reimagining the journey ahead Financials 21
Slide 22: AFL 2.0: Reimagining the journey ahead
AFL 2.0 : Reimaging the journey ahead Digital Inventory turn Drive improvements Heightened Profitable Cost focus & Growth Efficiency – investment into Tight control 6 high conviction on cost brands 22
Slide 23: AFL 2.0: The key drivers for profitable growth
AFL 2.0 : The key drivers for profitable growth Action Steps Revenue Drivers Margin Drivers ROCE Drivers • Strong Omni-channel capabilities to • Improve full price sales through retail • Better working capital management drive 25%+ growth in the online channel upgrade and smarter buying and leading
Slide 24: The Digital Drive: On track to becoming a 1000 Cr channel in FY22
The Digital Drive: On track to becoming a 1000 Cr channel in FY22 Leadership in Vibrant, scalable & profitable Digitally enabled 3rd party websites direct to consumer business offline retail • Leverage strong product offering and • Drive healthy growth with positive unit • In-house developed omni-ch
Slide 25: Supply Chain 2.0 – Productivity and Efficiency, the New Mantra!
Supply Chain 2.0 – Productivity and Efficiency, the New Mantra! • Supply Chain 2.0 project commissioned focussed on stock turns Objective • Targeting improving stock turns from 3x in FY21 to ~5x within 2 years • Tight control on seasonal buys with flexibility of in-season buy triggers Inventory • In
Slide 26: Driven by a professional management team
Driven by a professional management team Shailesh Chaturvedi Amitabh Suri Anindya Ray MD & CEO CEO – US Polo Assn. Chief Sourcing Officer & CHRO • 15 years in Arvind • c.1 year in Arvind • 18+ years in Arvind • 15+ years Benetton. Madura • 21+ years Indian Terrain, Shoppers • 15+ years: Bombay Dyein
Slide 27: Backed by strong board
Backed by strong board Arvind Fashions Limited lays special emphasis on corporate governance ensuring that global best practices are followed across levels of the organization. We have 6 independent directors & 3 women directors on board Sanjay S Lalbhai Kulin Lalbhai Shailesh Chaturvedi Punit Lalbh
Slide 28: Agenda
AFL Overview AFL 1.0 : Hits & Misses Agenda The Reset AFL 2.0 : Reimagining the journey ahead Financials 28
Slide 29: Financials – Profit & Loss (Pre IndAS 116)
Financials – Profit & Loss (Pre IndAS 116) Pre IndAS116 (Rs Crs) Pre IndAS116 (Rs Crs) FY21 FY20 FY19 FY18 H2 FY21 H1 FY21 Net Sales Value (NSV) 2201 3614 4644 4219 1670 531 EBIDTA (167) (117) 288 229 56 (224) PBT (406) (377) 13 12 (72) (334) Exceptional Items (45) (61) - - - (45) Discontinued Opera
Slide 30: Financials – Group wise
Financials – Group wise Without IndAS Pre IndAS116 Without IndAS Pre IndAS116 Sales (Rs Crs.) EBITDA (Rs Crs.) EBITDA % FY21 % Recovery H2 FY21 FY21 FY20 FY21 FY20 Power 74 (4%) 4% 1517 64% (54) 96 Brands Specialty Retail 463 54% (6) (61) (68) (13%) (8%) Emerging Brands 221 56% (11) (52) (145) (25%)
Slide 31: Financials – Profit & Loss (post IndAS 116)
Financials – Profit & Loss (post IndAS 116) Reported (Rs Crs) Reported (Rs Crs) FY21 FY20 H2 FY21 H1 FY21 Net Sales Value (NSV) 2201 3614 1670 531 Other Operating Income (Rent concessions) 128 60 35 93 Total Income 2329 3673 1705 624 EBITDA 121 318 181 (60) PBT (406) (377) (72) (334) Exceptional Ite
Slide 32: Financials – Balance Sheet
Financials – Balance Sheet Rs Crs Particulars 31.03.21 31.03.20 31.03.19 Net Worth* 735 685 1221 Borrowings 903 1210 791 Capital Employed 1638 1895 2011 Inventory 900 1367 1216 Receivables 614 781 879 Creditors 932 1325 1239 Net Working Capital 582 823 856 Net Fixed Assets 381 502 549 Other Assets 6
Slide 33: Thank You
Thank You
Arvind Fashions — Investor Presentation (August 2021) on 6ix