Vedant Fashions Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tejash Shah - Spark Institutional Equities Private Limited - Analyst : Vedant, despite festival wedding tailings that we would have thought initially, the quarter didn't materialize as we would have anticipated. So between consumer behavior, macro pressure, competitive landscape and perhaps any internal execution gaps, how would you kind of segregate the headwinds here?

Question: Tejash Shah - Spark Institutional Equities Private Limited - Analyst : Any reason for that?

Question: Tejash Shah - Spark Institutional Equities Private Limited - Analyst : Perfect. Second, the expansion plan or expansion so far has been tracking very well than we had initially kind of penciled in. And given the current SSSG scenario, how are you managing franchise expectations? Are you fearing that after seeing two years of successful pressure on SSSG, there REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 10:30AM, VEDN.NS - Q3 2025 Vedant Fashions Ltd Earnings Call will be some disappointments on their side also on payback period? And then there could be -- even if we expand on gross basis, perhaps a net basis, we won't see that kind of footprint expansion?

Question: Tejash Shah - Spark Institutional Equities Private Limited - Analyst : Understood. Vedant, last one, would there be any guidance -- you would have been in a position to give guidance on expansion for next year?

Question: Gaurav Jogani - JM Financial Institutional Securities Limited - Analyst : My question is in regards to Mohey. While you understand that the broader performance has (inaudible), if you can highlight how the brand Mohey has performed. And where are we on this turn of taking Mohey ahead as a brand and a separate view for this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 10:30AM, VEDN.NS - Q3 2025 Vedant Fashions Ltd Earnings Call

Question: Gaurav Jogani - JM Financial Institutional Securities Limited - Analyst : Sure. So for example, it's not the exact number, if you can give us some percentage. So maybe Mohey was contributing, say, two Manyavar, Mohey 20%, 25% at least in terms of productivity, that is. So is it now 50-50 at par? How is it? Any (inaudible)

Question: Gaurav Jogani - JM Financial Institutional Securities Limited - Analyst : Sure. And Vedant, my second and last question is with regards to the competitive inventory that you said which were largely remain the same. And even it seems from your comments that the competitors are also struggling. So would it be a fair understanding to say that the overall ethnic market also would have not grown under the same pace? And the slowness of the market is what is actually impacting the growth for you and for the entire category? And what can be done to revise the category growth from your end (inaudible) the market? .

Question: Gaurav Jogani - JM Financial Institutional Securities Limited - Analyst : So if I imply it right it's largely due to the macro cost situation that you're alluding this to rather than a category issue as such, if I'm understanding it right.

Question: Gaurav Jogani - JM Financial Institutional Securities Limited - Analyst : Sir, lastly, just one question here, that given that you still have some scale and you have been able to expand in a profitable manner, and that is what is keeping your approach. But there are competition who are running this business into deep losses. So -- and sustaining the business in such difficult times becomes also more difficult. So do you see further consolidation from other players, which possibly could lead to your end in the future?

Question: Sameer Gupta - IIFL Research - Analyst : Sir, firstly again, drilling a little bit deeper into this macro consumption thing. So sir, I mean, wedding is a category where typically people will still spend. I mean, they might spend lesser but you still expect them to spend. So just wanting to understand from you the reasons behind this supplier SSSG. Like are people down-trading towards lesser-known brands, more regional brands, they're going back to unorganized? Or is it more like you opened stores in the vicinity where now there is a cannibalization impact? So just trying to understand this aspect, sir.

Question: Sameer Gupta - IIFL Research - Analyst : So then --

Question: Sameer Gupta - IIFL Research - Analyst : No, no, let you finish first.

Question: Sameer Gupta - IIFL Research - Analyst : So Vedant, it still is a perplexing thing that middle -- the growth needs to come back. Where exactly is this growth going right now? I think -- if you're saying that middle section, the weddings itself are happening lesser now, which doesn't seem logical but it may be happening. But otherwise, they're still buying merchandise from somewhere, right?

Question: Sameer Gupta - IIFL Research - Analyst : Got it. I get this. So second question, and you have talked about this, on the retail area growth. I understand right now, rental [inflation] actually has been called out by a lot of companies. But let's say, you have guided on a medium-term average of around 15% in retail area growth or mid-teens. Do you like still see this happening, let's say, over a medium term despite rental inflation right now? Would you be comfortable in saying that?

Question: Sameer Gupta - IIFL Research - Analyst : And I didn't get the answer to the question on store splitting. So basically, if you have analyzed like stores where there are Manyavar stores in the vicinity, is that cohort doing exceptionally -- on the lower side, is that something that data is showing you?

Question: Anand Shah - Axis Capital Limited - Analyst : Yeah, I think thanks for taking my questions. So just a couple of questions again on that to slow down. I mean, can you call out what was the growth or maybe whatever the sale of AP is?

Question: Anand Shah - Axis Capital Limited - Analyst : Just one second. Can you hear me properly?

Question: Anand Shah - Axis Capital Limited - Analyst : Yeah. So I was asking, basically, can you call out the growth that you saw ex of AP, Telangana overall at the company average? So maybe what is the salience of AP, Telangana in the overall business?

Question: Anand Shah - Axis Capital Limited - Analyst : When you exclude AP, Telangana. Okay, okay. Got it. And I mean, -- so your reported SSSG also would be similar? I mean, if I take Q2, Q3 combined, I? Mean it was 17% and 3% this quarter, right?

Question: Anand Shah - Axis Capital Limited - Analyst : Okay. But then you were saying SSSG, I mean, if you exclude AP, Telangana also.

Question: Anand Shah - Axis Capital Limited - Analyst : Got it. So 2% to 3% SSSG delta. Got it. Got it. Okay. And secondly, I mean, can you share any data or insights on -- I mean, which part of the business is more impacted? I mean, your bride groom business, which is the core wedding business and the overall entourage or the other parts, which part is seeing more stress?

Question: Anand Shah - Axis Capital Limited - Analyst : Got it, got it. Now my second question is any insights you can throw for me as to how it is doing and what are the expansion to there? Or any salience, actually how much outcome contribute to the overall business?

Question: Anand Shah - Axis Capital Limited - Analyst : Okay. Got it. So I mean, when you say 25% of space is allocated to MoheyI , mean, is it what, 5% to 10% for Twamev now that you open, the new stores that you do?

Question: Anand Shah - Axis Capital Limited - Analyst : Got it, got it. So I mean, both Mohey and Twamev are tracking much stronger than the company average, and expansion on both of them remains a big focus area in the medium term.

Question: Anand Shah - Axis Capital Limited - Analyst : Got it, got it. And lastly on expansion, I mean, the consolidation or the store closures that you are doing, that is now completely now?

Question: Devanshu Bansal - Emkay Global Financial Services - Analyst : Vedant, first is on rental inflation. So there has been weak demand environment which has been prolonged, right? So typically, that environment does see a good amount of store closures, and we are also sort of a consolidating our network. In such periods, rentals sort of tend to ease. So I just wanted to check the reason for these inflated rentals continuing. And are there still brands across categories continuing to open stores? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 10:30AM, VEDN.NS - Q3 2025 Vedant Fashions Ltd Earnings Call

Question: Devanshu Bansal - Emkay Global Financial Services - Analyst : Got it, got it. And for Mohey, Vedant, you mentioned that revenue productivity is now more or less similar to Manyavar. I also wanted to check on the margin and working capital requirements for Mohey vis a vis Manyavar. So are they also sort of broadly familiar or there is some difference between Mohey and Manyavar?

Question: Devanshu Bansal - Emkay Global Financial Services - Analyst : Understood. Last question from my end, you have indicated that Tier 2, 3 markets have done well for us, right? So excluding metros similar to the number that you've shared and excluding AP, Telangana. So what would be the growth trends in rest of the regions for us?

Question: Devanshu Bansal - Emkay Global Financial Services - Analyst : Got it. Thank You with that. Thanks for taking my.

Question: Rishi Mody - Marcellus Investment Managers Private Limited - Analyst : Can you guys hear me? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 10:30AM, VEDN.NS - Q3 2025 Vedant Fashions Ltd Earnings Call

Question: Rishi Mody - Marcellus Investment Managers Private Limited - Analyst : So Vedant, firstly, just if you could give us an update on how, say, the January month has gone. Is it better? Have things improved? Or are they still looking the way they have been in Q3?

Question: Rishi Mody - Marcellus Investment Managers Private Limited - Analyst : Okay. Got it. Second, just I've been noticing a trend in your -- so your purchase of stock in trade, right, as a percentage of COGS which is effectively, in my understanding, the pieces that you're buying from a third-party wholesaler, in the last one year or last six quarters has gone up consistently. It's now trending in the 70% range. Earlier, it used to be in the 40% range. Now from what I understand these pieces don't have a lot of differentiation when -- like the commonality between, say, an unorganized player and your piece becomes higher. So the pricing then becomes the determinant rather than the design and quality of the product or the finish of the product. So firstly, like, is that the case? Or am I reading this wrong? Secondly, if that is the case?

Question: Rishi Mody - Marcellus Investment Managers Private Limited - Analyst : Yes, but Mohey is, what, 20%, 25%, right? It's not as if Mohey has doubled in the last one year that as a percentage of your revenue that this sharper jump should occur. So like I'm looking at the Q3 versus Q3.

Question: Rishi Mody - Marcellus Investment Managers Private Limited - Analyst : Okay. So localization, the incremental localization is what you're saying, you're getting it from the wholesalers rather than investing in the design --

Question: Rishi Mody - Marcellus Investment Managers Private Limited - Analyst : Okay. All right. I wanted to understand the marketing piece, right? So we spent a decent chunk, we spent like INR50 crores extra in this quarter in other expenses. Now I don't know whether it's entirely attributed to marketing or not, but I'm assuming it's largely attributed to marketing. So we're not getting the ROI against it, it seems. So where -- like what are your thoughts on what needs to be done on this front? Like earlier the strategy of hiring bigger stars, movies, ads and movies worked out very well, TVs, hoardings, all of that. Now we've changed the strategy to hiring lesser-known stars, more digital. So like I just wanted your thoughts on what needs to improve here to bring the footfalls back?

Question: Rishi Mody - Marcellus Investment Managers Private Limited - Analyst : Yes, but YTD doesn't matter, right? Because your Q4 this year is like more wedding dates than in Q4 last year. So you're going to spend more -- or ideally, you would have liked to spend more in Q3, Q4, right? So -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 10:30AM, VEDN.NS - Q3 2025 Vedant Fashions Ltd Earnings Call

Question: Rishi Mody - Marcellus Investment Managers Private Limited - Analyst : All right. Okay. I have maybe some more questions but I'm not going to take up the time on the call. I'll reach out to you later on. Yeah. Thank you. Thank you for answering my questions and all the best for you.

Question: Sheila Rathi - Morgan Stanley - Analyst : My question was again with respect to marketing. Now given that we are in mix of a very strong -- I mean, generally a strong wedding season, is there more we can do around marketing? I heard your commentary around what all we have done and I also understand we generally don't do discounting. But is there a need for us to revive the demand momentum back to do some kind of activations or discounting in this quarter?

Question: Sheila Rathi - Morgan Stanley - Analyst : Understood, Vedant. Now because we just touched upon the marketplaces, could you just remind us what is the share of the online piece for us now? And I mean, how are we seeing the trends there versus for other categories?

Question: Sheila Rathi - Morgan Stanley - Analyst : Understood. So probably, we will be focusing on this channel more aggressively going ahead, at least for certain type of our offering.

Question: Tejash Shah - Spark Institutional Equities Private Limited - Analyst : One follow-up, Vedant, and partly academic in nature of this question. But led by many media reports and other sources, last quarter was supposed to have a very loaded wedding season with some 4 million or 5 million weddings, depending upon which source you actually referred to. So just to channelize our future effort in right direction, do you see any credibility or any right way or forecasting significance of some of these wedding dates in terms of understanding whether it will culminate into demand? Or these are just vanity metric or vanity signs which we use for our reports and then for general discussion, but it may or may not turn out to be converting into demand later?

Question: Tejash Shah - Spark Institutional Equities Private Limited - Analyst : SSure. So if we just refer to the last quarter, where did the disappointment come from? The number of weddings were overstated or the kind of spend that we thought will happen but did not come through?

Question: Akhil Parekh - Batlivala & Karani Securities India Pvt. - Analyst : Vedant, my first question is on the demand in AP and Telangana. There is another listed player who happens to be in ethnic wear, name [Faisal]. 60% of business comes from AP and Telangana, right? But the commentary given by the company, as numbers reported by the company has quite contradictory to what you are mentioning. Because they said categorically that there is no slowdown in wedding consumption. Their SSSG growth has been 7% while top line growth is 16% plus. Could you please throw some light why -- and also a supplementary question to it, is it we are facing challenge more on Mohey side in these two particular states? Or is it broad-based weakness in both the brands? Yes, that's my first question.

Question: Akhil Parekh - Batlivala & Karani Securities India Pvt. - Analyst : Okay. But would it be fair to say like Mohey has done reasonably better in these two states as well, as you have highlighted for pan-India? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 10:30AM, VEDN.NS - Q3 2025 Vedant Fashions Ltd Earnings Call

Question: Akhil Parekh - Batlivala & Karani Securities India Pvt. - Analyst : Fair enough. And second and last question on footfalls and conversion rate. I don't know if we maintain those data points. And how do the convergence and the footfall number look like, maybe on a per store basis as of now versus say pre-pandemic levels?