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Homegrown retail footwear brand Khadim India is expecting 100-150 basis points improvement in gross margins by the end of this fiscal, backed by the company’s drive towards premiumisation of offerings and cost rationalisation measures. For the quarter ended June 30, 2022, the company’s overall gross margin stood at 41.3 per cent, a y-o-y increase of 596 bps while retail gross margins improved from 50.6 per cent to 54.1 per cent.
“Our gross margin on a consolidated basis is much higher than pre-Covid levels. Premiumisation is leading to an improvement in margins. For us, premiumisation is within the affordable range wherein we help customers graduate from one price point to a slightly higher one. This, coupled with the cost control measures has led to margin improvement,” said Namrata A Chotrani, CEO of the company, on the sidelines of a press conference held to announce the launch of its new campaign for festive season.
Sales to rebound
The company is hopeful of touching the pre-Covid level sales in volume terms by the end of the current financial year. In value terms, it is at par with the pre-pandemic levels, she said.
“We expect the festive season to be good this year,” she said.
In the wake of change in GST rates on footwear and the increasing prices of raw material, Khadim had taken some price hikes. Nearly 80 per cent of the company’s products are priced below ₹1,000 where the GST has been increased to 12 per cent from the previous slab of 5 per cent.
Turnover growth
The company also expects around 33 per cent growth in turnover at around ₹800 crore by the end of current fiscal, up from ₹600 crore during FY22, backed by surge in volume sales and better offtake in premium offerings. Retail accounts for nearly 70 per cent of its total sales while distribution accounts for the remaining 30 per cent, she said.
Khadim India is also looking to add 70-80 stores every year across the country. A majority of these would be on franchisee model as the company plans to follow an asset-light approach. Currently, 220 of its total 800 stores are company-owned while the rest are franchisees.
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