Increasing cash flow and focus on franchise-based expansion will help Arvind Fashions, become a zero-debt company in the next two years, says Kulin Lalbhai, Vice Chairman.
Owner of brands such as Arrow, Tommy Hilfiger and Calvin Klein, Arvind Fashion has been registering higher cash flow as it continues to focus on a franchise-based expansion.
Rationalising its brand portfolio, Arvind Fashions has reduced the number of brands it owns to five from over 20. The company currently has a debt of Rs 300 crore. Three years ago, it embarked on a full-blown strategy to create large iconic brands in order to get operational efficiencies and profitability by scaling them up.
The portfolio restricting helped the company generate high returns on the capital employee and increase its cash flow, adds Lalbhai.
The company plans to increase the size of its stores for each of the brands by 25 per cent, adds Shailesh Chaturvedi, Managing Director, and CEO. This will help it expand its product range and introduce a new large retail format to house all its brands under one roof.
Another of the company’s aims is to grow sales by 12-15 per cent annually and improve EBITDA by 100 basis points every fiscal year, adds Chaturvedi.
The company is also launching a new store format over 3,000-4,000 sq ft in Bengaluru which will house all five brands under a single roof. This part, it plans to open around 200 EBOs every year through the franchise route.
The company recorded a 45 per cent Y-o-Y growth in revenues to Rs 4,421 in FY23 while net profit surged to Rs 88 crore.
