Friday, June 2, 2023

Bewakoof earns Rs 160 Cr in FY22, losses quadruple.

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In FY22, direct-to-consumer fashion retailer Bewakoof grew by 25% after losing 38% of its scale in FY21 due to the pandemic.

The Registrar of Companies’ consolidated financial filings show that the Aditya Birla Group-controlled company’s operating revenue rose 25.7% to Rs 160.46 crore in FY22 from Rs 127.68 crore in FY21. FY20 revenue exceeded Rs 200 crore.

Millennials buy stylish clothes and accessories from Bewakoof. 94.3% of its revenue came from such sales. FY22 income rose 22.6% to Rs 151.25 crore.

Subscription services and advertising and marketing commissions from other companies increased 2.15X to Rs 9.21 crore in FY22 from Rs 4.27 crore in FY21. The company earned Rs 1.21 crore in other income.

The company’s main cost centre was product procurement, at 34.4%. This cost rose 53.8% to Rs 78.53 crore in FY22 from 51.05 crore in FY21.

Employee benefit expenses jumped 91.4% to Rs 40.38 crore in FY22 from Rs 21.1 crore in FY21, suggesting Bewakoof aggressively hired. ESOPs cost Rs 3.68 crore.

Bewakoof’s advertising and promotional spend increased 2.36X to Rs 33.6 crore in FY22 from Rs 14.2 crore in FY21 due to multiple campaigns and brand ambassadors Sidharth Malhotra and Fatima Sana Shaikh.

Its FY22 rental and IT costs rose 2.1% and 38.5% to Rs 6.46 crore and Rs 4.32 crore. In FY22, Bewakoof spent Rs 228.24 crore on miscellaneous expenses including goods, commission, job workers, and contract labour.

The firm’s losses quadrupled to Rs 80 crore in FY22 from Rs 20 crore in FY21, while sales only climbed 25%. ROCE and EBITDA margin fell to -127.48% and -45.52%. The firm spent Rs 1.42 every operating revenue unit.

InvestCorp, IvyCap Ventures, and Spring Marketing Capital have invested Rs 187 crore ($23 million) in Bewakoof. Aditya Birla Group’s TMRW would spend Rs 200 crore in Bewakoof’s D2C growth after obtaining a controlling share.

The decade-old Prabhkiran Singh-led company aims to reach Rs 1,500 crore in revenues in five years.

Topline targets are acceptable, but profitability is the issue. Most D2C platforms and brands have proven a worrying (for investors) link between marketing expenses and sales, making a clear transition from cash burn difficult for most. This strategy succeeded for fund-raising, but as budgets tighten, a runway lighted up with burning money is less appealing. It also calls into doubt their ability to develop consumer loyalty, which is becoming the question of the century for Indian firms founded on discount models in the past decade.

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