Vedant Fashions market leader in branded Indian wedding apparel industry delivered a soft December Quarter 2023. The stock price is down 15% since its Q3FY24 results were announced on January 25, 2024. Vedant Fashions offers Indian wedding & celebration wear for men, women & kids through its popular brands Manyavar, Mohey, Twamev, Manthan and Mebaaz. The company reported revenues of Rs 475 crore in Q3FY24, a 7.5% YoY growth in December Quarter 2023. Speaking on Q3FY24 results, Vedant Modi, Chief Revenue Officer at Vedant Fashions said, “In Q3FY24 period October month was significantly impacted due to inauspicious start, however with the onset of festivity and major wedding season, we witnessed a much accelerating trend.” He further added that the Diwali season recorded the highest ever daily exclusive brand outlet (EBO) sales in the history of the company. According to the management, the company reported EBO customer sales growth of 30.7% and SSSG sales growth of 17.3% during the period of 60 days excluding the Shradh period starting from Navaratri as compared to the same period last year. The company reported operating margin of 51% in Q3FY24, an expansion of 17 basis points YoY and net profit of Rs 158 crore, up 5% YoY.
Indian Wedding Season, A Catalyst For Growth
The Indian wedding season falls between the months of October to June. The wedding dates or auspicious/shubh muhurat days within these months are specified by Hindu Calendar or panchang. With a population of 1.4 billion, the Indian wedding season is a significant growth catalyst for a number of industries such as auto, housing, jewellery, hospitality, travel, consumer durables and of course apparel.
In the October-December 2023 period, nearly 36-40 lakh weddings are estimated to have taken place. And the wedding number was 20% higher than the same period last year. With this backdrop, Vedant Fashions muted December Quarter 2023 performance did not go down well with the investors. According to the management, the first 15 inauspicious days or shradh period impacted Q3FY24 numbers. The corresponding Q3FY23 was a clear and clean festive period with Dussehra falling on October 4, 2022 compared to Dussehra date of October 24 in 2023. But a 15-day lull period should not make a dent in a heavy wedding December quarter 2023 period with 36-40 lakh weddings. This management clarification has not gone down well both with the analysts and investors alike.
Manyavar Faces Competition Both Online And In Brick & Mortar Landscape
Vedant Fashions with its flagship brand, Manayavar is a one stop solution for premium wedding wear in a highly unorganized and fragmented wedding and celebration Indian wear. The vast scale built over the past fifteen years with 657 EBOs in 250 cities & towns is difficult to replicate. Known for its strong operational efficiency, the company does not offer discount sales or end of season sale (EOSS) like other retailers. The company has grown its revenue base at a CAGR of 12% and PAT at 24% over the past five years. But the revenue growth seems to have slowed down in FY24.
According to the management, lower demand due to weak consumer sentiment has hurt its topline especially in the tier 2 & 3 cities. Tier 1 cities have performed relatively better than tier 2 & 3 cities in Q3FY24. But is it just weak demand or competition has finally caught up with market leader, Manyavar? The ethnic Indian wear markets is estimated to be around $18-20 billion. While in India, wedding wear is still treasured and stored through one’s lifetime, online wedding shopping has definitely struck chord with the customers. Myntra, Amazon, Flipkart and small homegrown online retailers such as Utsav fashions, Kalki Fashions are catering to wedding wear, celebration and all kinds of ethnic wear needs. These online retailers give tough competition to established brands such as Manyavar especially in the tier 2-3 cities and rural towns. In the tier 1 cities, competition intensity has increased with the entry of Raymond, Aditya Birla Fashion Retail and Tata Trent. Raymond extended its formal wedding wear range to traditional ethnic wedding tapestry by launching Ethnix in 2018. Ethnix opened its 100th store in Bengaluru in December 2023. Aditya Birla Fashion Retail launched ethnic and men’s wedding wear brand, Tasva teaming up with celebrated fashion designer, Tarun Tahiliani in 2021. And lastly Tata Tent made its entry with ethnic brand, Samoh. Tata Trent’s Samoh is not exclusively in wedding wear but in traditional casual wear. Though wedding wear is recession-proof, an overall ethnic affordable product range with focus on both casual and celebration wear is a better bet. And for Manyavar also, it is also the non-groom segment which is witnessing better sales. Speaking on the non-groom segment, Modi said, “The non groom segment has definitely worked better for us more from a marketing angle as well which has led to better footfalls at the store over the last two, three years”. Exploring the non-wedding segment, Vedant Fashions launched Twamev, another premium but non-wedding brand in 2019 and Manthan, a value brand but only for men’s kurtas in 2018. Manyavar needs to move on the lines of Zudio and open economy/value affordable wedding wear stores. If premium retailers like Shoppers Stop can get into the economy segment by opening its ‘Intune’ value stores, why not Manyavar?
