Monte Carlo Fashions Ltd. – Q4 FY25 & FY25 Full Year Concall Highlights Financial & Key Metrics: - FY25 Revenue: ₹1,100 crore (+4% YoY); Q4 Revenue: ₹206 crore. - EBITDA: ₹188 crore (+31% YoY); EBITDA margin: 16.9%; Q4 EBITDA: ₹6 crore (margin 2.77%) impacted by seasonality. - Net Profit: ₹81 crore (+36% YoY); Q4 net loss of ₹10 crore. - Dividend: ₹20/share, doubled from last year, subject to AGM approval. Operational Developments & Strategy: - Capacity & Expansion: - Opened 66 new stores in FY25, with plans for 45–50 EBOs and 10–15 C&D stores in FY26 across Tier 1–5 cities, mainly in North, East, and Central India. - Launched new brand Cloak & Decker (C&D) with 12 EBOs, targeting higher-margin, smaller stores. - Increased focus on digital channels, with strong online growth via own website, and partnerships with Blinkit, Swiggy, Zepto (30-minute delivery). - Channel & Product Mix: - Shift from MBOs to EBOs and Store-in-Store (SIS); MBO sales down 7.9%, replaced by higher-margin EBOs and online. - Summerwear now 30–35% of sales, targeting 45–55% in 1-2 years. - Focus on light, fusion, and designer jewelry for higher margins. - Inventory & Working Capital: - Inventory at ₹503 crore (up 16%), expected to remain stable. - Debtor days expected to decline 5–10 days; inventory rotation optimized per season. - Net working capital cycles elevated but manageable. Margins & Realizations: - FY25: EBITDA margin improved ~360bps YoY to 16.9%, driven by price hikes, realization improvements, and cost controls. - Q4: Margin contraction to 2.77% due to seasonality, higher discounts, and returns, a normal quarterly pattern. - Pricing: 6–8% price hikes in FY25; 8–10% planned for FY26, leveraging brand power. Market & Industry Outlook: - Demand Environment: Broader retail demand faces challenges, reflected in 4% decline in Same Store Sales in FY25. - Channel Trends: EBOs, online, and quick commerce gaining share amid decline in traditional MBO channels. - Exports & International: Focused on branded exports; partnerships with Amazon (US/Canada) and Landmark Group (UAE). Early-stage international expansion with more clarity expected by year-end. Risks & Challenges: - Elevated working capital and seasonal margin volatility due to discounts and consumer behavior. - Broader retail headwinds impacting SSSG; industry shift away from winterwear. - MBO channel decline being addressed through store format shift. - No material change in inventory cycle or working capital comfort. Guidance & Outlook: - Growth: Targeting double-digit revenue growth in FY26, with margin expansion to >20% (excluding other income). - Margins: Expect gradual improvement driven by price hikes, realization gains, and operational efficiencies. - Capex & Investments: Focused on expanding EBOs, digital, and brand development; diversified store mix across locations. - Dividends: Continue healthy payout policy, reflecting confidence in cash flows. Overall View: Monte Carlo is navigating a challenging retail environment through strategic brand expansion (EBOs, new brands), channel shifts (online, SIS), and pricing leverage. Margins are expected to improve in FY26, supported by cost management and brand power. While inventory and working capital remain elevated, active management and sector tailwinds position the company for steady growth. International entry and digital initiatives are early but promising avenues. Management is optimistic about sustained double-digit growth and margin recovery in the coming year