Campus Activewear Limited (CAMPUS.NS) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Campus Activewear Limited Q1 FY '26 Earnings Conference Call. [Operator Instructions] Before we proceed on this call, let me remind you that the discussions may contain forward-looking statements that may involve known or unknown risks and uncertainties or other factors. It may be viewed in conjunction with our businesses that could cause future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. The Campus Activewear's management team is represented by Mr. Nikhil Aggarwal, Whole-Time Director and CEO; and Mr. Sanjay Chhabra, CFO. I now hand the conference over to Mr. Nikhil Aggarwal, Whole-Time Director and CEO, for his opening remarks. Thank you, and over to you, sir.

Good evening, everyone. Thank you all for joining us today for our quarter 1 FY '26 earnings call. We reported a revenue of INR 343.3 crores for the quarter, successfully navigating a challenging macro environment and managing 2 very significant internal transitions. First, stabilizing the operations at our new raw material warehouse, which took longer than anticipated as we consolidated the operations of 3 warehouses together. Second, the successful implementation of SAP. I'm happy to report that the blackout period for SAP was shorter than we anticipated, allowing us to resume normal business operations in the second week of April 2025. To mitigate potential disruptions during the blackout period, we proactively stocked up the inventories with our channel partners during quarter 4 end to ensure minimum impact on secondary sales in the distribution channel. However, online channel sales got impacted during this transition, resulting in sales loss during the first fortnight. During the quarter, our volume declined by 11.6%. However, the impact was largely offset through higher ASP, higher margin product mix. The decline in volume was driven by muted demand in the online channel and lower sales of entry price point, DIP school shoes, slippers and sandals in the distribution channel. Part of the volume loss of DIP shoes was mitigated through upgrading our consumers to EVA school shoes. The reduction in slippers and sandals volume was primarily in the entry price point segment with lower than average margins. Our revenue grew by 1.4% during the quarter, driven by 8% growth in the distribution channel, 20% growth in the large-format stores and partly offset with the transition-led degrowth in the online marketplace channels. We focused on driving premium product sales, in particular sneakers, which positively impacted our ASPs, which increased by 14.7% Y-o-Y from INR 586 in quarter 1 FY '25 to INR 671 during quarter 1 FY '26. This highlights our commitment to premiumization while ensuring competitive pricing even amidst macroeconomic headwinds. We continue to enhance our product portfolio by launching over 50 new value for money styles across men's, women and children's categories. These new offerings cater to various family occasions, reflecting our commitment to meeting the diverse needs of our consumer base. Notably, our sneaker category achieved a remarkable 150% growth. We sold 550,000 pairs versus 220,000 pairs last year. reinforcing our dedication to providing stylish, high-quality footwear at accessible prices. We also saw an improvement in our gross margin, which expanded by 210 basis points Y-o-Y from 53.3% to 55.4%. During the quarter, we hosted our largest ever distributors meet, Shoecase 2025, celebrating 2 decades of shared growth and our commitment to the future. The feedback we received for our latest focus collection has been overwhelmingly positive, enhancing our growth visibility and raising hopes for demand recovery in the upcoming quarters. I'm excited to share that our new digital campaign, Air Pro -- Capsule Pro, featuring Siddhant Chaturvedi.has resonated very well with the youth. This campaign showcases the versatility of our flagship Air Capsule Pro collection and has generated a significant interest amongst our target audience. As we speak, we have further augmented the in-house manufacturing capacities for upper by commencing the production of upper at Paonta Sahib facility in Himachal Pradesh starting 1st August 2025. This strategic move is expected to bolster our manufacturing efficiency and help us in meeting the peak of demand. We are optimistic about the trajectory moving forward and remain committed to delivering value to all our stakeholders. Thank you, and now I hand over the call to our CFO, Mr. Sanjay Chhabra to take you through more details.

Thank you, Nikhil, and good evening, everyone, and thank you for joining us on Q1 FY '26 earnings call for Campus Activewear. Our operational revenue grew by 1.2% year-on-year to INR 343 crores in quarter 1 FY '26, largely benefited by higher distribution, which has registered a growth of 8.6% and growth in large format stores, while the online channel had a degrowth of 8%. The company sold approximately 5.1 million pairs of footwear in Q1 FY '26 down by around 11.6% year-on-year. The average selling price grew by 14.5% year-on-year from INR 586 per pair to INR 671 during Q1 FY '26. The gross margins improved from 53.3% during Q1 FY '25 to 55.4% during the current quarter. The improvement in gross margin is largely driven by higher share of premium products, including sneakers as well as overall cost efficiencies. Our EBITDA for quarter 1 was INR 55.4 crores. The EBITDA margin stood at 15.9% during the quarter, an improvement of 10 basis points versus last year. PAT stood at INR 22.2 crores during the quarter, and PAT margin stood at 6.4%. Drop in PAT margin from 7.4% last year to 6.4% during the current year is driven by higher depreciation on our capacity enhancement related investments in Haridwar and Ganaur during second half of the last year. With this summary, I will now conclude my remarks and open the floor to the moderator for Q&A session.

[Operator Instructions] We have our first question from the line of Gaurav Jogani from JM Financials.

Sir, my first question is in regards to the decline in the online sales. Actually, we lost out the initial part of your commentary because there was a lull. If you can tell us why the online sales have declined sharply? And how much of this is recoupable in the coming quarters?

So actually, in the online sales, the 2 things happened, we basically had a very large transition of the raw material warehouse, which I called out. So we consolidated 3 warehouses into 1 and this is the largest transition the company has ever made in the history of the organization. Now the benefit, of course, is going to be immense, and we've already started seeing the benefits of this transition from quarter 2 onwards. But I mean, there's never honestly, a good time to make this transition because the business also has to run as usual, but we took that call to do it during quarter 1, which is like the slower time, right, compared to the season time. So during this time, while we made very good progress and the distribution channel had enough inventory to get the growth, we unfortunately could not supply enough material for the online-led marketplace. And that is where we sort of lost out on the growth over 15 days, I would say -- 15 to 20 days, which led to this [Technical Difficulty]. Sorry about this. Did you hear me so far?

Yes, sir, we -- I listened till the part that you said that missed out on sales for 15 to 20 days. That is where I heard you last.

Yes, yes. So that's basically what happened in the online channel. Otherwise, we would have gotten at least high single-digit growth in the online as well.

Okay, okay. And you said that already you are seeing the benefits of the warehouse consolidation. So if you can highlight what kind of benefits this consolidation is giving you? Are you talking more in terms of cost side? Are you looking more in terms of better distribution? How this warehouse consolidation is helping you?

Sure. So this warehouse -- so, so far, we had 3 warehouses for raw material issuance to basically all the plants and our fabricators and these 3 warehouses had a combined capacity of not more than 80,000 pairs a day, right? And that's the maximum we've ever done from these 3. Now the new warehouse gives us the capacity of -- in a mature state and high-throughput state, we can easily go up to 200,000 pairs a day. So it's basically doubling of the capacity of the throughput. And what this does is this debottlenecks the entire supply chain, where we can now comfortably -- and we can also do a lot of advanced issuance of the material to the respective plants wherever required.

Okay. So basically, it allows you to store a lot more raw material, which you can then give it to the vendors for processing and then your production can increase effectively. Is that the right understanding?

It adds a lot of bandwidth for us to feed our 60-plus fabricators who in turn make upper for us throughout the year and also during the peak season when we have a higher demand.

Sure. Okay. And sir, last question is with regards to the other expenses line item. I think this quarter, we also had a higher ad spend that probably -- and plus the negative leverage is impacting the margins. Otherwise, if you look at the overall margins ex of this, would you be confident of at least touching 16% to 17% margin this year given that now this -- the closure is now behind us, and we expect the sales to recoup going ahead?

Yes, Gaurav. We continue to aspire to go back to the old days, 17% to 19% is what we have been highlighting always. So that's what we aspire to achieve.

We have our next question from the line of Priyank Chheda from Vallum Capital.

Nice to interact again. But we'll be sorry to point out. We have been guiding for double-digit growth. We have been guiding for 17% to 19% margins, but we have been waiting also long for that delivery. And then somehow, either it's industry or internal to Campus that the delivery mix is something which is very consistent. Could you please highlight by when should we actually see what you have been guiding in terms of delivery happening on the P&L also?

Yes, you are right on delivery misses on occasion. But if you look at it on a consistent basis and on an annual basis, you will see that there is improvement on the EBITDA margin front. I mean, if you look at full year FY '25 versus FY '24. And if you look at the consistency, we are trying to maintain quarter-on-quarter. The numbers are there. As I said to answer Gaurav in the earlier question that yes, we aspire to go back to 17% to 19% trajectory, and we are trying to sort of work on all the building blocks, which are going to take us there on a sustainable basis. And these transitions, both SAP implementation and consolidating RM warehouse are part of that. I mean we are always keeping in view 1 year forward how do we augment the capacities to take care of the future demand growth. And these are building blocks. Yes, it is taking a bit of time. I agree with that.

Priyank, Nikhil here. I'd just like to add that -- like Sanjay clearly pointed out, there has been significant movement. The quarter 4 and quarter 3 last year was very good for the company. And after a long time, we were able to demonstrate that kind of performance. This was a one-off. We also did not honestly anticipate in quarter 1 this kind of time frame for the warehouse consolidation because it was massive, like it was hundreds of crores of inventory, which was shifted over a very short period of time, which had to be uploaded into the SAP. And so it was a very complex affair which we are very proud of, which -- it's a tough transition. And honestly, like it will -- it's opened up a lot of the debottleneck the entire supply chain completely. So we are very positive for quarter 2 onwards. And it's -- we've had a good start in quarter 2. So we are very hopeful of the recovery going forward.

Sure, sure. No, we also hope for that, and we have been well wishers. What I failed to reconcile is that if we had planned such a large movement, A, we would have guided the consensus or we could have guided the investors in the previous call itself that there would be this disruption. B, on the business front, in the times where industry is struggling for a better sales growth, we can't afford for 15, 20 days of sales loss. I think that could have been also planned well, just an observation, right? I'll come to the second question. The second question is on -- in the times when there is a 15, 20 days disruption, in the times where industry is struggling, we are still continuing to invest into the advertisement and promotion. If that is -- we couldn't see a decline or a degrowth over there. I mean I'm sorry, but I'm asking this question again, while I was -- I had asked this question in the last call also. We spent top dollars in terms of percentage revenue when compared to all the other footwear brands that are listed in India. How do we reconcile this for this quarter, for this full year, that ROI getting translated into the revenues. Help me with what's the thought process behind so -- spending such a large amount in advertisement and promotions.

Priyank, of course, needless to say that A&P spends always have a lag in terms of realization in terms of sales. And as we mentioned in the opening remarks that this degrowth in online was a channel-specific phenomena, which requires a certain set of finished goods. The degrowth was not universal, like we have shown a growth in distribution of around 8%, which is pretty decent. And that's what -- it's all execution-led. And also, it is -- it was a part of plan. I mean we did upstock inventory in Q4. Despite that, we were able to service all the orders post SAP go live and -- which resulted into a growth in distribution channel. So A&P spends are like channel agnostic. And of course, the investments are ahead of curve and the impact also comes in the -- with, let's say, a quarter lag, right?

Sorry to interrupt you, Mr. Priyank, may I please request you to rejoin the queue as there are several participants waiting for their turn. We have our next question from the line of Shraddha Kapadia from SMIFS Limited.

So basically, my question is with regards to the ASP. So we have seen increase in the ASP. So is there any specific region where there has been more ASP increase or it's overall, which is there also in terms of the consumer buying patterns. So if you could just give a brief about the recent Q2 demand trends and the consumer buying patterns that would be great.

Sure, sure. Firstly, with respect to the ASP, we have had an excellent response in terms of our sneaker portfolio, number one. Even on the shoes portfolio, there's sports shoes as well, which is -- so our 1,500-plus portfolio share saliency has gone up to a 50% plus for this quarter, which is the highest ever we've done. And so there are 2, 3 reasons for that. One is disproportionate focus on the sneaker category, which is definitely extremely premium and very high ASP. And that is, again, a reflection of our commitment to premiumization. And this is on a -- actually not a very large base, we've sold just 550,000 pairs of sneakers. So it's still like scaling up, and we have big plans for this category going forward. Secondly, there was -- we did slow down on the lower margin, lower MRP, DIP school shoes and some bit of sandals and slippers, which were not very margin accretive and very, very low value. So that is one portfolio which we sort of scaled down slightly. And so it's a combination of both where we have gained disproportionately on the ASP front.

Any regional trends which can be observed?

Not really, it's across. It's across the board. The regional saliency for us is also very similar to the previous quarter, so no real change in terms of -- it's across the board. In terms of the -- yes, I just -- the macros were like okay, they weren't like the best in terms of the demand situation. But they weren't also too bad. So we were hoping for -- so that's why we were able to do even 8% or 9% growth in the distribution. So -- but if you look at the other results of the peer set, right? So clearly, you can see there is stress in terms of demand. But as a brand, we have been focusing disproportionately on branding and the premium portfolio and the quality of shoes, right, which is giving us this kind of growth even in this market. So that's how we are looking at the market right now.

Sure, sir. Just one more question from my end. So what is the proportion of non-BIS inventory in the system? And do you continue to expect the 20 to 40 basis points of market -- margin drag for FY '26?

Shraddha, the proportion is -- has significantly reduced and that, again, has started reflecting in our gross margins as well. So on the one side, there is an ASP increase and on the other side, there's a cost efficiency, which means that now we are getting lower hit in terms of liquidation of non-BIS inventory and all as compared to same quarter last year and as compared to last quarter as well. So that has started reflecting on the margins. We don't see much of stress there beyond the range what we have already highlighted in the past.

We have our next question from the line of Umang Mehta from Kotak Institutional Equities.

So Nikhil, if I were to just -- you mentioned that D2C online, if this disruption wasn't there, then would have grown by around high single digits, right? So assuming that this wouldn't have happened, you are saying that your overall sales would have grown in something like 6%, 7%? Is that correct?

Yes, high single digits, Umang. That's right.

Even the company level sales?

At company level, that's correct.

Understood. And any color you can share on how June, July have been so that we come to know about how the recent trends are and what to kind of expect going ahead?

So without like diverging into numbers, I can share with you that we have recovered in terms of the sales in July, and we expect a decent quarter 2, we're basically in line with our budgets like internal budgets, what we've aligned. So we don't see any challenge there.

Understood. And just a clarification, the 16% to -- sorry, 17% to 19% guidance that you gave, that includes your other income, is it, in terms of the EBITDA margin that you all calculate?

Yes.

[Operator Instructions] We have our next question from the line of Sameer Gupta from India Infoline.

Sir, firstly, on the BIS part. Just want an update here. And this is not on the non-BIS inventory that we have. This is on the overall industry piece. There was an expectation that Campus would be one of the bigger beneficiaries of this disruption that we saw in BIS stops. Now as you see it on the ground, are all the related benefits to this accrued to us already or more can be expected?

So we've just actually started seeing the benefits, to be honest. The benefits are yet to be fully materialized. As there is still inventory in the system, non-BIS inventory for all the brands, it's not just limited to us. The regulation says that we have -- everyone has to dispose off the inventory before June 2026. So everyone is taking their time to do that. But that's not really a big issue now with anyone as the overall inventory is, I believe, finite and not that significant. So the benefit has started coming in, but I believe the bulk of it is yet to come.

Got it. And see, what I ask is because now with the evolving geopolitical situation with China, first of all, is there a potential for whatever benefits that could have come to even reverse hypothetically? Or now the ecosystem has changed completely and whatever has done is done and you don't think this situation to reverse?

You mean the BIS to be reversed?

As in, let's say, if the factories outside China start to get approvals, et cetera, then we'll be back to square one, right?

Not really. I mean, see, they're already getting approvals, but they're getting approvals for the MNC brands because they don't really have any manufacturing in India, and they're only dependent on China, Vietnam, Indonesia, such countries. So they are getting very exceptionally approved. But for -- basically, our biggest competitor were 2 lines of thought here. One is the fake goods, the fake brands that would come into India from China. That was a very big volume that was being brought here. And that sort of also disrupted our market. So that piece has really, really shrunk completely, more or less. And then there was, of course, other importers, the non-branded ones. So on both fronts, we have seen significant decline in the imports into the country. So I don't see any reason why the government would want to reverse this. I mean there are other ways of -- I'm sure they have better solutions to this. But I think it's a great move, BIS will be very beneficial for the entire industry in terms of even employment generation, which we're already seeing the benefits of. And even us, like we are going all out in terms of expansion, right? So we're also putting up new plants and new facilities and expanding our production. So clearly, we see a lot of leverage going forward.

Got it. And these fake brands and non-branded importers that you're talking about, they still have a sizable inventory of non-BIS products. That is why the benefits are yet to accrue. Is that a correct understanding?

There is some definitely. I mean, see, one is, obviously, there's a seasonality to it also. We believe that in the demand wasn't that great in quarter 1, and that is a reflection that you will see in the other results also of other companies. Despite that, of course, we lost out due to some internal transitions on the online side, but the distribution piece has shown growth, right, 8%, 9% growth. So in the season time, of course, this will be accelerated, and we believe that in the next 1 or 2 quarters, the benefits will become even more apparent of the BIS.

And there are no fresh imports happening of these fake bands, that is for sure?

I mean if anything is getting done by other means, I don't know, but like legally, yes, nothing is getting imported now.

Okay, okay. No worries. And second question, if I may. On this 15- to 20-day disruption that you mentioned, I'm not able to really understand what has happened. So one, how is it that this disruption is only affecting the online channel? Was it specific to certain SKUs that demand came in on the online marketplace and you could not supply or you couldn't anticipate stocking up or you didn't have enough capacity to stock up that much? What exactly happened?

Sure. So basically, we firstly had sufficient stock on the distribution side. Of course, there was some disruption on the distribution also, but distribution was less affected because they had a healthy inventory base already. On the online side, we got impacted mostly on the specific articles which were high movers and the outright sales in the marketplace, right? So both the areas got affected with respect to -- because they were already on a lower base of inventory. So that is where the impact was more significant.

But you planned to do this, so you could have stocked up on those items, right? If it was an unplanned exercise...

No, you're right. So 2 or 3 -- basically 2 big transitions were happening at the same time and the SAP and the warehouse. And while we honestly thought that this could have been done in over a week's time, but it took much longer the warehouse transition because of the complexity, which we did not really anticipate to take that long. So it was definitely a miss. I would call it out that it was -- it could have been done slightly better. But I mean, whatever it is, it is in the past now, and we are very hopeful of recovering completely from here on in the balance 3 quarters.

We have our next question from the line of Akshen from Fidelity.

First question was around the ASP. You've seen a sharp uptick this quarter. I don't know if this is just the choice of inventory we sold or something that we should see steady state going forward? Yes, that's question one. If you could answer that, then I'll go to the second one.

Akshen, Sanjay this side. So ASP, the high ASP is a combination of 2 things. One is the higher saliency of sneaker portfolio, which has a higher MRP range. That saliency or that portfolio has shown a growth of around 150%. And then second is the lower sale of slippers, sandals and DIP shoes. So DIP shoes were selling -- it's an entry-level school shoes, which was selling at a price point of roughly INR 400, which we consciously sort of descaled or scaled down and tried to move consumers to the EVA-based sole, which is a lighter school shoe, but at a higher price point. So it's a combination of, one, the sneaker portfolio; and second, the lower saliency of the school shoes -- DIP school shoes, plus sandals and slippers, which was a conscious call on sort of vacating some entry price point, which were delivering us less than the average margin. And going forward, I would say that sneakers, the base which we have formed in this quarter, I mean, from here on, there will be a consistent growth quarter-on-quarter, of course, we should not be comparing it versus last year, but now this 500,000 pairs to 700,000 pairs would become a base for every quarter because our Haridwar II facility is also now up and running at full scale.

So the ASP may not be as high as this every quarter, but it will certainly be higher than last year.

Second was just your comments around the disruption. So from the earlier call, you had mentioned that the SAP, you had a go-live on 4th April. So that wouldn't really have disrupted the quarter too much?

Yes, Akshen. So the disruption here, it was more on account of raw material warehouse consolidation, which feeds our 5 plants and 60-odd fabricators. So if there is a -- I mean, it handicaps us if there is a sudden demand on an article and if I'm unable to issue the raw material for that article, I just can't mold it and service that demand. And that's where our online channel got impacted. SAP go-live was scheduled for 4th, by 7th, all the modules were up and running, by 10th, it was BAU for our largest channel, which is distribution. So the disruption was more on account of back-end supply chain, which is raw material wear.

Sure. Just the last thing from my side, more of a suggestion. I mean we had a call fairly late in May, this disruption on warehousing would have been a known headwind to you. It doesn't change 1, 2, 3-year outlook. But just around the quarter, we were coming off 2 decent quarters -- 3 decent quarters. If we were changing logistics -- we did call out, but we didn't call out disruptions over there. If there were disruptions, you would have seen the disruptions by me. It's out of good practice. I think you should have just called it out. That's it from my side.

Noted, Akshen, yes. Thank you.

[Operator Instructions] We have our next question from the line of Prerna Jhunjhunwala from Elara Securities.

Just wanted to understand the difference between primary sales and secondary sales growth this quarter?

Prerna, we had a fair amount of secondary sales growth, I mean largely reflected in our distribution growth. So we are working in the key markets. We are working on sort of replenishment model. The big markets in North and also in West, we have seen a decent secondary sales traction.

So because we lost 15, 20 days of sales that would largely be on the primary side, I assume. And hence, just wanted to get clarity whether this would be covered up in the forthcoming quarters?

No, we have been mentioning, I mean, since the beginning that we have shown a growth in distribution around 8.6%. So distribution channel, we were able to upstock the inventory in line with the demand. The disruption impact was not that severe. And that's how, I mean, we have been able to grow. So the replenishment thing continue to work. Wherever in distribution, whatever little degrowth is, that is on account of lower sales of school shoes, DIP, sandals and slippers, which again was a conscious call based on those price points and lower-margin articles.

But just to add here, Prerna, that by the end of the quarter 1, we were able to start building up the stock again, right? So the disruption issue is behind us completely. And that's why we were able to see a good momentum July onwards. So I would say that this issue has passed us now.

Sir, would you like to call out for any positives coming in from preponement of festive season in Q2 this year?

I think it's too early to call that out. I mean, we are, of course, fully geared up for the season. So we'll see how it goes.

We have our next question from the line of Aliasgar Shakir from Motilal Financial Services.

Just wanted to understand the demand outlook. Now I mean, you did mention that the inventory of non-BIS inventory in the industry has come down quite significantly, which was hurting us and also overall macro scenario was also not very great. So in that backdrop, how do you see now the demand outlook? Also from a demand driver point of view, distribution side, what steps we have taken and all that, do you think we should be able to still do a double-digit growth target that we had? Or with this Q1 disruption, I think now that would come down?

Ali, so no, we are absolutely on track with the double-digit guidance. There is no change in that. We've basically been executing apart from this one issue that we had on the warehouse. We are executing very well on the front-end side. And we are currently doing -- we've had a fantastic distributor meet where we've collected orders till basically December. We have a very high visibility of the order pipeline and even at the secondary level, as currently, we're doing the retailers meet it as we speak, they're going on across the country. So the response is very good on the newer articles and the entire portfolio. The core portfolio is very well accepted. So we have a good visibility. It's all about execution now, and that's basically what we're doing as the challenges that were there in terms of the warehouse, we've opened it up completely. So at least now we have a very good throughput available from the warehouse side. So we don't see any other challenges in the season.

Got it. This is very useful. And on the distribution side, if you can share any insight in terms of the initiatives we are taking to ramp up distribution and the new territories that we are planning to add?

So yes, like I mentioned, I mean, these are all new initiatives. The number of retail meets that we're doing are highest in the country by far by any other brand by a significant margin. Like I can't share the numbers, but it's in like over 150-plus retailer meets that are happening across the country, plus the distributor meet that happened was at a very large scale. So these are like industry-first initiatives. Nobody else has done this before. And along with that, we're giving them a highly curated portfolio of very good designs and value proposition is very high as always that we maintained. Plus we're also launching with some new branding and -- which you will see in the coming times in the season. So a lot of stuff is happening in terms of the brand visibility, marketing, sales front. Of course, in the regions of South and West as well, like we maintained the momentum. South has also grown for us in quarter 1 Y-o-Y, right? So there is a very good execution push at ground level in terms of distribution, and that's where you see the growth as well in quarter 1.

Got it. Just last question on the margin front. So you mentioned 17% to 19% is where you aspire. Can you share time line? I mean should we expect this year to achieve that level of margin? Or else by when should we expect? And what kind of growth do we need to achieve that?

Ali, of course, we do plans and the plans are always slightly above what we have already delivered in the last year. So 17% to 19% is a range, I would say, for a period greater than 1 year. I would not sort of commit that, yes that upper band is what we will be achieving this year. But that's the range we are aspiring. It is a combination of multiple factors, and everything falls into place, I mean, we can deliver in that range. But definitely, I mean, that range has some building blocks, which we are working on.

But it should be linear, right? It should not be back ended, right? We should see linear improvement year-on-year?

Yes.

The next question is from Jasmine from VT Capital.

My question is largely on the nearer term. My understanding is that quarter 2 may have some seasonal impact from the rain plus the inventory disruption as well as the rising ASPs that may have caused a little bit of a stump in the volume as well. So would it be fair to assume that H2 is when a proper recovery would be seen?

Jasmine, so we've covered this already, like quarter 2, like I called out, is on track, right? And so whatever that translates into H1 numbers, given how quarter 1 went. But clearly, like we are on road to recovery, and we still have, like I've guided to a double-digit growth for this year with absolutely on track with that. So I mean, that's all I can point to here. I mean there is -- there was, of course, abnormally -- abnormal amount of rainfall this year. But I don't see a disruption beyond any point for that. So it's manageable, and we've been able to do fairly well so far.

Okay. My second question is on the unorganized competition. Do you have anything to call out on that front? And a followup or a related question on that would be how is the pricing in the market right now? Is there a lot of price cutting happening in the lower price points?

Yes, that is true. Actually, on the ground, a lot of the unorganized players are cutting prices a lot and there is intense competition on ground. So I mean that's where we are taking some steps to mitigate that and reduce that impact to as low as possible. So we've also done some schemes and some initiatives have been taken on the front end to push sales. And -- but as long as we're also obviously monitoring secondary inventories very carefully. So there is a movement on the secondary side completely. So it's basically the sale is pretty much in line with how we anticipate so far. But yes, there is a push on the ground. There is definitely quite intense competition at the moment.

[Operator Instructions] We have our next question from the line of Chirag Shah from White Pine Investment Management.

Sir, 2 questions. So first, on this disruption due to warehousing, that consolidation was happening, what kind of volume or revenue we would have lost because of that because you would have tried to recoup it in the subsequent period of the quarter. So either in terms of number of pairs or in any form you would like to call out?

Yes, Chirag, as we mentioned that the impact was there, primarily on the online channel, so which is roughly 35-odd percent saliency. And I mean, had everything been normal, and we would have shown a bit of growth there as well. So it would have an impact of maybe around INR 10 crores to INR 12 crores of revenue there, which on an overall basis would have added maybe 3, 4 percentage growth.

Great. And just a clarification. You indicated there was a 50% growth in sneakers, if I heard it correctly?

Yes, that's right versus last year same quarter.

And is this a new trend or last year was more of an abnormality because of the growth...

Sorry, we were not very -- I mean, geared up for the sneaker portfolio. We have set up new stitching lines in Haridwar facility mainly to cater to the sneaker segment because that's a trend or that's a category which was evolving, and we were late entrants there. That was a gap in our portfolio, which we have bridged from H2 of last year.

Yes. And last question was on this non-BIS inventory in general in the system. Is it from -- based on your understanding, can you call out what is the impact of this either on revenue as well as on margins either way in general for industry? Because it's a kind of a black box beyond a point and your understanding would be far, far superior than us.

As Nikhil mentioned, I mean the non-BIS inventory is primarily or let's say half of that is nothing but the fakes of the MNC brands, which used to get imported from China. So that has been stopped completely, which would mean that it should result in a demand for the local players, right? So that's what it is. And the government giving time to liquidate such inventories till June 2026 means that wherever it is parked, I mean those channels still have the inventory. And once those inventories are completely exhausted, it would lead to a demand for the local players. And by this time, I mean, since last 1.5 years, if the imports are banned, it is presumed that a large part of that inventory is already liquidated. So it should translate into the demand. And now it's all a matter of guesswork that how much of that demand will come to Campus and how much will go to the unorganized players. And it's now -- it's level playing field for all and it becomes an execution game for us to try to grab as much share as possible.

Sir,what I was trying to understand is if I take F '25 as a full year base, would it be right that for an organized players like you all as an industry, I'm more referring to, there would be a 5% to 7% impact on revenue coming because of this inventory of non-BIS inventory? Or it is more impacting you on the margin front because there is more supply and you have to compete in the market as a player. So how is the impact in your assessment on the financials?

It's very difficult to put a number to it. I would only say that it can impact us on the positive side in terms of revenue because the imports have been banned. On the negative front, as the cost, there was a cost of liquidating non-BIS inventory ASAP, which we have been doing for last I would say, 5 quarters since the BIS regulation is in place. And I mean, like all other players, we are also now left with very little of that stock, and hence, the cost side impact is very miniscule.

So would it be right statement that F '25 margins would be significant, whatever reasonable impact on this. And in a sense, can you help us understand how big it could be the impact? For F '25 as a whole I'm referring to because there could be quarterly variations, et cetera, et cetera.

It would be very difficult to quote a number.

[Operator Instructions] We have our next question from the line of Rajesh Agarwal from Moneyore.

Sir, can you throw more light on the sneaker business on the higher base of 5 lakh or 7 lakh, can we grow quarter-to-quarter 25% or yearly 40%? And you said, ASP will not go up. If the sneaker business goes up, ASP should go up from here also? These are my questions.

Okay. I mentioned earlier, I mean if you are comparing versus last year, the numbers would look great. But then if we get into a quarter-on-quarter comparison, 5 lakh pairs per quarter is a decent number. And from here on, our growth will be normal, let's say, 15%, 20%, right? The kind of saliency we will have for sneaker. And yes, sneaker commands, let's say, INR 200 to INR 250 ASP difference versus our regular sports shoe category. And hence, to that extent, ASP accretion and margin accretion would get reflected in the numbers.

Can you come back again on the last thing? What you said about the margin accretion?

That's what I'm saying that to the extent we continue adding sneaker portfolio, it's nothing about premiumization. So to that extent, the ASP accretion and margin accretion related to that price difference would accrue in our numbers.

That's -- please can you quantify that will be how much, INR 250 or INR 300 or whatever?

You can put, let's say, 10% growth on my current quarter's number. That's what it will grow now.

Okay. And our sneaker price begins from what range, sir? What price do we begin starting range?

It usually begins at INR 1,499 and above.

So still there's a scope of ASP to increase substantially from here or not?

Now we are at INR 671.

I mean from the sneaker portfolio, certainly the ASP will grow, right?

INR 1,499 is the MRP. So our realization will be after the channel margin, of course, yes.

But there is still a scope of ASP increasing?

Yes, there is still a scope.

So we have to -- so when we are talking about this guidance, so we're talking about volume growth also and ASP increase also?

We're talking about revenue growth, and that -- I mean, everything is built into that...

Understood. Okay. And any other drivers for the growth and the margins?

Of course, product sneakers. And from a category perspective, like segment perspective, women's share is another driver. And from a geography perspective, South is the driver.

Okay. Understood. Because I have been using your product, it's a very...

Sorry to interrupt you, Mr. Rajesh. May we please request you to rejoin the queue. We have our next question from the line of Yash Kinwalsara, an Individual Investor.

Okay, sir. Sir, actually, I did some ground work -- ground research. I talked 2 to 3 retailers. Sir, what I've noticed is that if you take the -- I'm talking about sports shoes. If you take the segment from INR 500 to INR 2,000 then people usually refer Campus, which is good, and congratulations for that. And sir, second thing, but if you take a premium segment, which is from about INR 200 -- INR 2,500, people are usually tilted to other international brands. So sir, my question is that do you have any strategy? Or are you planning -- do you have any framework for branding to gain some market share in higher premium segments?

Sure, Yash. No, great question. Yes, that's exactly what we're working on. So sneaker is one portfolio, which is helping us bridge that gap and INR 2,000 plus onwards, we have a fantastic range of sneakers, which is already there. And of course, there's a lot more in the pipeline, which is about to get launched. So that is one big piece of this puzzle, which will help us premiumize, INR 2,000 and above, right? And of course, there are some other steps that are being taken as well, which it's a bit early -- too early to share right now on the call. But rest assured, we are working on our INR 2,000-plus portfolio very aggressively.

Okay, sir. And my, sir, third question is that...

Ladies and gentlemen, in the interest of time, that would be the last question for today. On behalf of Campus Activewear Limited, that concludes this conference. Thank you for joining us. And in case of any further queries, please reach out to the Campus Activewear's Investor Relations team at [email protected]. You may now disconnect your lines.