Campus Activewear Limited (CAMPUS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Campus Activewear Limited Q3 and 9 Months FY '25 Earnings Conference Call. [Operator Instructions]. Before we proceed on this call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It may be viewed in conjunction with our businesses that cause future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. The Campus Activewear 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.

Thank you. Good evening, everyone. We appreciate your presence at our quarter 3 and 9 months FY '25 earnings call today. The company continued its growth momentum displayed in quarter 2 FY '25. We achieved the highest ever quarterly revenues of INR 514.8 crores (sic) [ INR 514.9 crores ], largely attributed to our aggressive distribution drive strategy and our higher online sales benefiting from the festive season, thereby navigating a challenging macroenvironment. Our revenue surged by 9.1% Y-o-Y in quarter 3 FY '24, led by a strategic focus towards multiple initiatives for gaining market share, like reach expansion in our key markets, 116% growth in our sneaker category and the new multimedia marketing campaign, amongst many others. The company has registered double-digit growth in key states in North, Central and West. Additionally, we have made a swift foray into the focused southern markets through scaling up our online presence. We have strengthened our product portfolio by launching 69 new articles during the quarter and new SKUs for women category, resulting in an improved product mix catering the diverse needs of the Indian family for every occasion. During the quarter, we have added 6 new stores across India, taking our total EBO count to 290. We have embarked our presence on Zepto during the end of the quarter, thereby satiating our customers' preference with prompt delivery convenience through quick commerce and our brand is also getting traction in premium large formats stores throughout the country. Our gross margin for the quarter stands at 51.2% marginally lower as against 51.4% in quarter 3 FY '24 versus quarter 2 FY '24, owing to the raw material price inflation. The EBITDA margin has expanded by 4.40 bps Y-o-Y from 12.2% to 16.6%, primarily due to improvement in debtors & inventory health, which is basically lower provisioning, reflecting better working capital management. Campus Activewear forged a profound and enduring engagement with its core demographic through a 360 degree 'Move Your Way' campaign, prominently showcasing our brand ambassador Vicky Kaushal, to resonate and captivate the market. During the quarter we reached out to all our consumers through a multimedia strategy including TV, digital media, print, outdoor and visual merchandising campaigns. We would like to share key updates in our capital expenditure journey as well. The CapEx for the sole manufacturing unit at our Gannaur facility was completed in Q3 FY '25. Furthermore, we anticipate the completion of our Haridwar facility, dedicated for manufacturing state-of-the-art uppers in Q4 FY '25 with commercial production projected to commence from March 2025. We persist in our endeavor to maintain a competitive edge through a data-driven strategy that allows us to actively track and adapt to evolving consumer trends, preferences, and pricing dynamics, ensuring our product portfolio is consistently attuned to market needs. Thank you, and now I hand over the call to our CFO, Mr. Sanjay Chhabra, to take you through more details on the quarter 3 and 9-month FY '25 performance.

Thank you, Nikhil. Good evening, everyone, and thank you for joining us for quarter 3 FY '25 earnings call of Campus Activewear. Our revenue from operations grew by 9.1% year-on-year to INR 515 crores in quarter 3 FY '25, largely benefited by higher distribution, which registered a growth of around 9%, and online channel, which showed a revenue growth of around 11%. The company sold approximately 7.6 million (sic) [ 76.2 million ] pairs in Q3 FY '25, up 10% year-on-year. The average selling price stood at around INR 675 in quarter 3 FY '25, a drop of 1% year-on-year, driven by higher saliency of accessories and socks. Footwear ASP remained flat at INR 683 (sic) [ INR 682 ] per pair. Our gross margin for the quarter was at 51.2% versus 51.4% in quarter 3 FY '24, showing a drop of 20 bps, marginally lower, driven by raw material price increases. On a quarter-on-quarter basis also, our gross margin dropped by 140 basis points driven by raw material price increase, adverse mix and liquidation of non-moving BIS inventory. The revenue mix between men and women and children category stood at 81.3% and 18.8% in quarter 3 versus 80% and 20% in quarter 3 FY '24, driven by higher sales of sneakers in men category. Our EBITDA for quarter 3 FY '25 was at INR 85.9 crores. The EBITDA margin expanded by 4.40 bps year-on-year to 16.6%, owing to a normalized SG&A. So last year, we had a couple of provisioning towards inventory and doubtful debt. So current EBITDA margin is at a normalized level. PAT grew by 86.2% year-on-year to INR 46.5 crores, and PAT margins expanded by 370 bps year-on-year to 9%. Our balance sheet continues to demonstrate strength with robust return ratios such as return on capital employed at 22.1% and return on equity at 17.5% as of 31st December. With this summary, I will now conclude my remarks and open the floor to the moderator for Q&A session. Thank you.

[Operator Instructions] The first question is from the line of Gaurav Jogani from JM Financial.

My question is with regards to the gross margin decline. I mean, we can see the gross margin being declining both sequentially as well as on a Y-o-Y basis. So if you can highlight which particular RM do you see inflation? And what are the steps we are taking to mitigate this? Also, if you can quantify the impact of the liquidation of the non-BSI -- the non-moving BSI inventory on the RM and the adverse mix that you highlighted?

Just to highlight one more number here, on a YTD basis for 9 months, the overall gross margin drop is just 50 bps. We have been seeing the input price increase with the cotton, wherein we had to take a -- or rather we had to give a price increase to our suppliers in the last quarter -- fag end of last quarter. This quarter, we saw the -- one of the components called TPU price increase, primarily due to countervailing duty imposed -- custom duty imports. It was a conscious call on our behalf not to pass on the prices to consumers, but we have taken selective price increases in November end and also in Jan beginning. So we see that we'll be able to mitigate part of this price increase or pass on this price increase to the consumers in the last quarter. That will help us to mitigate a bit of the gross margin drop, which is somewhere around 50 bps on a YTD 9-month basis.

And sir, if you can also highlight the impact of the non-moving BIS inventory liquidation and the adverse mix too?

Okay. So as far as the BIS inventory liquidation is concerned, that impact is in the range of anywhere between 20 to 40 bps depending on -- in the last 3 quarters. So it varies depending on article to article. But as I said, that on a full year basis it's 50 bps. It's a combination of the mix, the non-BIS component and the raw material price increases, which we have not been able to pass on.

From next year, we'll see the margins normalizing as we intend to liquidate majority of our non-BIS inventory within by March end.

So actually, my question was that only. Is the entire non-BIS inventory now over or it will -- still some impact in the future, maybe?

We have less than 10% of our overall inventory in terms of finished goods accountable to non-BIS inventory, which is a very small number, a much manageable number. So we do expect that by March-May, we should be sitting on non-significant non-BIS inventory.

Nikhil, my next question is with regards to the other expenses also. I mean we had done quite a bit improvement in terms of the absolute other expenses not increasing. But if you look at ad spend per [ pair ], it was in this quarter around 10.8%-odd of the entire sales. So any guidance on an annual basis you can give on the advertising spend that we are getting to keep in that range? So anything here?

So first, actually, the A&P spends are, in terms of absolute value, absolutely flat with respect to quarter 3 last year on a Y-o-Y basis in spite of the growth in the sales. So our overall numbers for the year would be trending in a similar range, like, 7%, 7.5% is what we've been trending at. And we don't see any increase in A&P spend for the entire year. For quarter 3 -- sorry, just to add, even for quarter 3, whatever we spent in A&P is absolutely flat in terms of absolute value, right? So as a percentage, it's actually gone down versus last year in quarter 3.

And Gaurav, just to add, quarter 3, our A&P spends are relatively higher considering the seasonality and festival.

Sir, and the last bit, on the employee cost bit also, we can see that also is not increasing very materially now either on a sequential basis. And we understand that you have spent employee expenses ahead of time towards team-building exercise. So how should one build in the employee cost moving ahead?

Gaurav, sorry, your voice is not clear.

Gaurav, your voice is muffled. Can you please repeat the question?

Yes. I was speaking about the employee cost. I mean, if you look at the employee cost as well, that's been quite under control. And I think what we have been hearing from our interactions is that you have spent on team building exercise ahead of the time. So how should one look at the employee cost going ahead?

Okay. So we don't anticipate any significant addition to the employee, either headcount or the cost overall. We did -- we have been investing ahead of the curve in terms of the employee count. And we believe that with volume, like what we've seen in quarter 3, with good volumes even going forward, we should be able to bring down this cost -- the employee cost as a percentage. And so we don't anticipate a significant movement in the cost, at least for a few quarters going forward. Like, we don't see anything in the short term or medium term.

The next question comes from Videesha Sheth from AMBIT Capital.

Two small questions from my side. One is on the growth perspective, especially in the trade distribution channel. Was it led with -- growth led by primary sales? Or was it more tertiary offtake that you saw. And is it fair to say that channel inventory at an overall level has [ grown fully ]?

Videesha, this quarter, it was like on the distribution front, it was very focused in terms of secondary sales. So there was a very small gap between our primary sales and secondary sales. We were more focused towards replenishing. We are happy to share that we are -- most of our distributors are now on the DMS thing. So we are able to sort of execute the replenishment thing more efficiently. And also, as far as our distribution network inventories are concerned, they are in a healthy -- around 80 to 90-odd days at a pan-India level. So no increase in...

There is no push sale, Videesha, just to be absolutely clear, like we have had a very good primary and secondary. It's in line with the expectation, and it's absolutely the same. Like, the same primary has been executed in terms of secondary numbers also. And we validate that through the multiple software that we have on ground. And also the DSO, the credit days and the credit overall has not gone up and it's flat with respect to quarter 2 -- in last quarter also. So there is no push sales with respect to distribution.

And on finished goods you mentioned that less than 10% of finished goods are pertaining to the non-BIS certified bit. Then when do you expect that to get liquidated out of capital system?

Like I said, majority of it will be done by March end, by in the next 2 months. And there could be a very small portion of it there, but it's not significant really. So we are anticipating that by this quarter 4 end, we should be done majorly with the non-BIS factory inventory.

And lastly, anything on the competitive landscape that you would like to highlight?

Not really. I don't -- is there a specific question you would want to ask with respect to competition?

No, in terms of either Campus' market share vis-a-vis competition, they're growing or that [ documents ] Campus is increasing the market share? Anything specifically about Campus?

We have certainly outperformed in our key states of the North, West and Central region, also East. So we do believe that we have gained the lost ground and there has been a good uptick in our market share. And given the competitive landscape and the macroenvironment wasn't really all that great in quarter 3 as well. Like, it did improve Y-o-Y, but it was still kind of subdued. So in that kind of environment, I think we've done reasonably well, and we are quite pleased with the way things are going. Because a lot of these initiatives that we've taken over the past few quarters are panning out really well and we lot of consistency going forward.

[Operator Instructions] Next question is from the Priyank Chheda from Vallum Capital.

So we have been shareholders and you have been delivering it good. But when it comes to guidance, you have been guiding for a few things which we haven't been delivering, right? We have guided earlier for -- to deliver mid-teen revenue growth. For 9 months, we are at plus 10%. We guided for ASP to remain flat. For 9 months, we are negative 3%. For margins, we have guided last 3 months ago to be at 17%, 19% for the full year, while for 9 months, we are at 14.4% in terms of EBITDA. I mean, I just wanted to ask, I mean, are these guidances -- should we take it given the evolving macro situation, given the internal strategy to the company, anything that you would like to comment on the guidances given earlier versus what you think is realistically achievable in FY '25?

So Priyank, great question. I'd just like to say that we are very much sticking to our aspiration to get to those numbers, what we have guided earlier. We never said that those guidances were for FY '25. We've always maintained that the company is on good track to get to these numbers, and we have been showing improvement quarter-on-quarter to get to these guidance numbers. So we're still very much on track with 17% to 19% as guided earlier in terms of EBITDA margin. And 16.2% as delivered in this quarter is a good step-up towards that number. So -- and the same goes for ASP. ASP is a slightly more dynamic number in nature. It depends on the actual market conditions on ground during that time, which was a reflection of how the festivities pan out, how the demand is -- actual demand on ground. And whether strategically, is that the right time to take a price increment or not and how the inflation sort of affects the raw material prices. So ASP is a bit more -- but the aspiration, certainly, remains to continue to premiumize, and sneaker portfolio is really going to add to that ASP premiumization as well as that category in itself is a higher ASP commanding category. And given the growth and the plans that we're building up for the sneaker category, we believe that it should continue to increase during the -- in the ASP. So like I said, the guidances were never for FY '25, per se, but we believe that given the challenging macroenvironment, we have been improving our performance quarter-on-quarter, and that should be comforting to I hope the investor base as well.

Definitely, I mean, very positive material checks that we found. And surely, your efforts on the sequential basis is visible. But yes, I mean, when it comes to FY '26, when we enter FY '26, there are not much of the disturbances that we had in FY '25 with respect to liquidation of inventory or with respect to the internal restructuring that we had. So when it comes to FY '26, any non-linear aspects of your business that you would like to highlight that we should keep in mind when it comes to the overall growth with respect to any of the segments or any of the channels that you would like to highlight?

Not really, no, Priyank. I think we are placed well. We are confident in our ability to deliver as long as the macros really don't get any worse from here on. And if they, of course, improve, it will certainly be a good tailwind. But as long as they don't get any worse, we are very much poised to -- and confident in our ability to deliver the numbers.

So when it comes to women's and kids or when it comes to South markets, where we have a lot of leeway to grow versus the markets and to improve our throughput within the retail stores, any specific strategy you would like to highlight, which we should think when it comes to FY '26 and '27?

The focus very much remains on the growth levers we've called out repeatedly, which is women, kids is certainly a big growth lever, and there has been an increased significant focus in terms of increasing the pipeline of designs. The overall SKU count that we offer within these 2 categories has significantly gone up. And the response has been very encouraging from the market as well. Of course, the shift between men and women has slightly skewed in quarter 3, primarily due to the sneaker offering being offered mostly on the men's side, and that has done really well. So that skewed the number. But overall, women and child category continues to grow, and we aspire to continue to take it forward. Anything else that you would like to know around this?

So on a sneaker market, what would have been our sales on 9 months versus the available opportunity? What is the kind of capacity that we are building up after our new plant comes in? If you can further dig down into that?

You mean capacity in terms of production capacity?

Yes.

We would be -- Priyank, this is Sanjay. We would be adding around 2.4 million pairs of sneaker capacity to our Haridwar new unit. Currently, we are under 10% in terms of volume share. And with the new capacity addition, we definitely expect to ramp up.

Those were a few questions, but in a public call, we find it limited time to further understand your overall strategy. We have been following up for a meeting. Hopefully, you can accommodate our request.

Sure.

Next question comes from [ Vaishnavi ] from Elara Capital.

This is Prerna from Elara Capital. I would like to understand how much price hikes have you taken that you mentioned in the opening remarks in last 2 months?

So we have taken a price hike of anywhere between 7% to 10% in select product categories, which are less price sensitive. So the idea is to -- at an overall level to insulate our P&L from the raw material price increases. These price hikes are like -- they are not specific to a channel or to a geography, but they are very selective.

Should it have around 2% to 3% overall impact when we see on an overall basis?

Yes. As I said, that the idea is to insulate the P&L from the input price increase or inflation. That's what we are targeting.

What would be your targets for distribution reach expansion by the end of the year and next 2 years in terms of EBO, MBO expansion and any distributor reach expansion that you are targeting?

As we have been talking about South as a geography where we need to penetrate more, East and West, we are comfortable with the progress we have made in the last 1.5 years. And we do have our internal targets. I would refrain from putting any numbers here. But we have seen -- even in this quarter, we have been able to expand our reach as far as distribution as a channel is concerned, and that has got reflected in the kind of volume growth we were able to do.

And can you provide some color on how has been the demand in metro, Tier 1, Tier 2, Tier 3? And what has been the significant changes that you observed during the quarter and how it should be going forward, assuming everything sacrosanct?

So our segmental sales with respect to the region has been very similar to Y-o-Y, like we've done about 40% -- 42% from North, about 21% from East, 7-odd percent from South, 22 and some-odd percent from West and about 7% from Central. So that's been the share this quarter with respect to the geographical split. And there we see that with respect to metros and Tier 1s also, it's not been as big of a dampener as for some of the other consumer goods that we've seen in the market. So we've had a fair share. So for us, it's pretty much been flat with respect to geographical split versus year-on-year.

And will BIS liquidation have any further impact on your margins in Q4?

It would not be a significant number. As we said that the inventory levels are very low -- the non-BIS inventory levels are very low as of now. So there could be a 10 or 20 bps impact. That's what, I mean -- we don't see any material number there.

Next question comes from Umang Mehta from Kotak Securities.

Congrats on outperforming this quarter. Sir, I just wanted to check, so the FM made some comments regarding a focus package scheme for footwear and some big numbers were given. Beyond the headline, would you have any insights as to what they are planning and how can it benefit players like us?

Hi, Umang. So we are also eagerly awaiting, honestly, the details of the budget to be released. Nothing has been put on paper yet. But we do anticipate the government has called out the certain incentives. So clearly, there is a drive and a push by the government to sort of grow the sector meaningfully because it does generate -- it is one of those sectors which generates one of the highest employment across the country as it is a labor-intensive industry. And we are proud to be part of an industry where we are able to generate this kind of livelihood for so many people. So I think that is one of the biggest agenda for the government to increase employment, right? So that directly impacts our industry.

And the second one was on BIS. So I recall that comment was that it could take a couple of quarters before we start to see any benefit. Would you still maintain that in the sense that still there is enough non-BIS inventory in the system which was imported earlier and it will still take a few quarters to clear out?

So I think the inventory levels have certainly dropped, the non-BIS inventory. We have -- there could have been some tailwinds on account of that as well. We're not sure of that, we can't quantify it honestly. There's no numbers to quantify that. But there could have been some tailwinds on account of the BIS as well in quarter 3. So maybe the levels have reached an all-time low and I don't see a lot of non-BIS being liquidated in the market in the next...

Just last, if I can ask, the current quarter, could you give any qualitative tailwind when already half of the quarter is behind us? Would you say that the momentum has largely sustained in the current quarter?

Umang, as much as we'd like to, I'm afraid we don't give out these statements. But we -- like we said, the BIS tailwinds are certainly also there and a lot of initiatives have been panning out for the company well. So we are fairly confident of delivering the numbers.

[Operator Instructions] Next question comes from Devanshu Bansal from Emkay Global.

Nikhil, I just wanted to check on the competitive intensity in the market. Obviously, demand is one aspect, but we have been through a couple of years of challenging period, right? And there was a lot of competition that's grown in during this period as well. Since the demand has remained muted, I guess the challenges would have been there in their businesses as well. So are you sort of seeing some normalcy in competition or that remains -- that still remains high in our area of competition?

Hi, Devanshu. So the way we think about competition is that it certainly motivates and pushes us to deliver more and get better at what we do. And this is something that we look forward to because it challenges us as a company and the management to do better. So we do believe that the competitive intensity did peak out as of last year, because, firstly, the conditions obviously were subdued in terms of demand. So also at the same time, the supply was also quite a lot and I think that has sort of peaked out last year. So we do see some normalization in that also with respect to competition. And -- but again, like I said, we don't -- we're not afraid and scared of a challenge. We really look forward to improving ourselves with respect to competition.

And from your channel perspective, in terms of working capital, so has that also eased off or still that remains a challenge because the demand has not recovered completely?

Devanshu, this is Sanjay. From a working capital perspective, I mean, for us, nothing much has changed. We continue to maintain healthy DSOs. We do have a robust credit control mechanism wherein offer or we incentivize our distributors to avail the cash discounts and pay us on time. So that's the philosophy which continues. On the inventory front, we have reached to 95 days of inventory holding from 110 days last year. So there also, we have seen our -- whatever numbers we are targeting in terms of driving inventory base, we are able to achieve that. So we don't see any stress in working capital.

Sir, my question was also to understand the distributor health. So from his perspective, how is working capital panning out for him? As in -- is he able to sort of recover money from the market or still there are challenges?

So again, I did answer this some time back in terms of distributor days of inventory and primary versus secondary. So that again is a reflection. So this quarter, our secondary sales and primary sales have a very, very nominal gap, which reflects that we are more getting into a replenishment model. When we reach that level, which means that distributor is able to recover his money from retailer, he is paying us on time and accordingly taking the inventory what is there in demand in the market. So I mean at 84 days level rate, through our DMS, the inventory levels are very much within our internal norms of 60 to 90 days.

So it's fair that if demand sort of recovers, then we are in a good shape, right? So that's the only thing lacking as of now.

Yes.

Next question is from the line of Aliasgar Shakir from Motilal Oswal Mutual Fund.

Firstly on the margin, so earlier you made some comment, I just wanted to clarify that as you mentioned that BIS-related inventory is now nearly behind us, so for FY '26, we should come back to our normalized 18% type of margin that we have been earlier doing and guiding. And also for fourth quarter, given that you mentioned that impact is now limited from BIS, so we should achieve our normalized margin both in gross and EBITDA level?

Ali, on a quarter-on-quarter basis, if you compare versus last quarter, we did improve on the EBITDA margin profile by roughly 400 bps. And this quarter, the numbers are like normalized numbers with no one-off in the SG&A. So we are hopeful that we'll be able to deliver margin in this range per se in the coming quarters and FY '26.

Also, I'll just add to that. EBITDA to PAT conversion has also significantly gone up as we've become debt free. So even, like, at 16%, let's say, PAT, we've been able to deliver -- EBITDA, sorry, we've been able to deliver good decent PAT, right? So the conversion is also sort of helping us there get to the PAT level.

So this quarter, of course, we have improved margin significantly, but that is on probably a low base of 3Q due to certain issues that we had faced. So I agree this quarter has been pretty good improvement, but we should come back to a normalized margin, right, next year, assuming that if the demand is in a normalized state?

Absolutely, Ali, right? 17% to 19% is what we are aspiring for.

And on the demand side, you've been kind of a little bit, I would say, conservative by saying that if demand is good then we'll do the margin. But just want to kind of get your sense on how is the demand on the ground? Do you see still challenging environment? As you mentioned that competition also got as active and you are doing a little bit better than them. So is there overall demand on the ground relatively decent for you to now kind of push for a double-digit growth, or you think that the environment is still very challenging and -- I mean, that you're not very sure in terms of how it will play out for you to achieve double-digit growth?

So I will not comment with respect to Campus as that would be a forward-looking statement. But what I can tell you is that the demand is not, like, absolutely normal in terms of how it used to be, let's say, 2 years ago, right, so -- or 3 years ago rather. It is certainly an improvement from last year in Q3 as well and Q4 also. But I don't know if the demand is -- we can call it absolutely normalized demand. So there is still some pain in the market and we're doing the best we can to be positive in macroenvironment.

And from new product point of view, we have launched sneaker range and also become very active on the open footwear also, right, especially in the North, particularly in the summer season. So can you share what would be the mix over there? And how much should that help you in kind of upping your overall growth numbers?

Sure. So I would refrain from sharing those numbers in terms of mix, Ali, unfortunately, because of the strategy -- internal strategy that we follow. But it's certainly on the cards. Like, we have been increasing our SKU count and our inventory in terms of open as well, as that's helping us penetrate the southern market and also normalize the impact in the summer months and reduce the seasonality impact. So that is certainly on the card. It is -- while the MRPs are very, very decent and -- but there will be some ASP impact on the account of the open inventory, but we are confident of mitigating that impact with respect to the premiumization of sneakers. So there's a counterbalance there. And net-net, we believe that the ASP should increase only.

And in the open footwear, margins are sort of in line with the overall margin?

Yes.

And what about sneakers? How is the sneaker traction in terms of new products and the kind of linear competition that is growing quantitatively?

Yes. So, no, the response is very encouraging, Ali. As the brand is -- of course, we are the #1 top of mind brand in our target audience. So they have accepted the sneaker range very well and we're getting a really good response. So there is a number of initiatives that we have been taking on that side as well. And there's a very exciting range also planned to be launched very soon with respect to sneaker. And we do anticipate a good move from there.

[Operator Instructions] Next question comes from Resha Mehta from GreenEdge Wealth Services.

If you could just comment on that over the last 1 or 2 years, we had -- if I go back to your past transcripts, I see that we have lost some market share in North in some of our key regions. So what is the reason for that? And also second question is, the online channels, I believe, you have classified in some 3 channels, which is O2O and B2B and the marketplace. So can you just comment on what was the problem in O2O and B2B channel? And what was the revenue contribution in the past and what has now that reduced to?

Right. So with respect to the market share in the North side, so there used to be -- and I'd like to call that out that there was some conflict across channels, because online was an absolutely new beast that we had to tame. The dynamics of that channel are very different from the offline, the way it works. And we were facing a lot of conflict between the channel partners as online there was some discounting versus offline the discounting much lesser. So that was how it was about 2 years ago. But over the last 2 years, we have basically segregated the entire portfolio across the 2 channels. So there is no common design as we speak, like hardly just barring maybe a handful in single digits, which are very old design. All the NCD, all the new designs have been completely segregated across the 2 channels. And therefore, the conflict has been completely resolved. So there is no issues today. And that has also really helped us gain our market share back, right, apart from -- so these are some of the things we've done internally, right, to gain that market share back in the North, especially in the Northern region. Sorry, what was the other part of the question?

Yes. So before I go there, just a follow-up here. So we lost the market share primarily in the North market or even we have lost in the Central, Western and Eastern markets and the reasons for losing share of any these 3 markets were also similar to the channel conflict reason given for the North?

Well, it was across India, but mainly it was in the North actually because we continue to gain market share maybe because our market share in the other territories was -- anyway, the base was quite low. North was very high as a base. It used to be about 50% or 52%, about 2 to 3 years ago, if I remember correctly. And...

I just want to add here that our saliency in North has gone down slightly. That's not because of loss of market share. In absolute terms, our North region is still showing a revenue growth. The saliency has gone down because in other regions, we have grown disproportionately higher.

So -- and the online channels like O2O and B2B, so, firstly, what are these channels? And I remember reading that there were some problems in these channels and we had to kind of scale down on these channels. So what revenue -- what was the problem here, number one? And number two, what was their revenue contribution, let's say, in FY '23, FY '24 and what is it down to now? And is this like a permanent loss in revenue or we've kind of made it up with something else?

So this O2O was something that 1.5 years back when some of the players wanted to -- players like Udaan and Ajio wanted to get into online retail sort of business or cater to the last leg of the retailers, and these channels suddenly show disproportionate growth. And then, let's say, after a year or so, they scale down because of the profitability issues. And it was just a cannibalization. I mean, these channels started catering to some of the distribution business. And when they were out of business, again, the volume shifted back to the normal pockets of distribution online. So that's how it was. And I think we have mitigated that. The volumes have gone back slightly to the marketplace and to some extent to the distributor.

So what is the B2B channel then? It's a continuation of the same question, just a clarification.

Let me answer this.

And the revenue contribution, which was there in the past and which is now from the O2O and B2B channels.

So we call B2B something like when we sell outright to the platforms like Flipkart, Amazon or Myntra. So that business continues to be there. And it's for these channels to decide how much they want to sort of do the business in the outright vertical. And again, between marketplace and outright it's just a swap. So if in a quarter there is a higher outright business, to that extent, marketplace orders or Flipkart is directly catering those orders to their outright inventory instead of these supplying those orders through the marketplace or from our warehouses. So it's a swap between those 2 verticals, right?

And your revenue contributions in the past versus now?

So wherever we are, both the channels outright and marketplace in the 9 months period have shown a growth. So the revenue saliency continues to be flat versus last year.

And O2O would have come down significantly. Would that understanding be right?

O2O does not exist now. So Ajio and Udaan both are out of this thing.

And at their peak, they would have contributed to how much of total revenue, the O2O channel?

I think if I recall correctly, at their peak, they were around INR 50 crores business.

[Operator Instructions] Next question comes from Aditya Khetan from SMIFS Institutional Equities.

My first question is on to the EBITDA per pair. This quarter we have the best EBITDA per pair of around INR 108. How much sustainable, sir, this number is for the near term and for the longer term? And would -- the gross per pair would be a good indication to going ahead or we can look at the EBITDA per pair only?

I would say that EBITDA level per pair benchmarking may not be a true reflection because our number of units sold includes units sold to different channels at different price points with a different cost element. It also includes accessories and in our units wherein we sell even socks. So per pair EBITDA would not be a right benchmark. It's always good to see on a percentage basis. And as Nikhil mentioned that we aspire to go back to the earlier days of 17% to 19%. And we are just trying to optimize both on the -- or rather bring cost efficiencies and also at the same time, drive premiumization and operating leverage. So all these 3 pillars should help us to improve our EBITDA margins, right?

Sir, my second question is, sir, any indication like on to the demand side? Like we have heard from the -- so many other companies that demand has started to slow from December. Have you also witnessed the same? And you see like demand so structurally slowing down for the premium products, especially in the coming 6 months because of the inherent slowdown also what we are witnessing. Can this change some dynamics at the ground and like volumes and ASP can drift downwards from here?

We can talk about the quarter gone by. I mean I would refrain from making any outlook sort of statements for the next quarter or next year at this point in time. But we see the quarter gone by, as I mentioned that in the distribution business, it was less of a push sale. It was more a replenishment on the basis of secondaries happening. So that's a reflection that there was a bit of demand uptick versus last quarter, last 2 quarters. And of course, growth versus last year, again reflects that -- yes, versus last year also there was demand uptick. So that's an indication. But again, at the same time, the ASP -- stagnation in ASP or dilution can be an indicator of less of premiumization. But at the same time, I mean, it will be -- for an individual player, it will be a strategy how to drive more reach, more expansion and introduce new product lines or product to drive premiumization and also to drive volume.

Sir, just one last question. Can you set out a new price point or you have...

Can you join back the queue please?

Okay.

We have a follow-up question from Gaurav Jogani from JM Financial.

Sir, just regarding the dividend, again I think first time announced a dividend of INR 0.70, but the percent shows around 20% to 25%. So this could be the only dividend or there could -- say, there could also be a final dividend also apart? And if you can also highlight the dividend payment for this going ahead?

Gaurav, of course, the dividend -- firstly, we're very happy to declare dividend interim or whatever for the first time in the history of the company. So that does give us confidence in our ability to deliver and we'll be looking -- we'll try to deliver dividend potentially going forward, right? That's the idea. I can't comment whether there will be a final dividend or not. That would depend on the final results and on the Board's decision. But certainly, we see this as something of quite a significant [ issue ] to our organization.

Sir, the other way around, is there any percentage of PAT that you're targeting on an annual basis to pay out as dividend?

Not really. I mean we've done about close to 25% at this point for YTD, but it totally depends on the Board.

We have a follow-up question from Prerna from Elara Capital.

I would just like to understand what will be the ASP of sneaker category that you are selling today in the books?

So this would be at least 15% to 20% higher versus our current prevailing ASP. Of course, it would also have a higher cost component, but net-net, it would be margin accretive.

And the new launches will also be in similar price points?

For each of the channels, we'll have different price points. I mean it caters to the different segment of consumers. Like if you go to the EBO, you'll find our products at a higher price point because we display our entire range there, whatever is available in online or they even bought through distribution channel, and those price points are different.

Okay. And the last question would be...

I'm sorry to interrupt. Can you join back the queue please?

Sure.

[Operator Instructions] Next question comes from Umang Mehta from Kotak Securities.

Just a quick follow-up on a bookkeeping question. What was the growth in marketplace model this quarter?

I think it was in line with our overall growth. Distribution, we did grow around 9%, but in online, it was 11%.

So the marketplace model within online was also 11%?

Marketplace was slightly lower because we did grow more in the outright business.

We have a follow-up question from Priyank Chheda from Vallum Capital.

Yes. Same question, marketplace and online, YTD for 9 months, what would have been the growth? And just a feedback, I mean, these all numbers. Now we can improve the disclosures via presentation so that we can have a concrete more discussion on the call. 9 months numbers on marketplace and online.

Point taken, we'll try to include all those numbers in the investor's call or investor's presentation.

And sir, on the EBOs, we haven't added much of the EBOs versus we had earlier plans to open at least 100 EBOs. What's the outlook on that? How should we look FY '25-'26? As well as on the trade distributions, at least on the presentation number, I can see that we have added a lot of new retail touch points versus the flat distributors. We were planning to improve the throughput within the same touch points, right? I mean, now this -- has been there addition, which -- so how do we look into the sales throughput per touch point and as well as on the EBOs?

So on the EBO front, this quarter, the net addition has been less. That's purely because of market conditions. We are now being more conscious about the geography wherein we want to set up our own COCO stores. So we did add around 6 stores in this quarter, but our strategy would continue to be 40 to 50 stores addition in the year. And as far as distribution is concerned, please appreciate this quarter 3 is both festival season and also seasonality in the North, so the retail touch point addition is highest in quarter 3. Having said that, we added around 7% to 8% retail touch points, but our sales growth was 9% to 10%. So the output or throughput per outlet is still higher. But yes, Q3 numbers are skewed, and we look at reach more through a different yardstick wherein how many retail touch points are getting built on a monthly basis. That's our internal yardstick. That is more consistent and more balanced number. Yes, Q3, the numbers go up slightly because of these...

Sorry, I couldn't get the gist out of it. My question was -- so we were looking forward for an improvement in the throughput per retail outlet versus we have added the outlets. Yes.

That's right. So what I'm saying is we added around 7% outlets. The outlet -- active outlet count increased by 7%, but my revenue growth increased by 9% to 10% in distribution, right?

Got it.

Which means that growth per outlet has gone up.

Even on the distribution channel-wise numbers, it would be great if you can have a clarity because we have given for December while the base quarter numbers are not there with us for distribution or D2C online and offline.

Okay.

Owing to the time constraints, that was the last question for today's con call. 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 Campus Activewear's Investor Relations team at [email protected]. You may now disconnect your lines.