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KKCL 434.9500 INR -1.13%
KKCL · Kewal Kiran Clothing Limited
434.95 INR -4.95 (-1.13%) At close · Nov 13
Market Cap
26.80B INR
Shares
61.63M
Volume · Nov 13 18.09K Avg daily vol (3M) 33.2K
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Earnings call · FY2027 Q2

Kewal Kiran Clothing Limited (KKCL) Q2 2027 Earnings Call Transcript

Concluded Nov 3, 2026 Audio replay
Nov 3, 2026 49:52 170 turns
Period
FY2027 Q2
Runtime
49:52
Sources
2 artifacts
Revenue 3.73B INR +5.3% YoY
Diluted EPS 7.84 INR/shares +7.5% YoY
Net income 490.00M INR +9.2% YoY

Transcript & audio

49:52 Audio
Operator

Ladies and gentlemen, good day and welcome to KVL Kid and Clothing Limited Q2 and H1 FY27 Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Before we begin, a brief disclaimer. The presentation which KWKR and Clothing Limited has uploaded on the stock exchange and the website, including the discussion during this call, contains or may contain certain forward-looking statements concerning KWKR and Clothing Limited business prospects and profitability, which are subject to several risks and uncertainties, and the actual result could materially differ from those in such forward-looking statements. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. I now have the conference over to Mr. Pankai Chen. Thank you, and over to you, sir.

Pankaj Chen Other

Good afternoon, everyone, and thank you for taking the time to join us today. Welcome to Keval Kiran Clothing Limited Q2 and H1 FY27 earnings call. I am joined on this call by Mr. Hemant Jain, Joint MD, and Marathon Capital, our Investor Relations Advisor. Q2 FY25 was marked by a challenging operating environment. Ongoing geopolitical tension led to sustained inflammatory pressures which waited well on the consumer sentiment. While exceptional heavy rainfall and localized flooding in the Wapi and Daman caused temporary disruptions to a factory operation. Despite these macro-headwinds and the shift of the festive season into Q3, we have demonstrated business resilience by delivering a positive 5% year-on-year increase in the consolidated revenues. We believe the resulting disruption at our manufacturing facility due to floods is estimated to have impacted a Q2 F527 sales growth. While we remain confident in the growth tragedy of our business, we continuously evaluate our strategic roadmap. In light of evolving business dynamics and company's initiative across brands and channels, management has undertaken a review of its Vision 2028. While retaining our revenue and profitability targets same, we have optimized our EBO store targets to 800 stores by F528. Killer store count remains unchanged with the shift towards larger store size of 800 to 1000 square feet to support a broader Product offering and improved revenue potential per store, the dominant target has been revised from 175 store to 125 store, reflecting a more focused D2Sale-led strategy centered on establishing larger, higher quality stores in the strategic selected locations that strengthens the brand visibility. This measured approach is expected to strengthen the brand's long-term growth tragedy. Conversely, the target for cross-stores have been increased from 50 to 75 stores, supported by encouraged brand traction witnessed through its format. And additionally, the company's plans to gradually phase out the K-Launch format over time, and therefore we have extorted from a revised EBO expansion plans. Overall, the changes are aimed to align... The company's retail expansion strategy while remaining firmly on track to achieve its vision 2020 revenue and profitability objectives. Coming to the highlights for Q2, consolidated revenue increased to 373 crores, supported by growth in apparel case and value. EBITDA grew by 12% year-on-year to 80 crores, with an EBITDA margin of 21% and profit after tax increased by 15% year-on-year to 54 crores. This performance reflected our ability to sustain healthy profitability despite challenging environments to discipline, cost, management and operational efficiency. The brand cross-delivered growth of over 25%, representing an increasing milestone in a strategy to strengthen a presence in the women wear segment. Coming to the brand performance, Killer continued with a positive growth journey. The brand now operates at 477 exclusive brand outlets while further strengthening its presence across large formats and online channels. Cross delivered another strong quarter with a robust sales growth backed by strong EBITDA margins in line with JKCA. The D2C-led brand strategy for lawmen continues to gain traction, reflecting its positive results. The integrity continues to make encouraging progress, driven by a renewed focus and targeted brand building initiative. Moving on to channel performance, retail channel grew 8% year-on-year, with a higher contribution from LFS channel, particularly driven by stronger cross-sales. Thank you. This performance is consistent with the strategy of strengthening both online and offline distribution. In line with the strategy of expanding our retail footprint, we have added a net of 5 VBO during Q2 of FY27, taking a total network of 675 stores as of September 30th. We view the current financial year as a period of consolidation during which the company has focused on further realigning its business processes to drive sustainable and profitable growth. In line with this strategy, the company has undertaken initiatives such as rationalizing its Evo network by streamlining, underperforming stores, and optimizing the balance between discount-led and fresh sales. The measures are aimed at preserving the brand value, enhancing retail productivity, and ensuring long-term health of the business. We remain confident in pursuing a double-digit growth target for this financial year and are committed to pursuing a revenue and profitability goals through a calibrated, disciplined, and sustainable business model. Thank you. I would now like to open...

Operator

Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Guneet Singh with Counter-Cyclical PMS. Please go ahead.

Guneet Singh Analyst — Counter-Cyclical PMS

Hi, sir. Thank you for this opportunity. So, regarding the Goregao registered office and adjacent bottom chemical compound, Could you please quantify the total land area, perversible atmosphere, and the estimated market value of these properties, and what are your plans for these properties?

Hemant Jain Analyst — Joint MD

Your voice is cracking. Can you repeat the question, please?

Guneet Singh Analyst — Counter-Cyclical PMS

Yeah, sure. One minute. Is it better now?

Hemant Jain Analyst — Joint MD

Yeah, now it's better.

Guneet Singh Analyst — Counter-Cyclical PMS

Yeah, so regarding the Goregao, registered offers an adjacent bottom chemical compound. Can you quantify that?

Hemant Jain Analyst — Joint MD

Sir, your voice is coming together. Now, the line is coming from disturbance. I'm not listening to it.

Pankaj Chen Other

Sir, it's coming, it's coming, it's coming, sir.

Guneet Singh Analyst — Counter-Cyclical PMS

Now, it's coming?

Pankaj Chen Other

Now, it's coming.

Guneet Singh Analyst — Counter-Cyclical PMS

Good morning,

Hemant Jain Analyst — Joint MD

everyone, and welcome to the call. Good morning, everyone, and welcome to the call. But what are the properties of the market? There is no doubt. Look, the market is up and down. I will tell you something today, and when we have to do something, then there will be more price. When we have to do something, we will tell you, it will be much better.

Guneet Singh Analyst — Counter-Cyclical PMS

Okay. And sir, since 2022, our sales have almost 50%. Pat has doubled, but our current sale price is near the 2022 levels. So, I would kindly request you to consider share buyback as for long-term investors like us, that will reduce the total number of shares outstanding, increase the EPS, and be a reward for the long-term shareholders. So, I would like to understand, I mean, would you consider the share buyback under such conditions, and if not, then under which conditions? Sir, you're not listening to your voice.

Hemant Jain Analyst — Joint MD

You're listening to your voice.

Guneet Singh Analyst — Counter-Cyclical PMS

Sir, I would like to say, consider a share buyback,

Manish Koyal Analyst — ThinkVax Health Managers

because our sales from 2022, if we compare it to it, it's more than 50%, then the profit has doubled.

Guneet Singh Analyst — Counter-Cyclical PMS

But the share price of 2022 is what our brand has been growing so far. So, I will tell you that for long-term shareholders, if you do share buyback, then the total number of shares will increase, and the share will increase. Or it will be a reward for the long-term shareholders. And it is also tax-efficient for minority shareholders if you consider share buyback. So, I request that you consider share buyback on the levels of the share buyback.

Hemant Jain Analyst — Joint MD

Yes, sir. We will keep this in mind. We will let you know. Because today, it's too early to say anything about this. But we will think about this.

Guneet Singh Analyst — Counter-Cyclical PMS

Okay, sir. Thank you very much.

Operator

Thank you. Participants who wish to ask a question may press star and one. The next question comes from the line of Shweya Chatterjee with Ageless Capital. Please go ahead.

Shreya Chatterjee Analyst — Ageless Capital

Hello, sir. Thank you for taking my question. Could you explain a bit more on what is happening on Lorman and Cross and that you have also entered into ethnic and footwear segments this time. So, what are you doing there, over there?

Pankaj Chen Other

We haven't worked anything on a footwork segment up till now. As we said, we had restarted guys in terms of brand positioning, and we have made it more retail-focused and more online-focused brand.

Shreya Chatterjee Analyst — Ageless Capital

Okay, and we are also considering exports for cross?

Pankaj Chen Other

Yes, we are.

Shreya Chatterjee Analyst — Ageless Capital

Okay, and so for the overall volume, if you see, the volume in quarter two has dropped a lot year on year, but the price has increased, and also the retail part has dropped, and non-retail segment has gone up. Would you like to comment a bit more on what is happening over here, like how have you positioned your products across cross, and what is happening?

Pankaj Chen Other

So, in terms of apparel, the quantity has gone up. As well as the realization.

Shreya Chatterjee Analyst — Ageless Capital

Okay, but the volume soul has gone down, like it has sharply fallen in terms of unit soul.

Pankaj Chen Other

Yes, it is one of the categories which gets added in terms of volume, and it's a mix of all the categories together, which you have, where you have diodrons and personal care as a category also, as well as a tracksuit and track fence. That number of volume can keep on changing, but in terms of apparel, okay, the apparel numbers have gone up.

Shreya Chatterjee Analyst — Ageless Capital

Okay, so Aparil has gone up, but the other segments have shrunk, has been intentionally shrunk. And what about the retail and non-retail mix since we have kept on adding EBO stores, but this quarter the non-retail segment sells was more than the retail sales.

Pankaj Chen Other

Sorry, I didn't get your question.

Shreya Chatterjee Analyst — Ageless Capital

So, I'm saying that the segment mix between retail and non-retail. Non-retail has gone up this quarter. Retail has shrunk. Even though you have added EBO stores, so the EBO stores have been increasing, but still the retail component of sales has shrunk.

Pankaj Chen Other

So, what is happening over there? Last year, last quarter itself, the retail to non-retail percentage is almost similar. Last time it was 50.

Shreya Chatterjee Analyst — Ageless Capital

So, in other words, if I could ask, like, what's the current SSG for the EBO stores, if it's possible to give out a number? Thank you. Thank you.

Pankaj Chen Other

The SSG for killer EBO stores on a half yearly basis was negative 10%.

Shreya Chatterjee Analyst — Ageless Capital

Okay. Okay. Okay. Thank you.

Pankaj Chen Other

This was also because of the change in season.

Shreya Chatterjee Analyst — Ageless Capital

Okay, and how do you expect quarter three or the second half, like how would the SSG work, if I have to normalize it like on a full year basis? Okay, so SSG will be in double digits for the second half. Okay, thank you.

Hemant Jain Analyst — Joint MD

Not as a gentleman, over-end revenue.

Operator

Thank you. The next question comes from the line of Kiriraj with Visarya Amnitrash. Please go ahead.

Kiriraj Analyst — Visarya Amnitrash

Yeah, hello team. First, if you can quantify the impact of a peak flood, like what percent of the business we lost or what actual value of business we lost due to the flood?

Pankaj Chen Other

On a quarter two number, I would put it at three to four percent. Thank you very much.

Kiriraj Analyst — Visarya Amnitrash

What I am saying, if you can also quantify what is the impact of shifting Navratri, because we have many other companies have given that. Yeah, I was good, sir.

Hemant Jain Analyst — Joint MD

It was sort of proper.

Kiriraj Analyst — Visarya Amnitrash

Is it audible now?

Hemant Jain Analyst — Joint MD

Yeah, now you are audible.

Kiriraj Analyst — Visarya Amnitrash

Okay. So what I was saying is, two other companies have highlighted that probably if Navratri would have been, or Navratri shifting has impacted so much percent of the SSG performance. So for us, what would be the impact? Thank you.

Pankaj Chen Other

Yeah, yeah, tell me.

Kiriraj Analyst — Visarya Amnitrash

Yeah, so Navrat, this last time was in quarter two, this time has been in quarter three. Okay, so any particular impact if you would like to highlight that?

Hemant Jain Analyst — Joint MD

Not much. Actually, look at how the retail store has a negative

Pankaj Chen Other

efficiency of closed stores on a half daily basis, we feel that on a nine-month number, it should remain a message.

Kiriraj Analyst — Visarya Amnitrash

Next, when we talk about double-digit growth for FI, earlier we were talking about 15% for the existing business and probably 5% for the inorganic agent when it comes. The double-digit will be more like 15% or the early double-digit?

Hemant Jain Analyst — Joint MD

We will try our best, boss. We will try what we have done, but it depends on what we have done. We have thought that the flood came from 3-4% of business. We say that when we talk about it, we will show the right picture.

Kiriraj Analyst — Visarya Amnitrash

And lastly, any more update on the, any incremental update on the Inorganic Growth Initiative? Thank you and all the best.

Operator

Thank you. Ladies and gentlemen, if you wish to ask a question to the management, you may press star and 1. The next question comes from the line of Arpan with Insight Advisory. Please go ahead.

Arpan Analyst — Insight Advisory

Good morning, sir. I have a couple of questions. First is, in the presentation and the presentation, you mentioned about EBO rationalization strategy. Can you throw more light on what is that we are looking at?

Pankaj Chen Other

We have revised the number from a 900 store to a 800 store, where we have kept our revenue numbers as constant. So, here we look forward that we will be increasing the store size of individual brands. Okay, that's the reason. Okay, the number in terms of stores for killer has remained constant. In terms of lawmen, we have brought it down from 175 to 125 odd store. And we have revised the number from cross from 50 to 75. The major impact is because of K-Launch, where we feel that we will be phasing out that in a rational manner.

Arpan Analyst — Insight Advisory

Okay, but the store economics for K-Launch was not common. Were they loss-making or not up to the profit mark?

Pankaj Chen Other

Not really. Ideally, individual store size of K-Launch when it was launched were close to around 600 to 700 stores where it used to in-house all the brands of KKCL. Okay, now individual brand and their categories have become that large that it becomes difficult to sustain all the brands in that particular store size. And that's the reason we have started opening and focusing on single brand retailing as compared to multi brand retailing.

Arpan Analyst — Insight Advisory

Okay, my next question is related to the brand. You know, I've seen Cross is majorly available in EBO and LFS. Do we have any other plans for Cross?

Pankaj Chen Other

We have already started with some part of exports in the Middle East, and... Okay, we have also started getting good attraction from the second quarter from online.

Arpan Analyst — Insight Advisory

Online?

Pankaj Chen Other

And what about MBO? Okay, we have started with MBO format also, but it's too early to still comment on the MBO channel.

Arpan Analyst — Insight Advisory

Okay. And what should we look at in terms of EBITDA margin for cross?

Pankaj Chen Other

The EBITDA margins for cross are in line with KKCL.

Ruchal Shah Analyst — Bugle Rock

Okay.

Arpan Analyst — Insight Advisory

Okay, in the opening remark, you have mentioned about optimizing fresh versus discounted sales. Can you just throw more light on that for better understanding?

Hemant Jain Analyst — Joint MD

See, now we are doing that in the discount markets, we say that if we do better for our EBITDA, we have to make discount a little bit less on the realistic price. The rotation is focused more on the profitability and better.

Arpan Analyst — Insight Advisory

It's the reason why the sales growth was rapid. That's valid point. I think that's well appreciated. Lastly, on working capital, can you just throw some light on inventory days and all?

Pankaj Chen Other

The net working capital for the current quarter was close to around 130 odd days, which was in line with last year.

Arpan Analyst — Insight Advisory

Okay, but there would be inventory because of the festive dispatches, which would have happened early October type, or majorly the dispatches would have happened in September.

Pankaj Chen Other

Inventory would be... Thank you. Okay, inventory last year, okay, was dispatched during the quarter two scenario. This year, it will be during the quarter three, and that's the reason inventory was on a little higher side as compared to last year.

Arpan Analyst — Insight Advisory

Sure, sure, sure. And last question on SSG, I know the reported SSG, but you know, just wanted to understand what is the number which you can look at.

Pankaj Chen Other

I already mentioned that on a 9 month basis it should look little flattish.

Arpan Analyst — Insight Advisory

On a full year basis? 9 months is that flattish?

Pankaj Chen Other

I'll have to come back to you on that question for the full year, but on a 9 month basis it should look flattish.

Arpan Analyst — Insight Advisory

And lastly, on the upcoming winter season, any specific plans or how do you see that season?

Pankaj Chen Other

Sorry, on the winter plan?

Arpan Analyst — Insight Advisory

Winter season. Are we expecting good winter season this time around?

Pankaj Chen Other

We are positive on the winter category this time. Okay, I think winter will be there, and it will be cool and climate, and fresh health rules should be better as compared to last year.

Arpan Analyst — Insight Advisory

Okay. That's it from my side and all the best for future quarters.

Pankaj Chen Other

Thank you.

Operator

Thank you. The next question comes from the line of Sahil Doshi with ThinkWise. Please go ahead.

Sahil Doshi Analyst — ThinkWise

Hi, good morning. First question on this Vision 28, you know, with respect to K-Launch, our thought was... Essentially, we want to create a family store and, you know, that's where the market is moving towards and that's where the strategy around women wear as well as kids came in. So could you just share incremental thoughts on that, you know, family outlet or the larger outlet which we had, now that we are revising this, so how do we try and position Junior I'm a killer and become a multi-brand kind of a brand. I wanted to understand what's our thought on that.

Pankaj Chen Other

Getting to a one family store as compared to a family store is becoming difficult. So we re-strategized our plan to make it more single brand retailing and focus on single brand retailing even if they are next world to each other. You may have a killer, a cross and a junior but next to each other, but it will be looked as single brand retailing only.

Sahil Doshi Analyst — ThinkWise

On the junior killer part, will it be a separate EBO strategy which you will have for retailing? It will be a sub-part of the killer. It will be a sub-part of the larger killer stores basically. Okay, understood. And in terms of the marketing and the thought-through in terms of...

Operator

Hello, this is Sai. Sorry to interrupt. Could you please use your handset, sir?

Sahil Doshi Analyst — ThinkWise

I'm on the handset. I'm on the landline on the handset. Is it better?

Operator

Oh, yeah.

Sahil Doshi Analyst — ThinkWise

Oh, yeah. Yeah. So, just on the killer, wanted to understand in this larger revamp or the entire Vision 2028 rework which we've done, is there a change in terms of positioning in terms of metros versus... T2, T3, and also is branding and marketing going through a change?

Hemant Jain Analyst — Joint MD

No, probably. As is. Look, you don't have to segregate what is matter and what is T2 and T3. You will see where the business will be better and where the profit will be, you will focus more on that. So, as for today, in the early years, the changes are not going to happen.

Pankaj Chen Other

On the marketing side, there will be more spent digitally.

Sahil Doshi Analyst — ThinkWise

So, earlier we were very confident of a 15% growth for this year. I understand the market dynamics might have shifted or there is a shift because of festive, but is that the real reason for us sounding a little less confident on this 15% number or it is purely the festive shift or something?

Pankaj Chen Other

Sir, Sahil, okay, we were definitely confident in looking at the first quarter scenario, but how are we looking at the geopolitical pressure scenario? The supply chain, the overflow of the rate perspective, it disrupted our entire supply chain,

Hemant Jain Analyst — Joint MD

all that did impact the quarter two numbers.

Pankaj Chen Other

So if that's the case, we are not sure whether we'll be able to achieve 15%, definitely achieve a double digit.

Sahil Doshi Analyst — ThinkWise

Thank you. U2 is what our expectations were. How is that doing? Can you call out?

Pankaj Chen Other

Yeah, it has delivered double digits.

Sahil Doshi Analyst — ThinkWise

In the first half? Yeah, in the first half. Okay, and double digit as in, meaning, do you expect it to be larger because the brand has gone through a...

Pankaj Chen Other

Yes, I did expect it to be larger.

Sahil Doshi Analyst — ThinkWise

Though the demand has been impacted or you said is softer, why is it that cross has been able to, you know, continue to grow at 25 percent? Is it more like an expansion growth or is there a SSG growth there as well?

Pankaj Chen Other

There have been expansion as well as SSG growth. However, the warehousing capability is different for both the aspects. The base also is different where Peter is operating on a 3x of what the cross is. That's the reason, okay, you see, and okay, since there was no disruption on the supply chain or maybe the warehousing perspective, it was able to deliver better.

Sahil Doshi Analyst — ThinkWise

Perfect. I'll get back in the queue for anything else.

Operator

Thank you. Participants who wish to ask a question may press star and one. The next question comes from the line of Ruchal Shah with Bugle Rock. Please go ahead.

Ruchal Shah Analyst — Bugle Rock

Hi, so my question was, in our retail channel and EVOs, specifically, like, how do you measure the customer loyalty? Like, if suppose one customer, you know, has to purchase today, let's say, like, within a year, how many times would he purchase? Do we track this kind of numbers?

Pankaj Chen Other

We do capture it only for an EBO channel, which is only our exclusive stores.

Ruchal Shah Analyst — Bugle Rock

Like, do more of justification, how has this moved in the last, let's say, two, three years?

Pankaj Chen Other

Are you going specifics into the numbers? Hello? The repeat ratio is close to around 22% of the customer with a frequency of 2.

Ruchal Shah Analyst — Bugle Rock

Okay. Okay. And so my next question is, how do we decide on opening of a store? Will it be like a company owned or an MDO? So what will be the top three parameters on which it is decided?

Pankaj Chen Other

So, since we are widely penetrated in general trade, it allows us to understand the market much better, even if there is a vacuum when new EBU has to be looked forward for, or maybe LFS gives us a counter in such locations. Such insights are helpful for both the EBO as well as the LFS. However, GT is more of an entrepreneurship-driven game scenario, so we bet more on the entrepreneur as compared to the area.

Ruchal Shah Analyst — Bugle Rock

So just a follow-up on this one. So whenever, for us, when we launch a new brand or a new collection, we do it via LFS. Although it's a low-margin business for us as compared to the EBS or the MBS.

Pankaj Chen Other

Sorry, sorry, sorry, you're twice, twice again.

Ruchal Shah Analyst — Bugle Rock

Yeah, yeah, yeah, sorry. Am I on? Is it broken now?

Pankaj Chen Other

Not much. Can you be a little loud?

Ruchal Shah Analyst — Bugle Rock

I hope this is fine.

Pankaj Chen Other

Yeah.

Ruchal Shah Analyst — Bugle Rock

Yeah. So for us, whenever we launch a new brand or a new collection, we do it via the LFS. Route, although it's a low-margin business for us as compared to the EBO or LBO.

Pankaj Chen Other

Losing it and saying it that we lose it to do it through an LFS route, it's not right. We said that, okay, generally we do it through GT, which is general trade. A distribution channel allows us to know or penetrate more, and it gives us that reach and which allows us to understand how the city operates or.

Ruchal Shah Analyst — Bugle Rock

Okay. Okay, fine. Thank you. Thank you so much.

Operator

Thank you. The next question comes from the line of Sukrit Patel with I-Sight Ventrate. Please go ahead.

Sukrit Patel Analyst — I-Sight Ventrate

Good afternoon. Good morning, girls, team. I have two questions. First question to Mr. Heyman James. How about you? Our latest second quarter sales have seen a healthy growth reaching around 370 crore rupees, largely driven by expanding our retail presence and pushing into newer segments like ethnicwear. As we aggressively add more retail stores to hit our multi-year growth target, what is the biggest risk that the market, what's the biggest risk that if the market gets oversaturated, and how do we protect our core denim and casual wear market share in case smaller local brands start... So, undercut the price, or, you know, if it gets into a price war kind of scenario. That's my first question. And let's go second question after this. Thank you.

Hemant Jain Analyst — Joint MD

You don't hear your voice. You speak a little loud, you'll talk a little better. You don't hear your voice. There's no problem.

Sukrit Patel Analyst — I-Sight Ventrate

Yes, yes, sure. I'll ask you a question.

Hemant Jain Analyst — Joint MD

Yes, tell me.

Sukrit Patel Analyst — I-Sight Ventrate

Yes. My question was, in the latest second quarter sale, have shown a healthy growth reaching around 370 pro rupees. This has been largely driven by expanding our retail presence and pushing into your segments like ethnic wear. As we aggressively add more retail stores to hit our multi-year growth targets, what is the biggest risk that, you know, if the market gets oversaturated, and how do we protect our core denim and casual wear market share if smaller local brands start to undercut the price? That's my first question. That's my second question after this. Thank you.

Pankaj Chen Other

Firstly, okay, you're understanding that it was...

Hemant Jain Analyst — Joint MD

Our core competition with Killer Live is Levi's, Lee, Wrangler, Mushti, Pepe.

Pankaj Chen Other

So I don't think there is an undercut happening. Okay, they will be... When the customer... By a brand perspective, we will operate and go to such stores as compared to an unorganized brand perspective. Comparisons are not...

Sukrit Patel Analyst — I-Sight Ventrate

Okay, my second question is, while we are tracking well within our retail footprint goals by opening, Many new outlets across the country. What is the biggest execution risk to our sales growth? Is premium shopping mall traffic slows down? Or is consumer spending costs pulled off in the coming winters? And which reason or territory are you finding the hardest to scale up to right now? Just want to understand a forward guidance on this.

Pankaj Chen Other

So, winter has always been difficult because it gives you a 60-day channel only. In a period of winter, definitely has impacts on the discounting. For the particular quarter, which is Q3. Scaling up, as you said, okay, as such, the markets have been growing established well. So I don't feel that any premium mall or perspective coming into, it gives us more room or more space. I would say more of a square feet area to, in fact, okay, penetrate. In such, premium malls may have a shopper stop or a lifestyle where you will be present also. It allows the brand to have more doors.

Sukrit Patel Analyst — I-Sight Ventrate

Okay, just coming back to my first question about Part B of my first question, I just want to understand, I am asking because the April market is becoming highly crowded with D2C online brands and deep discount formats, If we scale up our physical store footprint too quickly while consumer demand hit a seasonal halt, isn't there a risk that unsold inventory will start to pile up? Just want to understand guidance. This will be the last question.

Pankaj Chen Other

Most of the D2C brands which are actually scaling up are looking at brand visibility and then entering the offline market. Okay, so there will be a survival of the fittest game which will be happening. Okay.

Operator

Okay.

Sukrit Patel Analyst — I-Sight Ventrate

Thank you, and best wishes.

Pankaj Chen Other

Thank you.

Operator

We have a follow-up question from the line of Sahil Doshi with Thinkwise. Please go ahead.

Sahil Doshi Analyst — ThinkWise

Yeah, thanks for the follow-up. Just could you share an update on the Brand Pivots and the Rethink, if anything, because of the Vision 28?

Pankaj Chen Other

Brand Pivots, don't worry. Sahil, can you be specific what exactly are you asking?

Sahil Doshi Analyst — ThinkWise

No, so basically, if you can, do we have more update on, you know, the pivots which we were trying in different categories, as you are listed in the Vision 2028? So, can you possibly give us an update? Because it's been a year, year and a half since we... Thank you very much.

Pankaj Chen Other

I still feel it's too early scenario where, okay, we have not been able to crack it as well as we thought. You'll have to give me at least two more quarters to get an update on that.

Sahil Doshi Analyst — ThinkWise

And just, if you can just give us more clarity in terms of the impact of the monsoon or the rains, is that because you were not able to produce in time and you lost out of the season or because either both that demand was also an issue and supply was also an issue or? What, what really went wrong, you know?

Hemant Jain Analyst — Joint MD

Demand was not the problem, but the production was the problem. Because of the flood, we had a little disturb in the season. And the oil prices, the gas, the current, the impact. So, all such, it wasn't like the demand, we couldn't produce. To be frank, the fact that I am telling you is that we have to produce the order with the order.

Pankaj Chen Other

People couldn't reach the factories only.

Hemant Jain Analyst — Joint MD

Thank you.

Sahil Doshi Analyst — ThinkWise

In terms of inflation, which we've seen in cotton and... The environment which we said, how do we think about it? Should we see some pressure going forward on gross margins or we can take a hike?

Pankaj Chen Other

Too short, okay. I feel that it's too early to come. Two quarters also, okay. Thank you. One more aspect is by reducing the discount. I will say that, okay, when you said that, okay, we have already started placing that

Hemant Jain Analyst — Joint MD

inflationary pressure in terms of the fabric.

Pankaj Chen Other

But if you see for the first half yearly scenario, the gross margins have remained impact. This inflationary pressure may be there for a quarter three and a quarter four period. We will try to pass on this price bracket to the consumer by two aspects, either reducing the discount, that's one, or passing it into the MRP.

Sahil Doshi Analyst — ThinkWise

Thank you so much, and best wishes for the rest of the year.

Operator

Thank you. The next question comes in the line of Manish Koyal with ThinkVax Health Managers. Please go ahead.

Manish Koyal Analyst — ThinkVax Health Managers

Yeah, thank you so much, sir. Sir, my question is on the Vision 2028 and the change in the number of stores or the ABOs which we were targeting earlier from 900, which has been reduced to 800. And on the other side, we have maintained our revenue guidance of 1,500 crooks. So, just couple of things over here that now probably the 80 numbers of K-Lounge stores what we have. We intend to completely shut them out in next two, two and a half years, and we are intending to get more productive sales from the 800 stores. So, two things that in our earlier plan, K-Lounge was not expected to, probably, it was expected that K-Lounge stores will continue, number one. And number two, now if you are looking for higher contribution per store, throughput, so what, how will it, how will we achieve that? Like, you will, you did allude that earlier that you will increase the size of the store, but to get a higher throughput. How would it be possible? Number two, and number three, then on the margin front also, then if you have lower number of stores, your operating costs. Let me see better markets.

Pankaj Chen Other

One, answering one by one, all your questions.

Manish Koyal Analyst — ThinkVax Health Managers

One is, okay, definitely, we said that we are going to be rationalizing out and making it... Pankajji, your voice fades down when you answer, so maybe, sorry for that.

Pankaj Chen Other

I said, okay, as we said, okay, we were, since we didn't have a strategy for K-Lons, we had kept the number of K-Lons constant over this period. Okay, we now saying that we'll be rationalizing and making it, sparing it off over this period, and that's why that number of stores has been decreased for K-Lons. That's one. Secondly, we said that, okay, the store size will be increased. We are increasing the store's price for a single brand retailing. We are also looking at category expenses which we are looking at along with the brand. So it is not only jeans or t-shirt trousers, there will be other accessories, other categories which is maybe as a formal blazer as a category and winter wear which will be adding up and which will increase the throughput for the store.

Manish Koyal Analyst — ThinkVax Health Managers

But, Pankajji, it would be like... To probably get that incremental 15%, like where I am coming from is that your number of stores are down by 12 to 15%, and to get equally that kind of throughput higher, you would really require...

Hemant Jain Analyst — Joint MD

So, if you have a sale, you will be able to get a number of stores.

Manish Koyal Analyst — ThinkVax Health Managers

Okay, no. Heymanji, the point was that you probably, then probably to be more clear, what categories you would add up that you get a more sales per store. I agree that you will have a larger size store, but it doesn't imply higher sales. Just by...

Hemant Jain Analyst — Joint MD

Look, two things. It's just that our stores have been added. Plus, all the categories, the fashion related categories, all the categories and add to it, we will add. See, end of the day, you need business. Business is going to grow, growth is going to be the market demand.

Pankaj Chen Other

He got it.

Manish Koyal Analyst — ThinkVax Health Managers

So, my third question was on the EBITDA margin. Yeah, just let me finish. My third question is not yet answered. So, Pankaji, that is what you were saying, that if rental, minimal increase in cost will be rental, then should we look at better EBITDA margin because K-Lounge will get shut down and you will probably have a higher sale, higher throughput with lower cost structure. So, will that help to get a better margin?

Pankaj Chen Other

I see the EBITDA margins are almost above industry average. I don't feel that there will be incremental EBITDA margins ahead.

Manish Koyal Analyst — ThinkVax Health Managers

Okay, maybe I'll put it other way that whatever incremental you'll get, you'll probably use it for sales.

Pankaj Chen Other

Yeah, maybe marketing, and okay, whatever, most of the stores are franchisee owned, franchisee operated stores. So that incremental revenue also goes to, a subset of that goes to them also. Right.

Manish Koyal Analyst — ThinkVax Health Managers

Okay, we got it.

Pankaj Chen Other

Yeah, so that's the reason I don't feel there will be major impact on terms of the EBITDA. Throughput definitely would be better, but incremental margins would not be the case.

Manish Koyal Analyst — ThinkVax Health Managers

Thank you so much.

Operator

Thank you. As there are no further questions from the participants, I now hand a conference over to the management for their closing comments.

Hemant Jain Analyst — Joint MD

Thank you once again for joining us today. We truly value your continued support and confidence in KKCL's journey. With the festive season upon us, we wish you and your families a joyous Diwali and a happy, healthy, and prosperous new year ahead. Should you have any further questions, please feel free to reach out to our Investor Relations team. Thank you. Thank you so much and Happy Diwali.

Operator

Thank you, sir. On behalf of KVLK and Clothing Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Analyst Q&A · 55 questions
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