Brainbees Solutions Limited (FirstCry), a leading omni-channel retailer of baby and kids products, reported a strong first quarter performance for FY25, demonstrating significant revenue growth and improved profitability. The company showcased a 15% year-on-year increase in annual unique transacting customers, reaching 9.5 million, and delivered a consolidated revenue from operations of INR 1,652 crores, a 17% jump compared to the same period last year.
a. Financial Performance:
- Annual Unique Transacting Customers: Increased by 15% year-on-year to 9.5 million.
- Consolidated GMV: Reached INR 2,318 crores, representing a 17% year-on-year growth.
- Consolidated Revenue from Operations: Increased by 17% year-on-year to INR 1,652 crores.
- Consolidated Adjusted EBITDA: Grew by 106% year-on-year to INR 74.3 crores, representing a 4.5% margin compared to 2.6% in Q1 FY24.
- India Multi-Channel Adjusted EBITDA: Improved by 25% year-on-year to INR 954 million, with an 8.3% margin compared to 7.7% in Q1 FY24.
- Cash Profit After Tax: Increased by 200% year-on-year to INR 17.7 crores.
The company's core India multi-channel segment demonstrated strong performance, driven by growth in both online and offline channels. The international segment, while impacted by unseasonal rains and the advancement of seasonal spending in the UAE, showed signs of recovery in July and August. GlobalBees, the company's D2C brand aggregator, continued its growth trajectory, achieving a 26% year-on-year revenue increase in Q1 FY25.
b. Operational Updates:
- India Multi-Channel: Added 147 stores from Q1 FY24 to Q1 FY25, including 20 company-owned and operated (COCO) stores.
- International: Faced challenges in the UAE due to unseasonal weather and Eid timing, but showed signs of recovery in July and August.
- GlobalBees: Continued to scale operations, achieving positive Adjusted EBITDA in Q1 FY25.
- Preschool Business: Delivered a 30% year-on-year revenue growth and improved Adjusted EBITDA margin to 25% in Q1 FY25.
- Influencer Program: Successfully executed the largest influencer program for mothers, baby and kids in India, driving brand awareness and engagement.
c. Management Insights:
Supam Maheshwari, Managing Director & CEO, highlighted the company's multi-channel approach as a key differentiator, stating that "customers who join our journey online also goes offline and they join our journey as offline goes online." He emphasized the company's focus on building its home brands, driving cost efficiencies, and leveraging its distribution network to expand reach and reduce customer acquisition costs.
Gautam Sharma, Group Chief Financial Officer, highlighted the continuous improvement in gross margins and Adjusted EBITDA across all business segments. He attributed the gross margin expansion to a combination of factors, including increased home brand share, COGS reduction, and improved margins on third-party brands.
d. Strategic Initiatives and Future Plans:
- Store Expansion: Plans to add 350 stores over the next 2 to 2.5 years, primarily focusing on COCO stores across both FirstCry and Babyhug brands.
- International Expansion: Will continue to expand its presence in Saudi Arabia, with plans to add 12 stores over the next 24 to 30 months.
- Home Brand Development: Will continue to focus on building and expanding its portfolio of home brands, leveraging economies of scale and driving higher margins.
- Distribution Network: Will leverage its distribution network to expand reach and reduce customer acquisition costs, particularly for its home brands.
e. Q&A Session Highlights:
- Profitability Guidance: Management expressed confidence in the continued improvement of both top-line and bottom-line performance, but declined to provide specific guidance on achieving PAT level profitability.
- Segment-wise Gross Margins: While the company did not disclose segment-wise gross margins in this earnings call, they indicated a willingness to consider providing more color on this in future calls.
- Impact of Fires: The company clarified that the financial impact of the Bhiwandi fire was included as an exceptional item in the consolidated financial statements. The Kolkata fire's impact is still being assessed by the insurance company, but is not expected to materially affect profitability.
- International Order Frequency: The higher order frequency in international markets compared to India was attributed to a combination of factors, including a higher AOV in KSA and the increasing share of KSA in the overall mix.
Conclusion:
Brainbees Solutions Limited delivered a strong first quarter performance for FY25, demonstrating robust revenue growth and significant improvement in profitability. The company's multi-channel approach, focus on home brands, and expansion plans position it well for continued growth in the attractive baby and kids products market. While challenges remain, particularly in the international segment, the company appears to be on track to deliver on its long-term growth objectives.
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