TCNS Clothing Q3 Results Review - Tackling Multiple Headwinds: ICICI Securities
Revenue decline 7%YoY/13% QoQ (93% of pre-Covid).
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ICICI Securities Report
TCSN Clothing Co. Ltd.'s unimpressive revenue print was led by;
~7% revenue-impact (related to primary billing) of change in revenue/inventory accounting for business-to-business business from outright-sale model to sale or return model; where-in revenue is booked only after actual sales happen. In sale or return; inventory is on the books of TCNS Clothing. This trend (of shifting to sale or return) is likely to continue due to regulatory requirement (online companies shall not be holding inventory in their books) and post achieving critical-mass, step-down subsidiaries of the online companies requesting branded companies to sell directly.
Business closure at Central (Future Group company); impact of this is not in the base quarter.
Range failure in W brand has been a critical issue which may have potentially impacted the brand-image (negatively). In apparel retailing; winning back customer is extremely tough. Hence, we would expect TCNS Clothing to not have such issues repeated in future. We like the relative success in Elleven brand; added 17 stores over last nine months (versus 12 Aurelia stores).
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