Arvind Fashions reports 25% growth in footwear as GST cut boosts consumer demand

The disruption caused by the Bureau of Indian Standards (BIS) certification required in the footwear sector has been addressed, while the reduction in GST rates will augur well for demand in the coming months, said director and CEO of apparel manufacturing company Arvind Fashions Ltd, Amisha Jain.Jain, who took control of the company in August, told analysts during the quarterly earnings call on Tuesday that the footwear category grew more than 25% year-on-year in the July-September quarter, driven by the unwinding of the disruption caused by the BIS certification changes in 2023 and 2024 for leather and rubber products.

The company, which sells Arrow, Calvin Klein and US Polo, among others, also made the price changes last quarter due to GST rate changes to pass on the benefits to consumers. “These reforms will lead to higher disposable income in the hands of consumers and we expect to have a positive impact on demand,” Jain said.Bureau of Indian Standards (BIS) procured shoes under Quality Control Order, where procurement from factories has to be mandatorily certified by BIS, both in India and abroad. This affected many manufacturers, including those heavily dependent on imports, especially from China, as BIS was reluctant to certify overseas factories, causing stocks to evaporate from stores.

Arvind Fashion has indicated in previous management comments that its footwear business was severely affected and the company was left without shares. The settlement of this is now finally visible now that shoe sales have recovered last quarter.

In the case of GST, the government reduced the GST to 5%, compared to the earlier 12% for clothes priced between Rs 1,000-2,500 and 18% for products above Rs 2,500. The reduction in GST for that price range had a positive impact on many premium apparel brands in the country. Speaking about the company’s core apparel business, Jain said US Polo continues to post growth of over 20%, and Tommy Hilfiger and Calvin Klein are also maintaining growth momentum that she expects to continue. “As consumers are on the rise, we see these two brands being extremely strong from a brand positioning and offering perspective, and we expect to see a growth trend there,” she said.

Arvind Fashions’ standalone net profit fell 41% YoY to Rs 36 crore in the September quarter, while standalone revenue for the quarter grew 3% YoY to Rs 230.6 crore. The company’s direct channels delivered 8.3% growth on a like-to-like basis, and 50% growth in the online B2C channel.

“There’s a clear focus and strategy behind what we’re doing because you know we’ve talked about driving our direct channel strategy, and what we’ve seen is a strong focus on that,” Jain said.

The contribution of online B2C channels grew from 8% to 12% on an annual basis last quarter. The company’s total number of exclusive brand stores reached 998 in September.