Bata India aspires to launch 500 franchise stores

The demand scenario experienced by Bata India has improved in comparison to previous years. The company has been growing in double-digits. A major chunk of the growth has been pouring in from the tier-3 and 4 towns, including the franchise stores.

While the growth trajectory is certainly improving for the company, there is not much difference in growth between the tier 3 and 4 towns. What distinguishes growth between the towns is the source of growth, stated Sandeep Kataria, the CEO of Bata India. The fashion business will be impacted by festivals and the factor of seasonality.

The company is not focused on achieving growth through enhancing its pricing power. Instead, its approach includes directing its attention towards premiumisation. Novelty of products and adding a basket of new products to its shelves is the company’s main goal. Naturally, the prices of these products will be raised upwards in proportion to the value addition. However, enhancing fashion, comfort and innovation remain the major focus areas.

The business has forayed into the business of offering ladies’ and men bags, apart from its usual foot care and shoe care products.

The company has a target of launching 500 franchise stores over the course of 4 to 5 years. Nonetheless, it will still continue to launch company-operated stores as well. This is because both avenues are promising and profitable for the company. By expanding Bata’s footprint, the company is well on its way to sustaining its double-digit growth numbers.

The CEO also stated that the impending elections will not have a material impact in the medium-term, although some degree of volatility is inevitable.

Its performance in the quarter ended December 2018 has been satisfactory. Total income from operations climbed to Rs. 778.70 crore in Q3FY19 from Rs. 674.00 crore in Q3FY18, posting a YoY growth of 15.53 per cent. Net profit was reported at Rs. 103.18 crore in Q3FY19 as against Rs. 68.17 crore in Q3FY18, registering an increase of 51.35 per cent. EPS rose to Rs. 8.03 in Q3FY19 from Rs. 5.30 in Q3FY18, thereby surging 51.50 per cent.

On Thursday, the shares of Bata India opened at Rs. 1,375.50 and hit a high and low of Rs. 1,391.00 and Rs. 1,369.00, respectively. At 11:56 am, the stock was trading at Rs. 1,386.75, up 1.24 per cent.