Author Topic: Zodiac - Cost of Staying Away from Discount  (Read 2031 times)

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Zodiac - Cost of Staying Away from Discount
« on: September 30, 2016, 02:43:43 PM »
Zodiac, one of the leading menswear apparel brands in India, has a retail network of 120 stores. It predominantly manufactures shirts, which form 75-80% of revenues.

Over the last 12 months, the industry’s topline has been built on discounting and brick & mortar stores have been affected by the advent of e-commerce. The management pointed out that the downturn was worse than the one in FY10. Moreover, inability of the balance sheet to carry high levels of inventory and supply chain constraints affected their topline in the last 2-2.5 years

The management is hopeful of a pickup in 2HFY17 on the back of a strong monsoon and hopes of an upturn during the festival season. Immediate indications have been visible – upsurge in export order book after having been disappointing for the last 2 years. On the cost front, Zodiac has undertaken cost rationalisation measures in the last 2-3 years, which included negotiations with landlords for rentals and making the production process more efficient.