- 30 May 2022
- ICICIdirect Research
TCNS reports weak operational performance owing to Covid led disruptions
TCNSBRANDS - 453 Change: -4.90 (-1.07 %)News: Weighed by trade disruptions owing to omicron variant in Jan-Feb, TCNS reported weak operational performance in Q4FY22. On a benign base, revenue grew by 6% YoY to Rs 234.4 crore (81% of pre-covid levels). While gross margins reverted back to pre-covid levels (69%), higher seller and employee expenses led to EBITDA margins declining by 190 bps YoY to 8.5%. Company reported net loss of Rs 5.7 crore vs. profits of Rs 3.9 crore in Q4FY21.
Views: The management indicated that most of the matured stores are trending closer to 90% of pre covid levels and for month of April some were trending higher than pre covid revenues. The company is expecting a strong wedding and festive season in FY23 as the consumers have not refreshed their wardrobes for nearly two year. The company is planning to enhance the pace of store addition and is looking to add 100 new store on net basis in FY23 across all brands ( gross store addition around 125 stores) to capture higher share of consumer wallet. TCNS has navigated the pandemic without any external fund raise while maintaining strength of the balance sheet which positions the business to accelerate growth by investing in working capital & store expansion.
Impact: Negative