New Delhi: V2 Retail Limited, a value retail brand in India, is planning to open 20-25 company-owned and company-operated (COCO) stores in the next 4 months as it gives an advantage of economies of scale, Akash Agarwal, Director of V2 Retail Limited told ETRetail in an exclusive interview.
This move is expected to strengthen the brand’s foothold in key markets it is present in and enhance operational efficiency. Sharing the capital expenditure (capex) plans, the company said it earmarked Rs 30 crore for this store expansion plan and an additional Rs 30 crore for its inventory.
Despite this ambitious offline expansion plans, Agarwal said the profitability is in focus and the company is aiming to achieve an EBITDA of Rs 100 crore in the upcoming fiscal year.
In a BSE filing in February 2024, the company said its EBITDA for the third quarter ended December 2023, stood at Rs 60.9 crore as compared to Rs 38.1 crore in Q3 FY23, registering a year-on-year (YoY) growth of 60 per cent.
Also, its consolidated revenue from operations grew 56 per cent to Rs 373.8 crore in Q3 FY24 as against the revenue of Rs 239.7 crore in the same period, a year ago.
However, its gross margin declined to 31.4 per cent for Q3 FY24 as compared to 35.9 per cent for Q3 FY23.
The company said it is focusing on the volume business and plans to increase its net margin from a low single digit to 5 per cent. Also, its focus on product development has increased while enhancing the assortment of value-driven offerings and reducing the average selling prices (ASPs).
“Currently, only 35 per cent of the products are internally designed, but we aim to transition towards complete in-house designing in the coming years,” Agarwal said while sharing the company’s current focus.
Market positioning and growth strategies
With a positive outlook on future demand and a focus on consumer aspirations, the value retail firm is catering to the neo-middle-class group of the population living in tier 2 and tier 3 cities. Its growth trajectory is primarily fueled by tier 2 cities, where it plans to adopt a cluster-based approach to expand.
Currently, the company has a strong presence in northern and eastern India. Going ahead, the firm aims to reach more consumers across India with its omnichannel strategy and use efficient warehouse automation for seamless operations.
Additionally, the brand said it may explore franchising opportunities when it reaches product excellence.
Talking about online growth plans, Agarwal said there are challenges associated with a brand like ours with a low ASP to sell on different online channels. So, it is leveraging its online platform to grow profitably with minimized cash burn.
Manufacturing and product portfolio
With three manufacturing units, including two in Noida and one in Muzaffarpur, V2 Retail currently makes 22 per cent of the total products that it sells. Looking ahead, the company aims to increase its manufacturing capabilities and become a 100 per cent private label brand.
Agarwal further shared that menswear majorly contributes to its overall sales followed by kidswear, while women’s wear is expected to witness more sales in the coming years.
