Cravatex June 2011 results
Also, company has spent 3.8 Crores on Advertisements in 2011 vs 1.7 Crores in 2010, again doing all it can.
Operating and Net profit margins grow more than topline. Even though that is not evident. While the standalone sales have grown around 100% the bottomline has grown even more than 100% from operating business. For getting actual bottomline from operating business you have to substract 1 Crore from 2011 and 2010 quarters which accrues by virtue of rental income.
FILA size in India is very small with just 15 EBO vs 900 for Adidas. That does not justify full front page advertisement.
However, FILA is #2 in Market Share in Korea after Nike. Adidas has been trailing it at #3 position for the past 5 years, that proves what focus can do.
Globally they are 1/20th the size of Nike and Adidas.
Wholly owned subsidiary: Its out of the blue and a positive development. Who can expect a company with 3 crore quarterly revenues and 1 crore quarterly employee overhead to break even in first quarter. Therefore, consolidated net profits are down for now. Its a long term development.
Positives: Fila Korea is reviving business and with Acushnet takeover, will provide company more strength. Their focus is Korea where they have captured #2 spot and their focus is to revive business in US, recently tied up with 13 billion $ Kohls Corp for the US market. India should benefit soon with increased focus and wider range of offerings. Cross selling of FILA products in proline stores. Value of property (??) and rental 4.5 crores per annum to provide cushion. Even Korea has 10 times more FILA stores than India with 7 crore population.
Concerns: Business still in nascent stage, franchise model still not established. Working capital requirement is high. Rentals may touch 7 crores next year from 5.5 crores this year on Proline Fitness stores.
Heads I don’t lose much, tales I win.