Emerging Opportunities in the Casual Men’s Wear Segment

Published by Sharekhan Education | December 14, 2023

Amit Pathak | Sharekhan Education

Introduction:

Casual men’s wear focuses on providing comfort and style for everyday activities and social occasions. It encompasses denim jeans, denim jackets, joggers, hoodies, sweatshirts, sneakers, etc. Statement accessories like bold watches, cufflinks, and leather bracelets add a touch of personality to casual outfits.

About the Segment:

Inclination towards casual wear has experienced exponential growth in recent years in India. Also, according to the latest brokerage report, the casual apparel market has an estimated CAGR of 22% during FY22-27. Various factors, including urbanization, rising income levels, and the prevalence of nuclear families, are expected to fuel this growth. In the corporate world, the adoption of Friday dressing (casual Fridays) drives the increased casualization of men’s wear.

In the casual men’s wear segment, the focus is on tailoring offerings that align with each brand’s distinct identity to deliver a unique and value-driven experience. There is a growing awareness of sustainable and eco-friendly fashion, with many brands opting for environmentally conscious choices in fabrics and manufacturing.

Distribution Network:

Distribution channels in this segment are evolving through Exclusive Brand Outlets (EBOs), Multi-Brand Outlets (MBOs), Large Format Stores (LFSs), and e-commerce platforms. The Indian e-commerce sector offers a substantial avenue for casual fashion brands. Social media plays a pivotal role in marketing and engaging with consumers.

About Arvind Fashions:

Let us delve into Arvind Fashions in this space. The company, a lifestyle powerhouse with a robust portfolio of fashion brands catering to various price points, engages in designing, sourcing, marketing, and selling a wide array of men’s, women’s, and kids’ apparel, footwear, and innerwear. The portfolio includes international and domestic brands such as the US Polo Association, Arrow, Tommy Hilfiger, Calvin Klein, Flying Machine, and Sephora. They aggressively add 200 stores annually.
The Antique report estimates that Revenue/EBITDA/PAT will grow at a 9%/20%/52% CAGR over FY23-26E, with an improvement in return ratios and cash flows. It expects EBITDA margin to expand by 330 bps over FY23-26E, mainly driven by operating leverage. Moreover, working capital would further improve with better inventory turns. Over the next two to three years, the company is expected to achieve a net debt-free status.

Source: Brokerage Report

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