Baazar Style Retail To Expand Private Label Business To Improve Margins

Fashion retailer Baazar Style Retail Ltd. aims to expand its private label business for improvement in margins, after its successful initial public offering. The Rekha Jhunjhunwala-backed company also plans to reduce overall debt burden to sustain growth.

Repayment of the company's loans from the proceeds of the public issue would help in improving margins and sustaining growth, according to Pradeep Kumar Agarwal, chairman of the company. Baazar Style generated a revenue of Rs 972 crore in fiscal 2024 and an earnings before interest taxes depreciation and amortisation margin of 14.61%. The company's profit-after-tax stood at Rs 22 crore, nearly 4 times compared to the preceding fiscal, Agarwal highlighted.

“We are going to repay our loans, our debts will be zero, and benefits of debt repayment will aid our margins. We will continue to grow in the future the way we have grown in the past,” Agarwal told NDTV Profit.

Baazar Style made a flat debut on the stock exchanges on Friday. The stock was listed flat on both the NSE and BSE at Rs 389 apiece. The mainboard issue, worth Rs 834.68 crore, was open for bidding from Aug. 30 to Sept. 3.

The company has two strategies for margin expansion, said Shreyans Surana, the managing director of Baazar Style Retail.

“There are two strategies we are working on, one is on the gross margin side, which is helping us to improve margin expansion and the second one is on the cost side. On the gross margin side we have seen margin expansion because of the private label introduction," she said.

In the last three years, the company has grown 64% in private label and the management aims to grow it with the same momentum in near future. The cluster based approach it follows allows it to optimise cost, so margin will be expanded on both fronts, Surana told NDTV Profit.

The company does not plan to expand its in-house brand and instead will focus on private label expansion. She also projected that a larger portion of the company's total sales is likely to come from its private label business.

“I think the intent will be to grow private labels only. In the last three years, we have reached a growth of 64% on the private label side. I will say a bigger chunk of sales will come in from the private label compared to other labels," Surana said.